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Should You Save for Your Child’s College Fund or Pay Your Student Loans?

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As you start to grow your family, you may be wondering whether you should continue to aggressively pay down your student loans or start saving for your little bundle of joy’s college fund. Do you immediately set up a 529 to start saving for their college expenses? Or should you focus on paying your student loans before saving for your kid’s college? Here is some information to consider before you decide.

 

For the 2018-2019 school year, families spent an average of $26,226 on college. With tuition rates and the cost of living increasing, higher education can be an expensive endeavor to undertake. In 2019, 64% of families planned to pay for college by saving, according to Sallie Mae’s “How America Pays for College 2019 Study”

 

With all this in mind, you may think it’s a good idea to start saving for your child to attend college when they are a newborn. Perhaps the heavy burden of your student loans is something you want your child to avoid. However, it’s important to consider some factors:

 

Do you have a healthy retirement account?

Financial experts will argue you should not save for your child’s college expenses if it prevents you from saving for your retirement. The argument is based on the fact that you can’t borrow for your living expenses in retirement, but your child can borrow for school costs. If you wait to save for retirement after sending your child off to school with their tuition saved for, you will be missing out on vital years of compounding. Saving for retirement early can earn you thousands of dollars more than if you were to start saving later!

 

What do your other debt payments look like?

Is your financial situation stable enough to be able to pay tuition or save for future tuition costs? To determine this you should consider what debt (including your student loans) you have. Are you able to make all your debt payments? Do you have an emergency fund you are contributing to? If you have unpaid debts or don’t have an emergency fund, you may need to delay saving for future college expenses at this time. 

 

Can you afford tuition payments or monthly college savings in your budget?

If saving for your child’s college expenses is a priority for you, plan for it in your budget. If you are able to continue making your own student loan payments, save for retirement, and continue to build an emergency fund while saving for your child’s college expenses, go for it! Ready to make a budget, but not sure how? Check out this budgeting method

 

Options to Consider 

If you want to help with your child’s college expenses but it’s not financially feasible at this time, here are some ways you may still be able to help:

  • Refinance your student loans. If you are trying to save some money in your budget for your child’s college expenses consider refinancing your student loans. Refinancing allows you to obtain a new loan, presumably at a lower interest rate, to pay off your old loan. The new loan with a lower interest rate can result in significant savings for your monthly payment and in interest costs over the life of the loan. This monthly savings can go directly into your child’s college savings. To find out how much you may be able to save, check out our student loan refinance calculator.* 
  • Don’t feel bad if saving for your child’s higher education is not something you can afford. In 2019, 50% of families borrowed for college. This figure also includes families who had some savings. Student loans, both federal and private, are an important resource to pay for college expenses. Help your child determine how much they need to borrow and compare their options.     
  • If it’s not in the budget to save for future education expenses start saving any cash gifts your child receives. Take those gifts and open a 529 plan for your child. A 529 is a tax-advantaged investment account that allows you to save for qualified higher education expenses such as tuition and room and board. 

 

Ways to Save on College Costs

When you are deciding how to pay for college expenses, be sure to include your child in the discussion. After all, they will be starting their adult life and should have a good understanding of finances. Here are some points of discussion to get you started:

  1. Can they take Advanced Placement classes or do dual enrollment in high school to earn college credits? Earning college credits while still in high school is significantly less expensive, or possibly free in some cases, and can cut down on the required number of classes when they actually attend college. This can help them graduate early or reduce the amount of tuition you need to pay. 
  2. Is your child considering a private or public college? The type of school they are considering can have a significant impact on the cost. In 2019, the average cost of a private school was $48,510 per year compared to $21,370 for a public college. Though the sticker price for a private college is a lot higher, private schools often have the ability to give more generous financial aid. Before eliminating a potential college due to costs, be sure to look at their financial aid statistics. 
  3. Will they be eligible for any scholarships? There are a number of general and niche scholarships that your child can apply to. College Board’s Scholarship Search is a good resource to find out about scholarship opportunities. Tip: Be sure to fill out the FASFA, which allows you to be eligible to receive aid such as grants, scholarships, work-study and federal student loans. 
  4. Will your child have a job during school to help pay for expenses? A job on campus can be a great way for a college student to be more involved on campus and earn money for their living expenses. 

 

Bottom Line 

The ability to help your child pay for future educational expenses can be a great feeling. But before you take on this endeavor, you’ll want to be sure that your financial situation is stable enough. Armed with this information, you can make an informed decision for how you can successfully pay off your student loans and save for your child’s college expenses.

 


 

*Subject to credit approval. Terms and conditions apply.

 

Notice About Third Party Websites: 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.

Millennials and Money: Surprising Facts You Should Know

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When it comes to millennials and money, they have a bad reputation. The Pew Research Center defines millennials as people born between 1981 and 1996. Despite this wide age range, many stereotypes exist about millennials, including poor work and financial habits, especially when it comes to student loan debt, managing a monthly budget, and saving for the future. 

 

But you may be surprised by how frugal millennials really are. Here are some facts about millennials and money that you should know. 

 

1. Nearly half of millennials have a side gig

During the 2008 recession, many millennials watched their parents lose their long-time jobs and investments. They learned the importance of diversifying their investments and of having multiple income streams. 

 

With that experience in mind, millennials are leading the charge when it comes to side hustles. In a BankRate survey, 48% of responding millennials said they earned extra money on the side. 

 

On average, people with side gigs earn $1,122 in extra income per month, working 12 hours a week. They use those additional earnings to boost their savings, pay down debt, and even afford their regular living expenses. 

 

2. Millennials have one of the highest student loan balances of any generation

Millennials are dealing with unprecedented levels of student loan debt. However, that’s not entirely their fault. 

 

In recent years, college costs have skyrocketed. The College Board reported that from 1989-1990 to 2019-2020, the average cost of tuition and fees at a public four-year university tripled. With such high expenses, millennials have had to take out more in student loans to pay for school.

 

In fact, the average loan balance for millennials is $34,505. That’s the third-highest average balance for student loan debt. Only Gen-Xers and Baby Boomers have more. 

