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Advice from 11 Financial Gurus

August 23, 2016

Receiving sound financial advice can change a person’s world, and fortunately, there is no shortage of advice from people who have already lived through and learned how to successfully navigate the financial waters. In fact, simply seeking financial advice can be one of the easiest ways to learn how to save money, pay off debts (like student loans) early, save for the future, or generate enough money for fun expenses.

To help you along your financial journey, we have rounded up information from some of the most well-known and well-loved financial gurus on the planet. Please keep in mind that even as well-known authorities in their field, each person’s advice — or simply their delivery style — may not be for everyone. Therefore, even with different, overlapping, or similar financial philosophies (and their delivery methods), it is ultimately up to each reader to decide which style or kind of advice rings true.

In this quick guide, readers will find eleven of the most well-known financial advisors, accompanied by a quick biography, at least one of their most defining, bestselling financial advice books, and possibly some insightful advice.

11 Financial Gurus

(In Alphabetical Order)

  1. Gary Belsky

Gary Belsky is a columnist for Time.com, the author of several books, and a frequent lecturer to business and consumer groups on the psychology of decision-making. Belsky was a regular commentator on CNN’s Your Money and a frequent contributor to various well-known talk shows and radio programs. He is the former editor-in-chief for ESPN The Magazine and ESPNInsider.com, as well as a former writer at Money magazine, and a former reporter for Crain’s New York Business and the St. Louis Business Journal. In 1990, Belsky won the Gerald Loeb Award for Distinguished Business and Financial Journalism, administered by The Anderson School at UCLA.

Why Smart People Make Big Money Mistakes and How to Correct Them: Lessons From the Life-Changing Science of Behavioral Economics

This book, which Belsky co-authored, explores how informed people might make more rational investment decisions through behavioral economics. Money magazine describes it as: “A terrific introduction to the emerging science of behavioral finance.” Looking for financial advice from Gary Belsky? Look to psychology and behavioral economics.

  1. James M. Dahle, MD

James M. Dahle, MD, is a full-time, emergency medicine physician. After trusting a lot of the wrong people and getting ripped off repeatedly, he started The White Coat Investor, a blog that offers doctors and other high-income professionals advice on personal finance and investing. Since its inception of May 2011, the blog has grown into the most widely-read physician-specific personal finance and investing website in the world, and 95 percent of the advice is actually applicable to anybody.

The White Coat Investor: A Doctor’s Guide to Personal Finance and Investing

Dahle’s book, which followed two years after the blog, responds to the trickiest questions and financial dilemmas shared by thousands of people, especially those in the medical field. His book is considered a high-yield manual that specifically deals with the financial issues facing medical students, residents, physicians, dentists, and similar high-income professionals. The White Coat Investor fills in the gaps and teaches readers what they received little to no training in: business, personal finance, investing, insurance, taxes, estate planning, asset protection, and more. This book is considered great for financial learners of all levels and contains physician-specific tips that cannot be found in other financial books. Extra financial advice from James M. Dahle can be found in this expert interview from Mint.com.

  1. Wayne W. Dyer, Ph.D

Wayne W. Dyer is the author of over 40 books — including 21 New York Times bestsellers — related to self-help, finances, development, and spiritual growth. “His main message was that every person has the potential to live an extraordinary life,” and each person can reach their deepest desires by consciously honoring their “highest self,” clarifying their goals, and using their gifts. This message was applied to several books, including these related to finances:

Your Erroneous Zones: Step-by-Step Advice for Escaping the Trap of Negative Thinking and Taking Control of Your Life

Originally published in 1976, this first book acts as a positive and practical guide for breaking free from the trap of negative thinking or self-destructive patterns, and to instead enjoy life to the fullest. The “erroneous zones” are whole facets of a person’s approach to life that act as barriers to success and happiness. These zones are targeted so readers can learn to become self-reliant, as well as change and manage how much they will let difficult times, people, needs vs. wants, self-image, and more affect them.

It’s Not What You‘ve Got!: Lessons for Kids on Money and Abundance

The concepts presented in this illustrated book include: Money does not define who you are, it doesn’t matter what others have, and abundance comes in many forms. “It’s Not What You’ve Got is not a how-to manual on spending and saving for kids, but rather a positive, spiritual approach to the meaning of money.”

