25 Apr Using Your Line of Credit to Eliminate Your Student Loans – Summary
Too often students don’t realize that they at the beginning of their financial journey they can take advantage of many of the same strategies people use later in life. Learning to use simple strategies today ensure you’ll achieve your dreams tomorrow. So what exactly have we learned over the last six posts?
Keys to Getting Rid of Your Student Loan
Create Your Dream – Without clearly defined dreams budgeting will seem like a chore. Once you’ve created your dream, know the cost of each dream and how much you’ll need to save. To get started, use my free template, ‘These Are My Dreams’.
Build Your Emergency Fund: Your first step is to save two month’s living expenses. You want to have enough saved for the unexpected. Getting rid of debt doesn’t mean you should stop saving.
Put Your Income to Work –You are going to use your line of credit for one reason: to build wealth. Ignore your bank’s advertisements. Leaving your cash sitting in a checking account only helps your bank build their profits. Using your income and your bank’s money is a great way to get rid of you debt while paying a minimal interest. Imagine spending just $43 and saving $4,500 in interest! You’ll move your income from your checking account to your line of credit by making a loan payment equaling the income that’s deposited in your checking account.
Apply for a Line of Credit – Using this strategy you don’t need a large line of credit. You’ll only need about 1.3 times the amount you deposit in your checking account each month. Remember, lines of credit are not equal. Some banks attach fees and are cumbersome. Read my series, ‘Shopping for a Line of Credit’. To help familiarize you with their jargon, I’ve created a free Line of Credit Shopping Comparison Sheet.
Schedule Your Payments to the End of Your Billing Cycle – Ask yourself the question, ‘How would I manage my money if my bank were to pay me 20 percent interest? You would deposit your money as quickly as possible and you’d schedule to pay your expenses as late in your line of credit’s billing cycle. Here’s a tip: set your billing cycle to begin on the day you regularly make your largest bank deposit. Your first withdrawal for your additional loan payment will be on the same day your income is deposited.
Simulate Using Your Line of Credit – This is a new concept. Large corporations routinely use it; however, it’s not been taught to consumers. It’s regularly used in Australia. So, take your time to become familiar with each step of the process. Review my YouTube video three part series, Picture Your Line of Credit and use my tool, Create Your Own Line of Credit to visualize your savings.
Use CashMap to create your personal scenarios. There’s no right or wrong answer. Create your budget, schedule your paying your expense, project your future cash flow and over the next fifteen years see your savings grow and your debt retired. To learn more, review the articles in the CashMap section of my website.
Personal Guarantee – Feeling a bit unsure? You have nothing to lose! I’ll help you create your plan to put your lazy dollars to work. If I can’t help you create a plan that can save you 40 times my consulting fee for your mortgage or ten times my fee for your student or auto loan, I’ll refund your money. It will take between 90 minutes and two hours of personalized coaching to get you on your way.
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