🍆 The d word 🍆
Hi friends!
Welcome to Better Have My Money, Amber Jamieson’s Monday night newsletter, about stocks, investing, and making $$$.
I’m Isabelle Chapman, and I constantly pester Amber with my money questions. She knows WAY more about investing than I do (ed: untrue!!!), however there is something I know a thing or two about: student debt.
2020 is upon us, and I have been thinking about a few New Year’s resolutions — one is to make fewer plans, but my money resolution (and yes you should still email or tweet us yours) is to cut down my student loan debt BIG TIME this year.
I am lucky enough that I didn’t have to take out loans for undergrad, but I did need some extra cash for graduate school, so here we are. On the plus side, 1000% would not have the life I’m currently living if I hadn’t gone to Columbia and gotten a journalism degree. On the other hand, I pay hundreds of dollars a month for it.
I’ve been chipping away at my student debt for five years now. I am by NO means an expert — but here are a few of the tips and tricks I’ve learned along the way.
Enroll in autopay. Seriously. For me, I chose the 20th of every month — this means that your student loan payment comes out of a different paycheck than your rent or mortgage. When I signed up for autopay, I got a .25 percentage point reduction on my interest. It may not sounds like much but it’s hundreds if not thousands of dollars over the course of your life as you pay the loans off.
Every check from Grandma should go into the loan. Did you get a bonus at work? Or a big chunk of money back on your tax return? Put it into the loan. I know that new pair of shoes is tempting, but just think of how rich you’ll be when you finally pay off this loan.
Increase your loan payment when you get a raise. You know you can live on what you were getting paid before. Say you get a $5,000 raise. After taxes, that’s still a big chunk of money that you can put into your loan each year.
Pay off the loans with higher interest first — it’ll mean you pay less over time.
Above all, get to know your loan. It’s easy to put your head down, pay the minimum payment each month and hope that it goes away. But if you get to know your interest rates and loans, you’ll be able to devise a strategy that will help you pay down your loan faster.
Should you invest or pay off your student debt first?
It’s hard to know how much to invest when you have a loan. I try not to let my loan get in the way of how much I put into my 401K. My employer matches a certain amount how much I contribute, so I’ve maxed that out.
I also put a a few hundred bucks a month into individual stocks that I’m interested, and then have two investment accounts — one for me and my partner that we both contribute to, and one for myself. Then I also have a savings account that I contribute to each month. I don’t put a ton of money into those, but I want to be prepared in case of an emergency.
And as always, donating your money and time is important as investing it. I ran the Chicago Marathon for American Cancer Society in October to honor my granddad who died of lung cancer last spring, so I’d ask you all to think about donating this week to the American Cancer Society. Your donation is tax deductible (duh) and goes towards the fight against cancer.
Do you have questions about debt? This is a shame free zone. Feel free to DM me on Twitter at @Isa_Chapman.
Get that debt paid,
Isabelle Chapman
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As always, if you've got any questions about stocks, this is a shame free zone. Just reply and ask away.