Financial Tip From Wayne W. Dyer:

“If you want to be financially independent by the time you’re 30 years old, pay yourself first…When you get your paycheck, take a percentage — between 10 percent and 30 percent — and put that away…You’ll be rich enough to be financially independent within a short period of time.”

  1. Neale S. Godfrey

Neale S. Godfrey is an acknowledged expert on family and children’s finances and is considered the creator of the topic of “kids and money” in the United States. Her main goal is to help people raise financially responsible children and grandchildren by providing learning opportunities through life circumstances. To help people achieve this, she has written 27 books and created three, free iOS money games, all of which are related to financial education and empowering families and their kids to take financial responsibility. Her work has received numerous literary awards, and she has spoken on numerous well-known talk shows. Neale S. Godfrey opened The First Children’s Bank at FAO Schwarz in 1988 and was also part of the Institute for Youth Entrepreneurship in Harlem. Godfrey then created the Green$treets kids cartoon characters in order to entertain and educate kids about money.

Money Doesn’t Grow on Trees: A Parent’s Guide to Raising Financially Responsible Children

Money Doesn’t Grow on Trees is considered the book parents turn to when teaching their children about money, as it offers concrete examples on everything from responsible budgeting to understanding the differences between “wants” and “needs.” The book itself is targeted at children and young adults of all ages, and the newly revised edition has sections that discuss the power of the internet, the tactics of television advertisers, and the world of eBay.

  1. George Kinder

George Kinder, a Harvard-trained, certified financial planner and tax advisor, is internationally recognized as the father of the Life Planning movement and is the founder of the Kinder Institute of Life Planning.

The Seven Stages of Money Maturity: Understanding the Spirit and Value of Money in Your Life

This book is intended to help readers discover a powerful new way to look at their money and their life, including questions surrounding personal attitudes about money and how these factors influence lives. The book attempts to help readers approach financial issues with honesty, and without fear, so that they can gain peace, freedom, and security.

Life Planning for You

This book is considered an inspiring step-by-step description of “how life planning, either as a self-help phenomenon or as a global movement in financial services, transforms people’s lives.” Along with personal stories, the book allows readers to access the skills necessary to life plan for themselves, as well as find financial advisers they can genuinely trust.

Financial Advice from George Kinder:

“It’s about the meaning, not the money. If my investing is not really deeply tied to what I think is most important in my life [then] the asset allocation, the estate plan, the retirement plan might as well be thrown out the window.” Furthermore, “hire a registered life planner [a financial planner with additional training in helping clients identify and reach life goals] to help you through this, [as they are] trained in how to elicit from a client what is meaningful and how to keep their eyes on the prize.”

  1. Robert Kiyosaki

Robert Kiyosaki is an investor, self-help author, educator, entrepreneur, motivational speaker, financial literacy activist, financial commentator, and radio personality. He is best known as the author of the #1 personal finance book of all time (Rich Dad Poor Dad), but is also well-known for his part in the co-creation of the CASHFLOW® board game, founding the financial education-based Rich Dad Company, his appearances on several well-known talk shows, and as the author of various financial books. While Kiyosaki often conveys perspectives on money and investing that contradict conventional wisdom, he has earned a respected reputation for his form of financial straight talk.

Rich Dad Poor Dad: What The Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!

This #1 personal finance book of all time tells the story of Robert Kiyosaki and his two dads — his real father and the father of his best friend (“his rich dad”). In the book, both men shape his thoughts about money and investing, proving that a person does not need to earn a high income to be rich. The book also intends to explain the difference between working for money and having your money work for you.

Unfair Advantage: The Power of Financial Education

This book takes a hard look at the factors that impact people from all walks of life as they struggle to change and challenge the confines and preconceptions that impact their financial world. Readers are advised to push aside the belief that they are ‘disadvantaged’ people with limited options, and are instead encouraged to take actionable steps to move beyond what they believe are limited options. Included are actionable steps that any individual can take to move beyond their current financial situation or way of thinking.

Financial Advice From Robert Kiyosaki:

“My rich dad gave me lots of advice. One of the better ones: There’s good debt and bad debt. Bad debt is debt you have to pay for and makes you poor. If I use credit cards to buy new shoes, it makes me poor. Good debt makes me rich and someone else pays for it.” One example: “I’m closing on a $17 million property and financing $14 million. That $14 million is good debt. It makes me richer every month by putting $20,000 in my pocket.”

