Posts in Debt Management
How Scary is the National Student Loan Debt?
How Scary is the National Student Loan Debt?

Trends have shown student loan debt rising significantly over the years, significantly overtaking credit card debt in total debt owed by Americans. From one perspective, this feeds into the narrative that student loan debt is the biggest problem we are facing and that consumers are going crazy over education debt. I choose to look at it differently (and more positively).

  • Student debt isn’t the worst debt

  • Credit card debt is down 40%

  • Increased degree attainment

  • Broader planning reduces / increases the problem

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Debt ManagementJoshua Escalante Troesh, CFPStudent Loans, Debt Management
How should I manage the increase in my student loan payments?
How should I manage the increase in my student loan payments?

Placing your student loans in forbearance would be a mistake. The loans will continue to accrue interest, which will mean less of the money you pay at the end of the year will pay down the debt because you have extra interest payments. I would recommend exploring a few other options first (listed below) and then choosing which is suitable for your goals. You may want to hire a fee-only financial planner to run the numbers on the options and provide some clarity on what each option would mean to your retirement goals, buying a home, and other savings.

  • REFINANCE THE LOAN

  • CUT BACK ON RETIREMENT SAVINGS

  • DELAY HOME PURCHASE OR OTHER SAVINGS GOAL

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Debt ManagementJoshua Escalante Troesh, CFPStudent Loans, Debt Management
Coronavirus: What mortgage help is available?
Coronavirus: What mortgage help is available?

Resource are available to help including ways to replace your income and relief programs to help make your mortgage easier to manage. Start by identifying who owns your mortgage to determine the programs available to you.

ALSO COVERED:

  • Freddie Mac relief programs

  • Fannie Mae relief programs

  • How to request help from a bank or credit union

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Life Planning, Debt ManagementJoshua Escalante Troesh, CFPYoung Families, Starting Out, Financial Foundation, Stock Market Crash, Bear Market, Stock Market Correction, 30-year mortgage, 15-year mortgage, Mortgage, Debt Management, Corona Virus, Covid 19, Debt Relief
Is it worth paying points to buy down the mortgage interest rate?
Is it worth paying points to buy down the mortgage interest rate?

If you keep the mortgage for 30 years it is generally worth it, but almost no one does this for either their home or investment property. If you sell the property in 3 months it doesn’t make sense to pay $10k in points to get a $170 monthly savings. The question is: How long do you need to have the mortgage to make paying that fee (the points) worth it - considering the time-value of money?

Article Also Covers:

  • How to calcluate the net present value of the bank’s offers

  • How banks calculate their offers

  • Estimating how long will you keep the mortgage

  • The rate of return on alternative uses for the funds

  • Multi-decade tax planning and mortgage points

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Debt Management, Tax Planning, Life PlanningJoshua Escalante Troesh, CFPReal Estate Investing, 30-year mortgage, Tax Deduction, Tax Planning, Income Tax, Mortgage, 15-year mortgage
What should I do with the money in my savings account?
What should I do with the money in my savings account?

Generally speaking, putting the money toward paying off high-interest credit card debt is going to help you the most, then keeping an emergency fund, and finally contributing to retirement plans. There are also traps to be wary of with 0% credit cards. It would help to build a complete financial plan considering your entire financial picture including. . . .

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Debt ManagementJoshua Escalante Troesh, CFPSavings, Debt Management, Debt payoff, Credit Card Debt, Financial Foundation, Starting Out
Should I use money from my 403(b) account to pay off my credit card debt?
Should I use money from my 403(b) account to pay off my credit card debt?

While the credit card company charging 16% interest is annoying, taking money from your 403(b) or any other retirement account to get rid of the debt may negatively impact you financially. Even though you can take the money out without the 10% penalty, you would still have to pay taxes on the money. You would likely lose money on the deal based on how the math works.

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Retirement Planning, Debt ManagementJoshua Escalante Troesh, CFPCredit Card Debt, 403(b), Retirement Planning
How do I find the right financial advisor for me?
How do I find the right financial advisor for me?