 

Such a high loan balance affects millennials’ ability to pursue other goals, like buying a home, getting married, or starting a business. 

 

3. Millennial households are earning more than ever before

Despite their substantial student loan debt, millennials have very high earning potential. 

 

According to the Pew Research Center, the median income for millennial households is $69,000. That’s significantly higher than the median household income for all age groups, which is just $61,937. 

 

While that’s good news, much of that higher income goes toward their student loan payments and living expenses, so the economy is not reaping the benefits of millennials’ salaries as much as you’d expect. 

 

4. Millennial credit card debt is lower than average

After watching their families struggle with debt, millennials are notoriously wary of taking on consumer debt themselves. That’s especially true when it comes to credit cards. 

 

Experian reported that consumers carry $6,028 in credit card debt, on average. But for millennials, the number is much lower; they carry an average of just $4,712. 

 

That’s a good decision. Credit cards often have sky-high interest rates. According to the Federal Reserve, the average interest rates on credit cards that assess interest was 16.88% as of November 2019, the last available data. But some credit cards have interest rates of 25% or higher, which can cause you to owe far more than you initially charged on your card. 

 

Keeping your balances low — and paying off your statement balance in full each month — helps you reap the advantages of credit card rewards without paying interest charges. 

 

5. Millennials are delaying home ownership

While previous generations considered home ownership a huge step in becoming an adult, millennials are delaying this milestone. 

 

According to CNBC, the home ownership rate for millennials is eight percentage points lower than it was for Gen X-ers and Baby Boomers when they were in the same age group. 

 

There are a few reasons behind their reluctance to buy: 

  • Fear of commitment: Many millennials prize flexibility. They want to be able to take advantage of new opportunities that come along, like a dream job in a new city. They feel like home ownership would prevent them from being able to pursue those opportunities, while renting allows them to be more nimble. 
  • Lack of starter homes: Business Insider reported that there is a massive shortage of starter homes in the real estate market. Baby Boomers looking to downsize and real estate investors making all-cash offers are swooping up available homes, making home ownership unattainable for many millennials.
  • Prevalence of student loan debt: With high monthly student loan payments and a high debt-to-income ratio, millennials struggle to qualify for a mortgage and keep up with their payments. Until they pay off a significant portion of their debt — or eliminate their loans entirely — many millennials simply don’t feel comfortable making such a large investment. 

 

 

Millennials and money: Maximizing your finances

If you’re a millennial with student loan debt and it’s causing you to put off your other financial and personal goals, there are some steps you can take now to improve your situation: 

  • Create a budget: If you don’t have one already, spend some time creating a budget. Make sure you earn more than you spend each month and look for areas where you can cut back so you can free up extra money to put toward your debt so you can pay it off faster. 
  • Use your side hustle strategically: If you have a side hustle — such as graphic design, driving for a rideshare service, or delivering groceries — set aside your earnings solely for debt repayment. By using your extra income to make additional payments, you can pay off your student loans months or even years ahead of schedule — and cut down on interest charges. 
  • Refinance your student loans: To pay off your student loans even faster, consider refinancing your student loan debt. With this approach, you consolidate your loans together by taking out a loan through a lender like ELFI. The new loan has different repayment terms; you could even qualify for a lower interest rate, helping you save money over time.

 

 

 

 

If you think that student loan refinancing sounds like a good idea for you, use ELFI’s Student Loan Refinance Calculator to get a rate quote without affecting your credit score.*

 


 

*Subject to credit approval. Terms and conditions apply. 

 

Notice About Third Party Websites: 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.

How to Appropriately Ask for a Raise

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So you’ve been taking on more responsibility at work, your boss says you’re a real asset to the company, but your salary hasn’t changed in a few years. If this describes your current work situation, it might be time to ask for a raise. 

 

According to PayScale’s “Raise Anatomy” report, only 37% of workers have asked for a raise. Of those that did ask, 70% received some sort of increase in compensation. Those are pretty good odds so if you’re excelling at your job, you should ask! The average raise in 2019 was 3%, according to the 2020 Compensation Best Practices Report. This means that if you are earning $40,000, your raise would increase your income by $1,200 per year. The amount of a raise depends on the sector of work, location, and demand for the position. Typically, jobs in the private sector usually receive higher raises than jobs in the government. As a best practice, you should usually wait to request a raise after you have worked for the company for at least one year. Additionally, in most cases, you should not ask for a raise more than once a year. 

 

If you feel it is time to ask for a raise, here are some tips on how to appropriately request one.

 

Prepare for a Meeting 

When you are ready to ask for a raise, request a meeting with your boss and let them know you’d like to discuss your salary. 

 

1. Plan your request at the right time

When you want to ask for a raise, pay attention to the timing of the meeting with your boss.

An appropriate time for a meeting would be:

  • After you successfully completed a big project that brought value to your company
  • During a performance review meeting when you have exceeded expectations. Performance review meetings are a typical time when companies award raises. Being prepared to ask for a raise during this time could allow you to negotiate for more than the planned raise. 

 

Times to avoid a meeting:

  • During a busy season of work when your boss will not be able to focus on your request 
  • When you are behind on your work. If you are not able to perform your current workload, it will be hard to justify a raise to your boss.

 

2. Prepare talking points

Go into the meeting prepared to advocate for yourself. Although you don’t have to memorize a speech, it’s good to be prepared with the following information: 

  • Specific examples of accomplishments you have achieved at work recently. This could be anything from securing a big client to implementing an idea that brings in extra revenue for your company. 
  • How you have exceeded expectations for your position. 
  • Additional responsibilities you have undertaken. If you have taken on more responsibilities by taking initiative, be sure to highlight those. 
  • The value you will continue to bring to the company in the future and examples of how this will be accomplished. 

 

3. Do your research

It’s important to know that the salary you are requesting is realistic for your position and your location. A great resource is Glassdoor. You can compare salaries for your sector or receive a personalized salary estimate based on your market and position.