  1. Rieva Lesonsky

Rieva Lesonsky is an author at Small Business Trends (along with an editor and contributing author to several other sites), the President and Founder of GrowBiz Media, and a nationally known speaker and authority on entrepreneurship. Before co-founding GrowBiz Media, she was an Editorial Director of Entrepreneur magazine. She has appeared on hundreds of radio and talk shows and has written several books about small business and entrepreneurship. Along with her six year service to the Small Business Administration’s National Council, Rieva Lesonsky was honored by the Small Business Administration as a Small Business Media Advocate and a Woman in Business Advocate. In 2003, she was inducted into the Business Journalism Hall of Fame.

Start Your Own Business: The Only Startup Book You’ll Ever Need

This book, written by Lesonsky and the editors of Entrepreneur magazine, has helped hundreds of thousands of readers start their own businesses. The sixth edition features amended chapters on choosing a business, adding partners, getting funded, managing the business structure and employees, and also provides ways to understand information and legalities related to the latest tax and healthcare reform.

Startup 101: Quick Tips for Starting a Business

This ebook contains all the insider advice needed to form a startup business, including: secrets, shortcuts, and smart ideas to help get any business up and running—fast!

  1. Peter Navarro Ph.D

Peter Navarro holds a Ph.D. in economics from Harvard University and has been a professor of economics and public policy at the University of California-Irvine for more than 20 years. He is a distinguished author, keynote speaker, corporate trainer, and has appeared frequently on various well-known financial talk, news, and radio shows. He also often produces investment videos for thestreet.com. His business-related books, among others, are listed here.

Financial Advice from Peter Navarro:

“Take every piece of advice you get from any investment adviser with a barrel of salt. Most are trying to sell you things you probably don’t need or want. Think for yourself.”

  1. Dave Ramsey

Dave Ramsey is a nationally recognized, best-selling author, radio host, television personality, and motivational speaker. His show and writings strongly focus on encouraging people to get out of debt and save money along the way. After rebounding from a financial crash of his own, Dave Ramsey formed Ramsey Solutions in 1992 (to counsel those hurting from the results of financial stress), followed by his first book (Financial Peace) and the local radio show called The Money Game, which is now nationally syndicated as The Dave Ramsey Show. After six bestselling books, the 400+ members of Ramsey Solutions are continuously coming up with ways to help people reach their financial goals.

The Total Money Makeover: A Proven Plan for Financial Fitness

Dave Ramsey’s seven, organized, and easy-to-follow steps are aimed at leading the reader out of debt and into a total money makeover.

Financial Advice From Dave Ramsey:

“A friend of mine who is a billionaire told me he reads a book to his grandkids and I should read that book. The book is ‘The Tortoise and the Hare.’ Every time he reads the book, the tortoise wins. Slow and steady wins the race, and consistency matters. Get-rich-quick never wins…If you try to impress other people, you’ll lose the wealth race, as well,” Ramsey says. “It’s a reminder to somebody like me to keep me in check. It has implications for debt, mutual funds, budgets — an overlay for everything.”

  1. Thomas J. Stanley Ph.D

Thomas J. Stanley was a highly regarded authority on America’s affluent and wealthy. He wrote over 40 books on the subject, several of which were award winning and New York Times’ bestsellers. Dr. Stanley made appearances on several well-known talk shows, is cited in several well-respected journals and news reports, and served as chairman of the Affluent Market Institute, which develops research-based marketing and selling strategies for identifying, attracting, and retaining wealthy clients.

Author: The Millionaire Next Door

This bestselling book identifies and chronicles the seven most common traits and patterns that frequently show up among those who have accumulated wealth…and they are not always what others might assume. This newest edition (since 1998) includes a new foreword for the twenty-first century by Dr. Thomas J. Stanley.

  1. Suze Orman

Suze Orman is a two-time Emmy Award-winning television host for the Suze Orman Show, a New York Times bestselling author, a magazine and online columnist, a writer/producer, a motivational speaker, one of the most well-known experts on personal finance, and the winner of numerous awards. Suze Orman’s philosophy is “People first. Then money. Then things.”