Finding the right adviser is difficult but not impossible. You will want to research advisers and then set up appointments with at least three or four of them. An adviser should be a fiduciary, should not be a commissioned. . . .

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Life Planning, Investing, Retirement Planning, Tax Planning, Insurance Planning, Estate Planning, Debt ManagementJoshua Escalante Troesh, CFPFinancial Foundation, Starting Out, Building Wealth, Managing Wealth, Retirement & Legacy, Retirement Planning, Financial Advice, Fiduciary, Fee-Only, Financial Planner
Should we invest in stocks or pay off student loans with money gifted to us from our wedding?
Should we invest in stocks or pay off student loans with money gifted to us from our wedding?

I encourage the two of you not to consider this as an either/or situation, but instead use the money to provide for multiple goals. Focus on multiple goals to help you achieve both financial stability and a happier life . . . .

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Retirement Planning, Debt ManagementJoshua Escalante Troesh, CFP403(b), Pension, Starting Out, Marriage, Financial Foundation, Building Wealth, Student Loans, Retirement Planning, Emergency Fund
I want to invest some of my savings with a long-term strategy to use to pay back the loans I will be taking out for school; what kind of investment strategies or accounts should I consider?
I want to invest some of my savings with a long-term strategy to use to pay back the loans I will be taking out for school; what kind of investment strategies or accounts should I consider?

Before we discuss the investment opportunities for paying back the loans, start by talking with a financial planning specialist to identify additional financial aid opportunities to offset the schooling costs. Although it's great you . . .

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Investing, Debt ManagementJoshua Escalante Troesh, CFPStarting Out, Financial Foundation, Student Loans, 529 Plan, Debt payoff, Debt Management
Will my husband's financial advisor be able to learn about my personal credit card debt when reviewing our finances and joint tax return?
Will my husband's financial advisor be able to learn about my personal credit card debt when reviewing our finances and joint tax return?

No, your financial adviser will only have access to information approved and provided by you and your husband. This information may come out if you and your husband were to submit your credit reports to the adviser for. . . .

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Debt Management, Life PlanningJoshua Escalante Troesh, CFPYoung Families, Debt payoff, Credit Card Debt, Debt Management, Starting Out, Choosing an adviser, Budgeting
Should I take money out of my 401(k) to pay off my house and save money on the mortgage payments in retirement?
Should I take money out of my 401(k) to pay off my house and save money on the mortgage payments in retirement?

The answer to this question will also depend on how much money you have in your 401(k), what your Social Security benefit is expected to be, and how much your annual expenses will be in retirement. If you have a sizable 401(k) (think more than 15x to 20x your annual . . . .

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Retirement Planning, Debt ManagementJoshua Escalante Troesh, CFPRetirement Planning, Retirement & Legacy, Managing Wealth, 30-year mortgage, 15-year mortgage, 401(k), Social Security
How should I get out of debt?
How should I get out of debt?

Other than the credit card debt, your other debt and your housing costs actually look quite good. If you can get the credit card debt paid off, you'll be doing very well financially. Your best bet is to make minimum payments on your student loans and your car loan and put everything you can . . . .

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Debt ManagementJoshua Escalante Troesh, CFPDebt Management, Starting Out, Financial Foundation, Credit Card Debt, Student Loans, Stafford Loan, Debt payoff, Budgeting
Do Credit Cards Charge Interest on New Purchases If One Is Paying Off a Balance?
Do Credit Cards Charge Interest on New Purchases If One Is Paying Off a Balance?

When credit cards carry a (any) balance they charge interest on the entire amount, even purchases, on a daily basis. So there is a difference, because the client in scenario B would accrue interest daily on the purchases they made that month, while in scenario A they are only accruing interest . . . .

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Debt ManagementJoshua Escalante Troesh, CFPCredit Card Debt, Starting Out, Financial Foundation, Young Families