 

4. Practice, practice, practice

Asking for a raise can be a nerve-wracking conversation. By preparing and practicing before your meeting, you can walk in confidently and armed with data to back up your request. In addition to practicing your talking points, you will want to be ready for any questions or negotiations that may arise. While it’s good to have a specific salary in mind, you should also be open to other numbers or benefits that your boss may offer. For example, the company may offer you work from home or extra vacation time in place of a salary increase.

 

In the Meeting 

You’ve requested a timely meeting, prepared extensively, and now it’s go-time. Once you’re in the meeting here’s what you should focus on:

 

1. Your Demeanor

Pay attention to your tone and body language when speaking. You want to appear confident in yourself and your abilities. Show a positive attitude about the value you bring to the company, but do not appear arrogant. If you get questioned about why you deserve a raise, keep your cool and answer with the talking points you prepared. 

 

2. Communicate Your Accomplishments

Instead of just rattling off a laundry list of accomplishments, focus on a few incredible examples and, if possible, bring proof of your work. Here are a few ideas of what you can present in the meeting:

  • Two-three examples of big projects you accomplished 
  • Work you did that was beyond the scope of your job
  • Specific examples of when you took the lead and were successful
  • Examples of work brought that brought monetary value to the company
  • Ideas for your future at the company. Companies value loyal workers so be sure to point out how you have demonstrated loyalty and your desire to remain with the company.   

 

3. Explain Why You’ve Earned It

Be sure to avoid talking about why you need the extra money and instead focus on how you have earned a raise. For example, if you are in sales, instead of saying you need the money because of increased living costs, say you have earned this raise because you are the most successful sales associate, have brought in $100,000 in revenue, and receive great reviews. 

 

4. Bring a Specific Number

It’s best to have a specific number you are requesting, according to a study by Columbia Business School, instead of a range. For example, you want to request $55,000 as opposed to saying $52,000 to $57,000. Provide the reasoning for how you arrived at that number and, if applicable, give examples of how it is in line for the type of work you do.  

 

Bottom Line

If you have been in your role for over a year and are killing it at your job, you should seriously consider asking for a raise. But before you do so, preparation is absolutely critical. Follow the steps above and you’ll be in a great place to have this discussion with your boss. Good luck!

 


 

Notice About Third Party Websites: 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.

5 Mistakes Millennials in Student Loan Debt Make

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By Caroline Farhat

 

Do you have student loan debt? You’re not alone. In fact, 45% percent of millennials are currently dealing with student loans. The average student loan debt amount for the 2018 graduating class was $29,800 per student. With this info in mind, it may come as no surprise that 17% of millennials surveyed regret taking on student loans, according to Bankrate’s May 2019 Financial Survey. But student loans don’t have to be something you regret! After all, they helped you obtain higher education and that’s a major accomplishment. Here are 5 mistakes to avoid while in student loan debt to brighten your financial future. 

 

1. Not saving for retirement

You may think that you can’t afford to save for retirement while making student loan payments. Or even if you can save, you think retirement is so far off that you can wait to save after your student loans are paid off. However, that’s a huge mistake that could cause you to lose out on thousands of dollars. The earlier you can start putting money away for retirement the better because even a small amount in the beginning is better than nothing. Let’s take a look at an example to see just how powerful saving early can be.

 

The fix: Let’s say you start saving $60 a month in a retirement account. How much difference can this really make? If you start saving $60 per month at age 23, assuming an interest rate of 7% and increased contributions when your income increases, you could amass $230,417 by the age of 66. But if you wait until age 33 when your loans may be paid off you would only have $106,605 at the age of 66. Starting earlier increases your savings by $123,812! 

 

2. Not understanding the specifics of their student loan debt

Maybe when you obtained your student loans you were just trying to get your tuition paid and didn’t give a second thought to the terms of your loan. This could be costing you a lot of your hard-earned money. It’s important to know the interest rate of your loan, whether it’s fixed or variable, and the loan’s repayment term. If you have a variable rate your payment could rise if the interest rates rise. Therefore, it’s important to know what you’re facing.

 

The fix: Read your latest statement or call your loan provider to get the details on your loan. Once you have that information it may help you avoid the next mistake on the list.

 

3. Not finding the best student loan repayment options

Just because you have student loan debt doesn’t mean you can’t save some money while paying it off. There are a lot of different repayment plans and programs that can help you save money monthly or over the life of the loan. 

  • If you have federal student loans, an Income-Driven Repayment (IDR) plan may be a good option if you are having a hard time making your loan payments. With an IDR plan, your payment is based on a percentage of your income and your loan term is extended from the standard 10 years to 20 or 25 years in some cases. But be aware that extending your loan length means you will be paying more in interest over the life of the loan. 
  • Student Loan Forgiveness: There are different programs available to have some or all of your loans forgiven based on your sector of work. If you work for a qualifying nonprofit or government entity and have federal loans you may be eligible for Public Service Loan Forgiveness if you are on the required payment plan. It may pay off to do some research on whether you are eligible for any forgiveness programs. 
  • Student Loan Refinancing: Refinancing is obtaining a new loan to pay off your student loan(s). Your new loan presumably has a lower interest rate and can save you money monthly, as well as the total amount you pay. Student loan refinancing can be an easy process with the right company. At ELFI you get a personal loan advisor to help you through the process of refinancing your student loans. To refinance you have to meet minimum qualifications based on your income, credit score and credit history, along with other eligibility requirements that you can find here. Check out our student loan refinance calculator to see what you could potentially be saving.* 

 

The fix: Evaluate whether you qualify for any forgiveness programs, if not refinancing may be a great option to not only lower your monthly payment but also save you money in the long term.

 

4. Not saving for emergencies

It’s not if an emergency will happen but when. Whether your car has an issue or you end up with unexpected medical bills, it’s wise to put some money aside for when these instances occur. Nineteen percent of those surveyed in Bankrate’s May 2019 Financial survey regret not saving enough for emergencies.

 

The fix: Try to cut out going out to eat a few times a month (or any other non-essential expense) and put that money into a savings account for emergencies only. After a year you’ll have the beginning of a solid emergency fund. A good rule of thumb is to have an emergency fund with at least three to six months worth of your living expenses.