The Money Book for the Young, Fabulous & Broke

This book was written to address the specific financial realities that young people face today. In essence, it is “Generation Debt” and “Generation Broke’s” cry for help. Those who are part of this “young, fabulous, and broke” generation will find the following contents especially helpful: a personalized action planner, step-by-step instructions to improve financial futures, an interactive online community to share thoughts and questions, ongoing advice from Suze, and free online resources.

The 9 Steps to Financial Freedom: Practical and Spiritual Steps So You Can Stop Worrying

This personal finance classic changes the way readers think, feel, and act about money by approaching money from both a spiritual and an emotional point of view. Suze Orman’s advice leads readers through nine simple steps to reclaim their power and embrace her philosophy: you are worth more than your money.

Financial Advice and Continued Learning

Becoming a financially independent individual may take some time and plenty of research, but it is well worth the effort. The good news is that when you start with sound advice, strategic help, and personal education, the journey towards financial success can be much smoother and shorter. At Education Loan Finance, we hope that you (and your family) are able to find the perfect financial guru for your long-term financial plans.

How Much Of Your Income Should Go Toward Rent?

Disclaimer: Any information shared on ELFI.com does not constitute financial advice. This blog and website are intended to provide general information only and does not attempt to give you advice that relates to your specific circumstances. Readers are advised to discuss specific plans with independent financial advisers and lenders. This website has not been compensated by companies mentioned through advertising, affiliate programs, or otherwise.

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Women walking on college campus.
2019-02-13
Scholarships to Save Money on Student Loans for College

People have all kinds of amazing hopes and dreams for what to do with their lives. From those passionate about teaching and making a difference to talented analysts who want to help steer the ship. There are so many incredible careers to choose from, but once you pick the path it’s time to think about school. How do you make that dream of going to school a reality?   Financing an education can be challenging, but there are options and ways, even if you don’t have a nest egg for tuition. One option that is worth looking into is finding scholarships to save you money on student loans for college. Have you checked out what’s available? Here are some things to consider in your search.  

Look for scholarships based on need.

All types of people from all different backgrounds go to college, but some are at a disadvantage when it comes time to pay for school. For instance, some students can’t get student loans for college if they don’t have co-signers but might qualify for federal loan programs that don’t have the same requirements. Some scholarships aim to help these people specifically—like people who are more likely to need aid because they’re non-traditional students with children or over a certain age, or they are the first generation in their family to attend a university. There are also options for students who have been on other government aid programs as children or teenagers in a low-income family.  

What kind of scholarship fits your abilities?

Lots of people receive scholarships for any number of abilities—either because they are gifted academically or because they excel at a sport or activity. Talk to your school counselor or other college resources about your grades and test scores. It might be worth it to retake something like the SAT if you are pretty close to qualifying for academic scholarships. If you’re just starting to look at scholarships, now probably isn’t the time to become a master volleyball player or flutist, but scholarships for activities like those do exist! So if you are looking for ways to save money on student loans for college by getting a scholarship, don’t forget to search based on your extracurricular. Here are some common scholarship types provided based on extracurricular.  

Community Service Scholarships

Have you been busy volunteering? If so, you’ll want to look into community service scholarships. Many institutions hope to have students who make a powerful impact in the community. This scholarship is a great option as there is no special talent required it just takes time and dedication to complete.   Now we’re not saying to volunteer only for a scholarship, we’re just saying to try it out. Who knows, you may even like volunteering and actually have fun and make new friends!  In addition to making new friends, having fun, and saving money on student loans for college volunteering can expose you to new environments and things that you may have otherwise been unaware of. If you’re volunteering with an organization, be sure to ask them if they offer a scholarship.   Segal Americorps Education Award Do Something Scholarships Youth Changing The World Tylenol® Future Care Scholarship  

Creative Scholarships

Creative scholarships are just what you would think they are. These are scholarships provided to users for unique and creative creations. These scholarships consist of anything from designing a logo to playing a musical instrument. When you’re applying to a creative scholarship be sure to include an impressive portfolio of your additional work.   Doodle for Google Create-A-Greeting-Card Scholarship Stuck at Prom Scholarship Contest Shout It Out Scholarship    

Academic Scholarships

Academic scholarships are the most common. These scholarships are often based on your GPA, leadership, and ACT or SAT scores. Typically academic scholarships are provided by the institution but private academic scholarships can be another great way to pay for college. On your application, you’ll want to be sure to include any additional activities you are involved in. Some private academic-based scholarships will require the student to pursue a specific type of degree.   Shell Incentive Fund Scholarship USRA Scholarship Awards Alpha Chi Omega Foundation Scholarships The AAF-Tenth District Scholarship SouthEast Bank Scholars Program    

Look for fruitful memberships.

