The Power of Your Dollar

Recapturing YOUR Time & YOUR Interest

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Putting Yourself at the Center of Your Repayment Strategy

What does it mean to put yourself at the center of your college loan & debt repayment strategy? Traditional mindsets regarding your debt repayment strategies puts your lenders first. To put it simply, your dollars are working for them before they are working for you.

When you make a payment on a debt, either your minimum payment or any additional payments on a monthly basis, you’ve lost any further opportunity to benefit from that dollar.

Traditional strategies tell you to cut back on your lifestyle and save up cash to spend in bulk to avoid debt. Or, they tell you to take out loans to build your credit and make large payments on those loans to avoid interest accrual. Both strategies work if we assume that life doesn’t happen and that anything unexpected or un-planned doesn’t derail your influx of cash flow.

Traditional Thinking...

Upon graduation, there are generally 3 parts that alumni focus on financially: Debt Repayment, Savings, & Emergency Fund. You are in charge of selecting the debt repayment plan that best fits your current situation (but if you push it off close to or at the end of your 6-month grace period after graduation, you will be automatically enrolled in the 10 Year plan). Each plan has specific caveats that, depending on what your current situation is and what your priorities & goals are, have different short-term & long-term effects.

Most graduates know to fund their savings, but fewer realize that their savings and an emergency fund are two separate accounts with two different purposes.

Building Your Foundation - with your goals at the center.

Building your savings should focus on future/goal expenses such as buying a car, taking a vacation, or purchasing that expensive saxophone you’ve been eyeing since the 8th grade. Whereas, the financial planning industry standard for an emergency fund is that you have 6 months’ worth of basic living expenses on hand.

Eliminating your debt following traditional thinking is what led us to approximately $1.6 trillion in college debt as a country (21 years on average to pay off a bachelor’s degree), 30% of graduates moving back home, and an average total savings of approximately $8,500 for singles under 34.

Without your dollars working for you, being able to accomplish multiple jobs at the same time, the disruption of your cash flow can set you back further than anticipated when life happens.

So, how can you make your dollars work as hard as you are? You put them in a triple threat position.

The Triple Threat Position

For the non-basketball fans out there, when the basketball is passed to you, your body needs to be in the physical position to accomplish three things:

  1. Pass the ball
  2. Shoot the ball
  3. Drive (or dribble) to the basket

That is being able to accomplish all three of your offensive objectives at once, a triple threat. When your dollars are positioned offensively, you’ll be able to efficiently accomplish your 3 points of financial growth at the same time:

  1. Repay Your Debts Faster & Minimize Interest Paid
  2. Build your Savings
  3. Build and Keep an Emergency Fund
Triple Threat - In Action

How can you put yourself in a position to accomplish your goals when it comes to your dollar? The concept of a Supercharged Savings Strategy. You rely on your own personal economy, with your goals and priorities front and center. This tool is fundamental in eliminating your debt faster and more efficiently while building your savings and emergency fund. There are high interest-bearing savings tools that out-perform your non-interest or low-interest savings account, without any market risk.

Some seek market returns, but the unpredictability of the stock market makes investment options a non-viable option for stable, guaranteed growth. Understanding the differentiation between stable growth and the risk/reward system in the market is vital to launching your life.

Safe Growth vs. Market Based

Author of The Black Swan: The Impact of the Highly Improbable, Nassim Nicholas Taleb, broke discretionary investing down to a simple guideline. Of your discretionary monies (cash distribution outside of necessary living expenses: i.e. rent/mortgage, food, water, electricity, lifestyle, etc.), 80% should be dedicated to a stable growth environment with little to no volatility, which allows the remaining 20% to be the “designated hitter”, aiming purely for big returns. Balancing your growth vehicles in this fashion provides breathing room and stability moving forward.

Using a Supercharged Savings Strategy gives you the freedom and the power to know what’s ahead and be prepared for when ‘life happens’. Flexibility to work with your current situation but grow alongside you as future life events happen (Buying a New Car, Buying a Home, Getting Married, Moving Out of Town, Changing Jobs/Careers, Annual Vacations, etc.). It also gives you ample opportunity to develop in the market following the 80/20 rule.

Make sure your dollars are working just as hard as you are and put yourself at the center of your college loan & debt repayment strategy.

Certified College Debt Specialists at Responsible College Advocates have the tools, knowledge, and technology to keep you on track, your goals at the forefront, and your dollars working for you and not your lenders.

Responsible College Advocates is a Free Community Resource. We believe that since you had to pay for your education, you do not have to pay for the solution to further your after-college goals. We may not be able to give you free college or forgive the college debt you have already accrued, but we can give you your personalized free solution.