How I Paid Off My Student Loans in Five Years

Student loan debt in the US is more than $830 billion. That’s too many zeros. Are you facing mounting student loan debt? Are you considering taking out a loan in order to pay for expenses? Are you just out of high school and considering taking out student loans to help you foot the extra bills that the next fours years of college will bring?

After starting college, I decided that a laptop was an absolute necessity. As I understood, student loans should be used to assist the student with expenses that are related to his or her education. Perhaps, I was getting ahead of myself assuming that a laptop was a necessity? However, I still went online, applied for a Stafford loan for $2,500 and was able to get it. Purchasing the laptop was the first big mistake that I made. Why? The laptop was not a necessity, however, when confronted by the opportunity to have new toy, I succumbed to the materialistic monster inside of me and still went for it.

Rules

Only take out a loan if you absolutely need it. Do not convince yourself that you need new clothes, gear, electronics to be successful in college. This may sound like a old fashioned person talking, but believe me, the pay back was a gruesome process that I dealt with for five years. Personally, I chose to live a life that was free of materialistic pursuits in order to pay off my debt. It has helped me sleep better at night, knowing that I do not face a mountain of expenses every month. The following of the rules and regulations should be there to get the real amount of the loan. The interested person can find more information at the official site to get the things done. 

Options

Stafford loans give you the option to pay back while you are in school or you can wait until you have completed your education. In my case, I took out a total of $8,000 in student loans over the course of three years. Most of my loan, I paid back immediately. I worked part time for two years and the full time for the next three years. I was able to always maintain my payments and paid higher than the required amount. In this way, I was able to save on interest fees and charges. Personally, I recommend applying your tax refund to pay off your student loan. It can be tempting to apply that fat government check to other things. Look at it this way, you’re getting closer to paying off something that will loom over your head like a dark cloud. It becomes lighter and lighter as you begin to pay it off.

Another option is to consult your Financial Aid Advisor about programs that you can enroll in that will help pay off your student loan debt. Some teachers in America, opt to teach in low income schools for five years. Their reward is that their student loan debt is paid off. This can be a good option for those in the education sector.

Warnings

Defaulting on your student loan or not making the minimum payment can result in huge penalties. Remember, the government does not take it lightly when you default on a loan. This is a permanent glitch on your record and will remain with you for life. Credit ratings affect your ability to get and keep a job, purchase a home or car and many more life decisions.

Finally, only take out what you know that you need. Speak to a Financial Aid Advisor and get some counselling before doing anything immediately. Being independent is a great feeling, but you don’t want it to cost you your whole life. Your education is something that can never be taken away from you. It should not cost a fortune, but it should be well worth it!

Is Lending Through Prosper.Com A Viable Investment?

A lot of different bloggers are experimenting with lending money on Prosper.com as a methodology of earning a higher rate of return than money market accounts, certificates of deposit and savings accounts.

Prosper.com is a relatively new service that allows borrows to place requests for loans and then lenders can big to fulfill part of that loan at the going interest rate. The going interest rate is determined by the free market, lenders can bid the interest rate that they want to lend the money at, and the borrowers can then choose the best interest rate form all the lenders ho have bid on their loan. Borrowers then pay their money back to Prosper, and then prosper will distribute the money to all of the lenders for that particular loan. Lenders distribute their money to a number of different borrowers to minimize the risk that they are taking. But the question remains, is lending money through Prosper.com a worthwhile investment?

In order for prosper.com to be a successful and a sustainable market place, it has to be a benefit to both the borrowers and the lenders. If either side is getting had, the system will inevitably break down. This is true for any market place though. Unlike eBay and other online market places, it’s a lot harder to determine the value of the likelihood of the borrower to repay the loan, as opposed to finding the value of a physical good that is sold on eBay.

Prosper.com finds a balance of rate of return in two different ways. First, the rate has to be better than the money that people can get other places. Lenders might put their money in CD’s and savings accounts which get 5% rates. It is also must be below the rate that borrowers can get money elsewhere, such as on a credit card. The price will fall somewhere in between there.

It’s interesting that lenders on prosper are lending money to people at rates of return less than what banks would lend money at. We don’t have better financial information than banks, and are certainly not better financiers than them! The reason people can lend money at lower rates than banks, is because they don’t have any overhead. You’re just a person with an internet connection, you don’t need to have a branch, tellers, staff, facilities and ATM machines. You’re just you!

But should we do this? In most cases, no. When you are loaning money on prosper, you are definitely dealing with sub-prime borrowers. There’s a lot more risk when lending money on prosper as opposed to putting money in the bank. If you want to take on some more risk for a higher rate of return, you’re most likely off better than investing in a junk bond fund. You could also become part owner in a bank by investing in their stock. When all is said and done, there are much less risky and much more viable alternatives. Just like what you see in Majestic Lake Financial Reviews, the feedback od customers to Prosper.com are mostly positive.