If you or your parents are members of a fraternal organization, church/denomination, or if you work in a particular industry you may qualify for a scholarship. Some companies even offer scholarships to employee families. If you were a member of an applicable student group in high school, then you may qualify for a scholarship based on this. There are even scholarships for people who have survived cancer. Talk to your parents and other family members about memberships you may not be aware of!  

You might qualify for employer-sponsored scholarships

In an increasingly competitive market, employers are doing more to find and retain top talent. Do you work for a company that offers scholarships? Check out this list of companies that offer scholarships. Everywhere from fast food restaurants and service jobs to large corporations offer financial aid and scholarships to their employees. If you’re not sure, talk to your HR person and see if you qualify. It’s worth a try!  

Get the scoop on where to search.

School counselors are the first place to check for scholarship opportunities. You might be able to apply for a local scholarship from a company in your region through your high school, or your college or university of choice might have scholarships for attendees. You can also take your search to the Internet and look for ideas, search based on your specific requirements or areas of interest, and get information on how to apply. Check out this scholarship search tool from the Department of Education.   If you’re looking to save money on student loans for college, make sure that you check for scholarship opportunities every semester. Student loans can be a great tool and easily manageable if you’re informed, so don’t be afraid to ask questions and check out all of your options. Do your best to decrease the amount you need to take out in student loans to pay for college.  

FDIC Backed and Why You Should Care

  NOTICE: Third Party Web Sites Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – The bank is not responsible for the content. Please contact us with any concerns or comments.
Creepy campfire outside under the stars.
2019-02-07
Don’t Put Out the F.I.R.E with a Lifestyle Creep

Unless you’re on a desert island somewhere, it’s likely you’ve heard of the F.I.R.E movement. If you haven’t Gilligan, the F.I.R.E movement stands for “Financial Independence, Retire Early.” Basically, it’s a movement started in which many finance savvy people increase their savings in hopes of retiring early and living their best life. Sounds great right? It may sound great but there are really only two ways to participate in F.I.R.E and that is increasing your income level or increasing your savings. So, how does the Financial Independence Retire Early movement relate to lifestyle creep?

What is Lifestyle Creep?

Lifestyle creep might be a term you haven’t heard before, but you’ve probably experienced it or witnessed it. As your discretionary income goes up, your lifestyle becomes more expensive. It’s that train of thought that can really get you in trouble with your bank account. You know the thought, the good ole “I worked really hard this week I deserve a new purse.” That is where lifestyle creep really starts.   If you suffer from lifestyle creep you’ve probably also thought of things like. If you can afford a better car, why not drive a better car? If you can afford an apartment without roommates, why have roommates? So, what’s wrong with these thoughts, because if you can afford it, then you should do it, right?  

Lifestyle Creep and Financial Independence Retire Early Movement

It’s a really delicate balance when income goes up and you feel entitled to nicer things. Suddenly the ability to afford something makes your current situation or current belongings seem like they are not enough, whereas they were just fine yesterday. This is a nightmare for most people involved in the F.I.R.E Movement. So when does it make sense to increase your budget based on higher income and when should you hold off? Here are some things to keep in mind that will keep you away from lifestyle creep and keeping you in the race of Financially Independent Retire Early movement.  

Always “pay yourself” first.

To pay yourself means to invest in yourself—specifically, your future self (oh hey, F.I.R.E). Increase your contributions to your retirement when your income increases. If you get a raise every year, set a reminder or put your retirement contribution on autopilot to also increase by 1% (or whatever amount works for you). If aiming to be in the F.I.R.E movement you may want to contribute over 1%. This is how people end up “maxing out” retirement contributions, without ever feeling like they are taking a hit in the present to save up for the future. Just ask anyone who’s ever done so. They’ll tell you it may have been the hardest thing they have ever done at the time, but their future self was really grateful!  

Look at the big picture.