 

5. Incurring credit card debt

When you are just beginning a job after college your salary probably will not be as high as you expected. The average American millennial’s salary is $35,592 per year. With student loan payments and all the other expenses of life, it can be tempting to reach for a credit card to pay the expenses your income is not covering. However, credit cards come with high interest rates that will make getting out of debt harder. 

 

The fix: Create a budget that covers all your expenses so you can begin living within your means and won’t have to rely on credit cards to make ends meet. If you need help creating a budget, this blog post will walk you through the popular 50/20/30 budgeting rule.

 

Bottom Line

Having student loan debt doesn’t have to prevent you from living your best life and building a solid financial future. Make a plan and you can avoid these mistakes in the future!

 


 

*Subject to credit approval. Terms and conditions apply.

 

Notice About Third Party Websites: 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.

Cutting Your Monthly Budget: Where to Start

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A monthly budget is not always one-size-fits-all. You may find a budget that works perfectly for a little while, but your financial situation is not likely to stay the same. Big life changes can come along, both planned and unplanned, that require a budget adjustment.

 

Whether preparing for a new baby, saving for a down payment on a home, or going through tough times such as a job layoff or large medical bills, you may find yourself cutting the monthly budget. If your monthly budget already seems tight, it can be hard to determine the best place to start. Here are a few quick tips for cutting back on your monthly expenses:

Be Proactive

Cutting a budget for significant life changes pays to start early. Some can be easier to prepare for than others – a new baby comes with a few months to save as much as you can, and a home can be purchased on your own timeline when you are financially ready. You may try to plan your life as much possible, there are always unexpected changes and challenges.

 

Even if there are no planned life changes on the horizon, it is essential to build up a solid emergency fund. The general rule of thumb is to save around three to six months of living expenses. A solid emergency fund ensures that when times get tough, you will have something to fall back on.

Assess Your Variable Expenses

When cutting your budget, looking at your variable expenses is a great place to start. Your variable expenses include amounts that fluctuate every month. Examples of variable expenses are groceries, dining out, entertainment, and clothing.

 

Variable expenses are good to start with because you control how much you spend in these categories, and they are often easiest to cut back on. As much fun as going out for dinner and a movie is, it may be considered a luxury for the phase of life you are in. Making meals at home is exceptionally less expensive than eating out. In addition, renting a movie or having a game night at home with the people you love can be just as satisfying as a night on the town. To save money on groceries, looking into the benefits of meal planning can be helpful.

Find Ways to Slash Fixed Expenses

Obviously, you may not be able to immediately cut back on expenses such as rent, mortgage, car payments, or education loan repayments (although student loans could potentially be refinanced to save you money or lower your monthly payment). However, there may be other fixed expenses that you can eliminate. For example, cutting out cable – even temporarily – can save you a surprising amount of money. If you have a landline, you might be able to get rid of it and solely use your cell phone. Utility bills can rise in the winter months, so ensure you are diligent about turning off your lights, unplugging appliances, and not turning up the heat too high. If necessary, do some research to make sure you are getting the best deals on cell phone service, internet, and car insurance. While you won’t be able to completely exclude all of your fixed expenses, with a little effort, small savings spread over several categories can add up to a cumulative amount that creates more flexibility in your monthly budget.

 

Getting Through Tough Financial Times

Throughout life, there are many circumstances that may change your income or expense levels. Whether you are cutting back to consciously save up for an exciting life event or to unexpectedly adjusting to a financial challenge, it is essential to reevaluate your budget to adapt when these changes occur. Though it may seem daunting at first, you might be surprised by how much you can save when you put forth the proper thought and effort.

 

Related: Best Apps for Budgeting in College

 


 

Notice About Third Party Websites: 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.

 

10 Most Expensive U.S. Cities to Live In for 2020

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Depending on where you live, your income may not give you as much spending power as you expect. For instance, someone making $100,000 in Lancaster, Pennsylvania will be far more comfortable than someone making $100,000 in Manhattan, New York. 

 

If you’re thinking of moving to a new city, consider the cost of living before committing to relocating. The city’s cost of living can have a big impact on your cash flow and your ability to handle your expenses, including your student loan repayment if you have education debt. 

 

10 Cities with the Highest Cost of Living in the US

To come up with a list of the 10 U.S. cities with the highest cost of living, we looked at information compiled by Kiplinger. In each city, the cost of living is well above the national average and the median home value is over $450,000 — well above the median home value for the nation as a whole. 

 

According to the U.S. Bureau of Labor Statistics, the annual average wage for all occupations is $51,960. To show you just how expensive each of these cities actually is, we used a cost of living calculator to demonstrate what that salary is worth in each location. For the sake of comparison, we used Atlanta Georgia as the resident’s original city — a city that is right at the national average in terms of cost of living. 

 

Here are the 10 most expensive U.S. cities to live in for 2020: 

 

10. Boston, MA

If you relocated from Atlanta to Boston and earned the national average wage of $51,960, you’d have to get a job that paid at least $75,137 to maintain the same standard of living that you’re accustomed to in Boston. That’s because Boston’s cost of living is 50% higher than the national average. 

 

Boston does have a below-average unemployment rate, increasing your chances of finding and maintaining a job. As of December 2019, the unemployment rate was just 2.1%

 

 

 

9. Queens, NY

If you want to move to the Queens section of New York, you’d have to earn at least $75,387 to have the same spending power as you would with a $51,960 salary in Atlanta. The cost of living in Queens is 52% higher than the national average. In particular, you’ll face a much more competitive housing market. According to Zillow, the median home value in Queens is $531,000 and the median rent price for an apartment is $2,250.  

 

 

 

8. Arlington, VA

Arlington’s proximity to the Pentagon and the nation’s capital makes it a hotspot for government workers and lawyers, and the cost of living reflects that. Its cost of living is 53% above the national average, and the median home value in Arlington is $737,932 — nearly $500.000 more than the national median home value. 

 

If you moved from Atlanta to Arlington, you’d have to earn at least $76,588 to maintain your standard of living. 

