Is it Possible to Get Ahead Financially While Paying Down My Student Loans? (veezq-33053)

There are different theories about building wealth while paying off debt. Here's some insight.

You need to first assemble all of your paper work concerning your debt. This would include your student loans, credit cards, mortgage, monthly utility bills, and insurance. This will give you your full monthly payment picture. Next you need to remove those that you can use as tax deductible items.

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Those are the loans that you will want to pay off last. Since you now have a total picture in front of you of your monthly obligations, the strategy then needs to be worked out. Remember almost all debt is bad debt.

However, you can make some of that debt work for you to your advantage. And these are the bills or loans that the government lets you use to write off as tax deductions. Since we already know that they are your mortgage and your student loans, these are the two that we will form a plan to let that money work for you.

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First, let's discuss the other monthly bills. The utility bills have no interest rate and should be paid on time monthly to keep up good credit (not to mention TV, heat, water, etc.). However, the bills that hurt you the most are your credit cards and your department charge cards.

They come with an extreme high interest rate with no good to you other than they eat a fat hole in your pocket if they are not paid off in full each month. From here watch your charging habits so you no longer throw away money. Let's take a look at two plans and how to make your money work for you.

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You have graduated from college with a loan due of $20,000. You now have a good job and can afford an extra $100 each month to put on that loan. The loan payment is $202 and with that extra $100 you are able to have the entire loan paid off in full in six months.

Now you take the entire amount of $202 and $100 and invest into savings. Since you were given a 10 year period to pay off your loan we will use that as a marker. At the end of ten years you will have in the bank a savings of $16,728.

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Now let's look at it from another direction. You decide to make the monthly payment of $202 and instead of putting that extra $100 on the loan you decide to put it directly into the bank.

You realize that you can still use it each year as a tax deduction, so why not. At the end of the ten year period you now have paid off your school loan and you have a total of $21,700 in savings that you have invested.