If you get a job offer and will suddenly make 40% more, but your commute will be long, does it make sense to move closer to work if your residence will also cost more? That depends on the big picture. Maybe the amount of time you’ll lose to commuting is worth more than the higher rent or mortgage? Maybe, you will be able to get a house in a better school district, which fits with your long-term plans?  If the commute is farther with a lower mortgage, and you can pay down debt or increase your savings. You need to run the numbers. Check out our below examples of two different scenarios that we estimated. Please note that these are estimated costs.  

Scenario #1

For example, let’s say that you work in Manhattan, New York… You currently live in Blairstown, NJ and live rent-free thanks to Mom and Dad. Your commute to NY takes 4 hours by bus and costs about $400 a month. If you pay $400 x 12 months = $4,800 a year spent on commuting In 2019 there are about 250 Business days (excluding public holidays and weekends) 250 business days x 4 hours = 1,000 hours a year you spend commuting.  

Scenario #2

Let’s say that you move to Hoboken and have a roommate. You pay $1,000 a month on rent. Your commute is about 1 hour a day. Let’s say it costs about $150 a month to commute. $1,000 a month x 12 months = $12,000 a year on rent $150 x 12months = $1,800 a year on commuting costs $12,000 year rent + $1,800 year commuting = $13,800 a year on commuting and housing 1 hour x 250 business days = 250 hours a year spent commuting   Now, this example really gives insight into that big picture. Yes, it costs more to live in Hoboken and you have a roommate, but look at that time saved! If your time is of high value to you, Scenario #2 is likely the best choice for you. If you are participating in F.I.R.E and want to save money or pay down debt as much as possible, Scenario #1 is likely the right choice for you. Regardless, which option is personally best for you, understand these are the types of numbers to run when looking to make big decisions.  

Do I need this or do I just want it? The treat yo’ self trap.

Let’s say your discretionary income goes up, should you get that household repair or a non-urgent medical procedure? By all means, this is not an example of lifestyle creep and you should use your higher income to make it happen. Now, if you find yourself flush with cash and jealous of your neighbor’s new car, you should pause.  If you believe that you have worked hard enough to deserve a big trip. Planning a vacation just because you can, is an example of lifestyle creep. We aren’t saying you don’t deserve a vacation, but that vacation should be planned on a responsible budget.   When making any purchasing decisions ask yourself, “Are these wants more important than other needs?” We’d recommend thinking long-term when it comes to making purchasing decisions. What’s more responsible, paying off debt and continue reaping the reward of not having high payments or added interest or making a purchase like a car that you don’t “need”? Maybe there is a compromise like paying off your current car and setting a goal to upgrade next year, or maybe you can plan a trip for next year and save for it while you are concurrently paying down debt.   It’s dangerous to deserve better. We are constantly bombarded with flashy advertising, slick marketing, and more choices than ever before. It can be really easy to think that you deserve something better, but in reality, is that new item really going to bring you long term happiness and security? Many participating in the F.I.R.E movement will say items are just items and that real happiness comes from relationships and memories.   The F.I.R.E mindset can get even tougher when many of us have had parents who treated us like the most special people ever who gave us what we wanted. That’s not a bad thing until you start making decisions based on what you think you deserve, instead of what you can practically achieve. Thanks, Mom and Dad, but I don’t mind having roommates for another year, or it’s not a big deal to keep driving a car that’s older but works fine.  

Check those budget boxes.

If your discretionary income has gone up either because you got a raise or other costs went down, you need to do some budgeting. Typical steps that personal finance experts advise working on include getting up-to-date on all of your bills if you aren’t already. Second, have a $1,000 emergency fund. Lastly, experts advise people to focus on high-interest debts before building a savings account with 3–6 months of expenses in it. Then look into things like investing, saving for your children’s college or paying off your house!   Achieving a higher income is great! It’s a wonderful feeling when you see your hard work paying off and making life easier. Don’t end up being someone who makes more than enough to live comfortably but you’re still living paycheck to paycheck. Lifestyle creep is so important to recognize and avoid. Keep your financial goals in order and continue to work towards them. Whether your goal is to be Financially Independent and Retire Early or to pay off your debt, you got this!  