 

 

 

7. Oakland, CA

In Oakland, be prepared for sticker shock when it comes to housing. The median home value in Oakland is $765,350. The median rent for apartments is a whopping $3,000. That’s more than three times the national median rent for a one-bedroom apartment. 

 

To have the same spending power in Oakland as you did in Atlanta, you’d have to earn at least $80,193 per year. 

 

 

 

6. Seattle, WA

Seattle’s cost of living is 54.8% above the national average. To maintain your standard of living after relocating from Atlanta, you’d have to earn at least $79,792. If you want to be a homeowner, be prepared to spend a significant amount of money. The median home value in Seattle is $752,187. If you prefer to rent, the median rent price is $2,600. 

 

The unemployment rate in the area is relatively low. As of December 2019, it was just 2.2%. The median household income was $85,562

 

 

 

5. Washington, D.C.

The cost of living in the nation’s capital is 62.6% above the national average. If you relocated from Atlanta to Washington D.C., you’d have to earn at least $82,095 to have the same spending power as you did before. 

 

The median household income is a high $82,604. The median home value in the area is $636,372, and the median rent price is $2,700. However, unemployment in Washington D.C. is quite high. As of December 2019, it was at 5.3%. Unless you already have a job lined up, it may be difficult to find a position since it’s a very competitive market. 

 

 

 

4. Brooklyn, NY

Brooklyn has become a more desirable area for New Yorkers to live, and it’s become more expensive as a result. Its cost of living is 81.7% above the national average, and you’d have to earn $92,206 to maintain your standard of living. 

 

While the housing market is expensive, incomes tend to be relatively low. The median household income for Brooklyn residents is just $56,015. And, the unemployment rate is quite high. As of 2018 — the last available data — the unemployment rate reached 4.6%.  

 

 

 

3. Honolulu, HI

Moving to an island paradise may sound like a dream come true, but that dream comes with a hefty price tag. Honolulu’s cost of living is 89.7% above the national average, largely because so much of your everyday essentials need to be imported. To maintain the standard of living you enjoyed in Atlanta, you’d have to earn $100,766 working in Honolulu. 

 

The median home value in Honolulu is $705,505, and the median rent price is $2,200. Unemployment is Honolulu is low; as of December 2019, unemployment was at 2.1%

 

 

 

2. San Francisco, CA

Many major employers call San Francisco home, including Salesforce, Kimpton Hotels & Restaurants, and Genentech. With such big companies in the area, employees can often command high salaries. The median household income for San Francisco is $110,601, well above the national median income. 

 

However, San Francisco’s cost of living is quite high; it’s 96.3% above the national average. To maintain your standard of living, you’d have to find a job that paid at least $100,166 per year. 

 

The median home value in San Francisco is $1,392,859. If you want to rent an apartment, be prepared to pay a high price; the median rent price is a staggering $4,500 per month. 

 

 

 

1. Manhattan, NY

Manhattan is notorious for its sky-high cost of living. In fact, its cost of living is 148.5% higher than the national average. If you were to move to Manhattan from Atlanta, you’d have to increase your salary to $127,497 to maintain your standard of living — a $75,537 increase over your current income. Everything in Manhattan is more expensive, especially housing, food, and transportation. 

 

The median home value in Manhattan is $1,013,116, and the median rent price is $3,450. Unfortunately, finding and keeping a job to pay for those housing costs can be difficult since Manhattan does have a relatively high unemployment rate. As of 2018 — the last available data — it was at 4.1%

 

Living in an Expensive City

If you’re moving to a new city, it’s important to know what to expect in terms of cost of living and how far your income will go in your new location. Before moving, create a budget and streamline your expenses to free up as much money as you can. 

 

If you need to improve your cash flow, consider student loan refinancing. You could lower your interest rate or extend your repayment term to reduce your monthly payment, giving you more breathing room in your monthly budget so you can afford your new home. Use ELFI’s Find My Rate tool to get a quote without affecting your credit score.*

 


 

*Subject to credit approval. Terms and conditions apply. 

 

Notice About Third Party Websites: 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.

 

7 Great Things to Spend Your Tax Refund On

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While tax season fills most people with dread, there’s one thing everyone looks forward to — tax refunds. According to the IRS, approximately 71% of American tax filers receive a tax refund. In 2019, the average tax refund was a whopping $2,869. If you’re like many people, that may be the biggest lump sum you’ll see all year – so it’s important to use it wisely. 

 

By Kat Tretina

Kat Tretina is a freelance writer based in Orlando, Florida. Her work has been featured in publications like The Huffington Post, Entrepreneur, and more. She is focused on helping people pay down their debt and boost their income.

 

7 Best things to spend your tax refund on

During tax season, retailers compete for your business. You’re bombarded with advertisements and sales trying to get you to spend your newfound money. But before parting with your hard-earned funds – it is money you worked for, after all – focus on using your tax refund on things that will improve your finances, your future financial prospects, and overall well-being. 

 

Need inspiration? Here are seven smart ways to use your tax refund. 

 

1. Student loan lump sum payments

Student loan debt can be a substantial burden, causing you to put off other goals like saving for retirement, relocating to a new city, buying a home, or even getting married. 

 

Using your tax refund to make a lump sum payment on your debt could allow you to save money on interest fees and help you pay off your loans ahead of schedule. 

 

For example, let’s say you had $30,000 in student loan debt at 6% APR. With a minimum monthly payment, it would take you 10 years to repay your loans. And, you’d repay a total of $39,970; interest charges would cost you $9,970. 

 

But let’s say you received $2,869 as a tax refund. If you applied the entire amount to your student loans as a lump sum payment, you’d pay off your loans 15 months early and you would repay just $37,801. By using your tax refund to make an extra payment on your debt, you would save $2,169 in interest charges. 

 

You can make your tax refund work even harder for you by refinancing your student loans to possibly lower your interest rate. Use our Student Loan Refinance Calculator to see what you could save by refinancing your student loans.* 

 

2. Medical procedures

If you’re like many people, you may have put off going to the doctor or visiting a dentist because you simply couldn’t afford it. In fact, 25% of Americans reported putting off necessary medical procedures due to cost. However, skipping routine medical and dental care can cause more expensive issues later on, so it’s important to stick to a preventative care routine. 