Click for Cards and Accounts That Pay You

  NOTICE: Third Party Web Sites Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – The bank is not responsible for the content. Please contact us with any concerns or comments.
Bride and Groom Figures Separating
2019-01-30
How Does Divorce Affect Student Loan Debt?

Lots of millennials are waiting longer to get married so that they’re more secure before tying the knot. The divorce rate dropped 18% in the last several years. Even so, divorce still happens. It doesn’t have to be the end of the world. Maybe your uncoupling is a fresh start, and separating your finances is the first step to setting up your new life.   As a millennial, many of us have student loan debt that is just part of our everyday reality. That’s true whether we’re married, single, or divorced. This is why so many people often will end up seeking out help and advice about student loans during the divorce process. Answers aren’t always clear, but we can help. There are a few things you should know to prevent any financial surprises.  

Can’t Divorce a Servicer

Student loan responsibilities after a divorce—particularly for Federal Loans—will be dependent on whose name is on the loan. If you and your ex-spouse agree on a payment arrangement that requires one of you to help pay, if it’s not in your name on the loan, that may not be enforced by the servicer. If your name is on the loan, you’re the one they’re going to pursue for payment.  That doesn’t mean you shouldn’t try to come to an agreement that works for both of you but stay on top of which of your loans are being paid. Make sure you never miss a payment even if your ex is supposed to be paying it.  

Repayment Amounts and Plans

With divorce, your family size changes, as does your household income. Changes to income and family size can mean changes to your monthly payment. Now it’s likely these changes will only happen if you are on an income-based repayment plan. It doesn’t mean that your monthly payment will go down, but your loan payment could go up or down. The payment amount will depend on what your spouse’s income was when compared to yours, so everyone’s situation is unique. Make sure to update the paperwork and stay current on your loans as you transition to paying your debts on your own.   If you’re having trouble making payments, look at different repayment options like an IBR plan so that you stay current on your loan payments and don’t fall behind. If at all possible, avoid deferment. Deferring your loans ensures that you don’t fall behind on payments, but the interest continues to accrue while you are not paying. This could extend the life of the loan and increase the amount that you owe, so it really should be a last resort.  

Credit Score

Some people think just filing for divorce will negatively affect credit, but that isn’t necessarily true. What can affect your credit is the process of changing your bills around. For example, putting things in solely your name that weren’t previously could affect your credit score. Making big financial changes like selling a house, refinancing, or restructuring debt can also have effects on your credit score. Some of those things could be good and some could lower your score, so it just depends on your situation. For example, adding on more debt without increasing your income could have a negative effect on your credit score.   If you are in the process of reassessing your financial situation on your own, you’ll want to review paperwork. Gather vital documents like your credit report and score. If you haven’t checked your credit report in a while, now is a great time too. Make sure there are no errors on your credit report and ensure that you know what your score is. You may be looking to make some changes that will certainly need a credit review. Changes could include looking for housing on your own, your own mortgage, changing the car you drive, or something else that will require a credit check. Don’t be caught off guard by not knowing what’s on your report right now.  

State Laws

The laws will either determine the debt as separate property or marital property. Now, separate property generally includes things like assists obtained before marriage like that of inheritance. Generally paraphrasing anything obtained by an individual before marriage is considered separate property. Anything that remains outside of separate property typically is marital property. Marital property is where the state laws really play a role.   Your remaining marital property will be divided based on if you are located in “community property” state or an “equitable distribution” state. During a divorce in a “community property” state, any marital property is split down the center at fifty-fifty. Most states tend to fall into the “equitable distribution” state law. The “equitable distribution” law says that each party has a legal claim to the asset or debt. The portion of value that is then divided to each party is determined by a number of different factors according to The Court.    

Cosigners and Private Loans

Private loans can be more complex. For instance, if your ex-spouse is a cosigner, then you are both responsible to pay the debt. If he or she was not your cosigner, the debt is the responsibility or you and your cosigner, if any.  

It might be a good time to refinance loans.

Whether you are just entering the divorce process or have already completed, see if now is the time to refinance. Get in touch to have one of our friendly advisors walk you through the process and give you information on how we can help.   Divorce can be one of the most stressful events a person will face, but empowering yourself with information will make it easier to navigate. Be sure to consult with a lawyer before you start divorce proceedings so that you can prepare. Do your best to work together to come to an agreement that helps you both afford to live on your own so everyone can move forward.  

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