 

If you haven’t been to the doctor or dentist because you were short on cash, using your tax refund to take care of your health is a wise investment. 

 

3. Car repairs

Cars are often money pits, causing many people to skimp on routine repairs because of the expense. AAA reported that the average car repair is $500 to $600, but can often cost much more. Keeping up with your car’s maintenance and making necessary repairs can improve your car’s lifespan and fuel efficiency, helping you avoid more costly issues later on. 

 

If you’ve been putting off any repairs or need to replace your tires, use your tax refund to finance that purchase so you can get to and from work safely. 

 

4. Professional development

With technology changing so quickly, it’s essential that you keep on top of the latest trends in your field so that you remain competitive in the job market. If you want to take your career to the next level, consider using your tax refund to invest in your professional development. You can attend a conference, take a class, or hire a career coach. 

 

5. Investments

If your finances are in otherwise good shape – meaning you don’t have high-interest debt or a pressing immediate expense – you can use your tax refund to build long-term wealth. Consider using your refund to invest your money by making contributions to your retirement accounts or an individual taxable account. 

 

Don’t think your tax refund can make that much of a difference? Think again. Over time, your money can grow significantly. 

 

For example, let’s say you’re 30 years old and deposit your $2,869 into an individual taxable account. If you don’t deposit another cent and your money earns an average annual return of 8%, that account will have grown to $31,374 by the time you’re 60. 

 

If you’re not sure where to start, check out robo advisors like Betterment® or WealthFront®. They automatically invest your money based on your goals and risk tolerance, so you don’t have to be an investment expert to reap the rewards. 

 

6. Exercise equipment

Investing in your health and wellness is a good use for your money. Over time, it can help you save on health insurance and medical bills, too. 

 

Consider using some or all of your tax refund to purchase exercise equipment you’ll actually use. Or, sign up for a gym membership or take a few sessions with a personal trainer to ensure you’re using the equipment correctly. 

 

7. A new computer

If you freelance or are thinking of starting a new side hustle, you may want to use your tax refund to purchase a new computer or software so that you can work more efficiently. With better tools, you may be able to improve your earning potential. And, you may be able to deduct the cost of a new computer or software on next year’s taxes (talk to a tax professional about your unique situation). 

 

How not to spend your refund

There are a lot of bad ways to spend a tax refund. But one of the worst is using it to purchase a car you can’t really afford. Unfortunately, using a tax refund to buy a new car is incredibly common. 

 

Using your tax refund as a down payment can help you qualify for a car loan. But car values depreciate rapidly, and you could end up with a car that is too costly for your budget, or you could end up owing more than the car is worth. That issue can put you in a precarious financial position, and it’s hard to dig yourself out of debt. 

 

If you need reliable transportation, use your tax refund to purchase an inexpensive, used car that you can comfortably afford. If you need to take out a loan, financial experts recommend that you choose a loan term no longer than 36 months; if you need a longer loan term than that to manage the loan payments, the car is likely more than you can truly afford. 

 

There’s seven things that you should spend your tax refund on, along with one that you shouldn’t! Regardless of your situation, focus on spending your refund responsibly. 

 

For more information, learn how to create a monthly budget.

 


 

*Subject to credit approval. Terms and conditions apply. 

 

Notice About Third Party Websites: 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.

5 Great Investing Apps for Beginners

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This blog has been prepared for informational purposes only and does not constitute financial or investing advice. You should always use caution when making investing decisions. Rates and fees for the apps listed were obtained as of February 21, 2020 and are subject to change.

 

There are several ways to go about building wealth – some focus on building their career and earning more, putting their money into traditional savings accounts, 401ks, and IRAs, while others may focus on putting their money to work for them through investing in stocks, bonds, and ETFs. While many young adults have previously shied away from the stock market and investing in the past, a recent study showed that seven in ten millennials are financially investing in some way, and that 85% of millennials do not feel too young to invest

 

Why the change? From national student loan debt reaching record highs, to the housing market being generally more expensive for buyers, there are certainly enough reasons for millennials to focus on finding new ways to build their wealth, rather than just using traditional savings. 

 

If you’re a believer that history repeats itself, you may find the stock market to be a good opportunity to grow your wealth. Since its inception in 1896, the Dow Jones Industrial Average has delivered an average return of 5.42% per year, and the S&P 500 index has delivered an average return of 7.96% from 1957 to 2018. 

 

For the new investor, however, getting started can be a bit overwhelming. Some questions beginners might ask: What should I invest in? Should I invest in stocks, bonds, or ETFs? Should I manage my portfolio or allow a robo-investor to manage it? What about cryptocurrency? Which is going to get me the best return? Which strategy is the safest? Should I be thinking long-term or short term?

 

Luckily, there are a variety of applications that serve well for individuals that are just getting started on their investment journey. Here are five great apps that all have unique benefits for individuals looking to start investing.

 

Robinhood®

Robinhood ® launched in 2013 and took the digital investing world by storm by offering commission-free trading along with a free trading account and providing users with a free stock for just signing up. Its simplified user experience may not suit the seasoned investor, however it’s a great starting point for individuals interested in investing in stocks, ETFs, and even select cryptocurrencies. You can search for stocks, add them to your watchlist, get some general information about the company, such as analyst ratings on the stock (buy, sell, hold), their earnings data from previous quarters, their dividend yield, among other useful numbers to guide your investing decisions. Upgrading to Robinhood Gold for $5 a month gives you access to extending trading hours, real-time market data on order volume, among other features.

 

Robinhood recently released fractional shares allowing you to invest in any company with as little as $1. Overall, Robinhood is a user-friendly app for those who want to be in full control of their investment strategy. 

 

Acorns®

If managing your portfolio isn’t for you, Acorns ® may be a more suitable option. Acorns is an app primarily focused on helping you save and grow wealth by investing your spare change. Once you link your bank account, Acorns will track your purchases and round them up to the nearest dollar, depositing $5 worth of spare change at a time. You can set the round up to double, multiply by five, or multiply by ten if you’re interested in stepping up the amount you invest. When you first begin, the app provides you with a questionnaire that helps determine your investment goals and strategy, allowing you to choose a more moderate or aggressive strategy. 

 

In addition, the app gives you small rewards for making purchases with specific companies, like Walmart, Chevron, Uber, and more. Acorns is a great way to passively invest your spare change.

 

Stash®

Allowing you to invest with as little as $5, Stash ® is a great app for learning how to invest effectively. Like Robinhood, it allows you to be in control of your investments, however it provides a bit more guidance as you move along by helping you pick your investments based on your goals. The app is filled with articles and tips that help strengthen your investment decisions, also providing themed categories of investments, such as innovation or environment. 

 

Betterment®

Betterment ® is a leader among robo-advisors, providing value to hands-off investors. The app charges just 0.25% for asset management annually, with no minimum amount to start investing. Betterment takes a traditional approach to investing by diversifying your portfolio based on your decided level of risk tolerance and your goals. They offer more portfolio options than some of the simpler applications, making it a strong tool for individuals who know what they want out of a robo-advisor. It’s generally less expensive than other robo-advisors and uses strong algorithms to manage assets effectively and provide strong returns. 

 

TD Ameritrade®

If you’re interested in doing more than getting your feet wet, TD Ameritrade ® is an app that borders between being suited for the beginner and intermediate-level investor. The app, offered by one of top US brokerage firms, offers a powerful trading experience, allowing you to customize dashboards and screens, access research and advice, receive market news and alerts, and watch educational videos on investing. It’s definitely more suited for the active investor who wants to make adjustments to their portfolio on a daily or weekly basis. While they previously charged $6.95 per online equity trade, they recently released commission-free trading as well. While it may not be the best place for everyone to start, it’s a great place to consider moving to once you’ve established your investment strategy and are working with a larger portfolio. 

 

With these apps, investing doesn’t have to be overwhelming. You can invest passively, schedule deposits, invest spare change, or dive in and control your investing destiny – whichever feels right for you. You should always use caution when investing your hard-earned money, however, getting started with a few dollars now and learning the ropes could be worth something to you in the future. We hope that at least one of these apps provides you with value and helps you get started in your investment journey.

 


 

Notice About Third Party Websites: 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.

High Income, High Debt: How to Stop the Spiral

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By Caroline Farhat

 

A lot of people think if you are earning a high income you must have lots of wealth and no debt. However, that is not always reality. In fact, for some people, earning a high income can mean higher amounts of debt. If you are in these circumstances, read on to find out how to stop the spiral.

 

High Income, High Debt

There are many reasons that higher-income households can have higher debt. One reason is higher earners like doctors and lawyers may have higher debt due to the amount of student loans needed to obtain their education.

 

But the big problem lies with the high earners who have high levels of debt and no assets to show for their income. A 2015 Nielsen study found 25% of American households earning $150,000 or more were living paycheck to paycheck. These are the earners who may be going down a spiral. There are reasons for this spiral that can be addressed to stop it. Some reasons include:

  • Desire to spend – A person earning a high income feels like they have a lot of money they can spend and deserve to spend. However, this can cause some to spend up to the total amount they bring home or worse exceed the amount, causing credit card debt or the need for personal loans.
  • Keeping up with the Joneses – Always trying to keep up with your group and show “wealth” you may not really have. This can be seen in the form of always buying the latest gadget, flashiest car or taking a trip to the latest popular destination. Even if you can afford some of these items now, feeling the need to keep up can be dangerous because you never know when a time may come that you may not be able to afford your lifestyle due to sudden job loss or a change in financial circumstances. 
  • Lifestyle creep – Increasing your expenses when your income increases because of your wants or perceived new needs. For example, the thought that now you need a more expensive and larger house because you can afford it with your higher income.

 

How to Stop the Spiral

Did any of this resonate with you? If so, don’t panic. You can always stop the spiral of high income and high debt. Below are some actionable steps you can start today.

 

1. Determine your fixed expenses

Fixed expenses are the expenses that are mostly out of your control and remain constant every month. They include your rent or mortgage, car insurance, internet bill, cell phone bill, utility expenses (although these may not be the same each month you can figure out the average), and loan payments. Knowing these expenses will help you complete the next step.

 

2. Create a budget

You knew this was coming! Now that you know your fixed expenses you can create a budget. There are different methods you can use to create a budget. One budget that many people find easy to follow is the 50/20/30 rule. The basic principle is subtract your fixed expenses from your take-home pay. Then put money in savings for your emergency fund, retirement, or whatever you determine is most important to you. The rest of your income is used to pay your variable expenses. These are the expenses you have the most control over, like your food budget, restaurants, and clothing shopping. 

 

3. Try to reduce your expenses.

The easiest expenses to try to reduce will be the ones completely in your control, like eating out less. But there are some ways to reduce your fixed expenses.

 

Refinance student loans – Have a high monthly payment? Refinancing may be a good option. Refinancing student loans can reduce your monthly payment and save you in interest costs over the life of your loan(s). You can refinance private student loans and federal student loans. Check out our student loan refinance calculator to determine what your potential savings could be.*

 

Negotiate your bills – Have a high internet bill? Or maybe you are still paying for cable. Check for any deals with your provider and compare with competitors. Better yet, think about whether you really need the service. If you are a die-hard Netflix fan, it may be time to cut the cable cord.

 

4. Pick a method to attack your debt.

There are two methods financial experts recommend to pay off debt: the snowball method and the avalanche method.

 

Snowball method – Use any extra money to pay off your lowest loan first. Once the lowest loan is paid off you take the payment you were making to that loan and apply it to the second-lowest loan. Here is an example of how it works:

  • If you have a student loan of $25,000 with a payment of $290 and an auto loan of $15,000 with a payment of $275 you would focus on paying the auto loan off first. You would make both minimum payments but if you have an extra $25 per month to apply to a loan you would apply it to the auto loan. Once the auto loan is paid off you would apply the payments of $275 and $25 to your regular minimum student loan payment of $290 and now be paying $590 per month to your student loan ($275+25+290 = $590). You would continue this until all debts are paid off.

 

Avalanche method – List your debts in order of interest rates and start paying off the debt with the highest interest rate first. Add any additional payments to the loan with the highest interest rate. Continue paying the minimum on all other loans. Once the highest interest rate loan is paid off you apply that minimum payment to the next highest interest rate loan. 

 

5. Put salary increases into savings

Don’t give into the lifestyle creep. If you were able to pay all your expenses before your salary increase, you can continue to live off your old income amount and save the increased amount. The difference can be put into a retirement account or savings account, thereby increasing your wealth. The best way to do this is to set up an automatic transfer so that the extra money never hits your bank account. If you can’t see it, you can’t spend it!

 

Bottom Line

If you have realized you are in a high income, high debt spiral, there is hope of stopping it. With some work, you can get your finances in order and begin to see your savings grow.

 


 

*Subject to credit approval. Terms and conditions apply.

 

Notice About Third Party Websites: 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.

Why Experiences are the New Measure of Wealth

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By Caroline Farhat

 

For the past half-century of American history, material objects have been a primary source of value to the working class of Americans. Following World War II, many Americans dreamt of owning a suburban home, driving a car, and joining in on the baby boom. The U.S. saw significant expansion through the 40s and 50s, gross national product rose dramatically, as did personal expenditures on things. By the end of the 50s, the majority of families owned a television, a car, and a home. By 1960, blue-collar workers became avid buyers, enjoying more disposable income through the 1970s.

 

Today is a different story. A study found 74% of Americans value experiences over things. The reason for this shift in ideology can be tied to a number of things, such as younger adults having watched the effects of the 2008 recession and, as a result, feel less of a need to be tied to material objects. This is leading to many millennials skipping the mall to attend music festivals, skipping homeownership to live in the city, and putting off having children for added freedom. Rather than defining wealth by what they have, many young adults are measuring wealth by what they can experience.

 

Typical Measure of Wealth

Wealth is typically measured by calculating a person’s net worth. This is calculated as assets – liabilities = net worth. Assets can include homes, cash, retirement accounts, and stocks. Liabilities can include all debts such as student loans, auto loans, and mortgages. Take a look at this example to calculate net worth: 

  • If a person owns a home valued at $500,000, a car valued at $22,000, they have $15,000 saved in a bank account and $33,000 saved in a retirement account, they would have a total of $570,000 in assets.
  • If there is a mortgage on the home for $200,000 and a car loan for $5,000 and student loan debt of $30,000, this person would have liabilities totaling $235,000.
  • This person’s net worth would be $570,000 – $235,000 = $335,000.

The net worth that is considered “wealthy” is subjective, however, a survey conducted by the Federal Reserve in 2017 found that the median net worth of families was just $97,300. Calculating net worth allows a person to see numerically how much wealth they have, but it is not the only way people define wealth. 

 

Why Millennials Value Experiences

Calculating net worth may be considered an old measure of wealth by millennials (people born between 1981 and 1996), but why?

 

To begin with, millennials value relationships with others more than material objects. The benefit of being able to experience things with their friends and significant others seems to outweigh the benefit of accumulating wealth.

 

While millennials do seem to understand the value of saving money, they also understand the need for work-life balance. A study conducted by Deloitte found 57% of millennials say traveling is their top aspiration. This supports the notion that being able to enjoy life and experiences is a measure of wealth to millennials. This supports the notion that being able to enjoy life and experiences is a measure of wealth to millennials.

 

Another reason for the shift in measuring wealth is millennials are facing financial struggles that previous generations did not experience. According to a study by the Pew Research Center, more millennials have student loan debt compared to previous generations, and the amount of student loan debt they have is also greater. If you are dealing with student loan debt and high monthly payments, you may feel you are not able to purchase a home, start a family, or build the traditional standard of wealth. But even with a low net worth, millennials can partake in great experiences that add value to their life and make them feel wealthy. 

 

Options to Build Your Wealth

If you have student loan debt, whether federal or private student loans, you may be feeling you will never be able to grow your net worth or have the life experiences you want – but that is not the reality. Student loans do not have to hinder you from growing your wealth. Check out these options to build your wealth:

  • Start a side hustle. Earning extra money outside of your day job allows you the freedom to use the money how you want. It doesn’t have to pay the bills, it’s extra money that you can use to travel or put away for retirement. Plus your side hustle may lead you to passions and causes that are important to you which only further enhances your life!
  • Refinance your student loans. When you refinance your student loan you may be able to lower your monthly payment and save interest over the life of the loan. The extra money you have monthly could go towards experiences to enrich your life and extra savings in the bank for emergencies. How much savings can you expect a month? Check out our student loan refinance calculator on our site to get an estimate of your savings.* Student loan refinancing is easy with the right lender. With ELFI you never pay an application fee or origination fee. You also receive a personal loan advisor who guides you through the process of refinancing.
  • Create a zero-based budget. What if you were told to “spend” all of your income each month?  This might sound crazy at first, but many financial experts regard this method as the most effective one out there. The concept of zero-based budgeting is that your monthly income minus your expenses should equal zero. The idea is that each dime you make should have a “job” and fall into a certain category in your budget. For example, if your take-home pay is $5,000, you have exactly $5,000 to spend, save, or invest. This can help you take control of your finances and ensure every dollar is put to good use.
  • Use an effective debt-payoff strategy. Using the debt snowball or debt avalanche method of paying off debt can make payoff simpler and more effective. The debt snowball involves paying off debts with the lowest balances first, then moving onto the next smallest balance. The debt avalanche method involves paying off the largest debt first, then moving on to the next largest balance. Both strategies have their pros and cons, but both will also lead to a debt-free life.

 

Bottom Line

Wealth is more than just the possessions you own or the car you drive. Experiencing a full life with great relationships and experiences can lead to happiness overall. By getting a handle on your student loans not only will your typical financial wealth increase, but so can your experiences in life. No matter how you measure wealth, you can achieve it while paying your student loans!

 


 

*Subject to credit approval. Terms and conditions apply.

 

Notice About Third Party Websites: 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.