As the old adage goes, "the 20s are for learning and the 30s are for earning." For most people, their 20s are a time of growth and development, not so much for wise financial decisions.
Young folks fresh out of college are notorious for spending beyond their means and making spur-of-the-moment career changes.
Many people in their 20s buy fancy cars, take expensive trips to luxurious locales, and don't even thinking about saving money for the future.
But not everyone is that irresponsible. I made smart financial moves in my 20s that set me up for a lifetime of financial success.
I had a savings account opened by age 21, a 401k by age 24 and no credit card debt at age 29.
However, the financial move that now, looking back, I'm most proud of was definitely my decision to consolidate the student loans I had opened to get myself through college.
If I had put all my student loans onto credit cards, I may have ended up saddled in debt forever. That said, I'm glad I decreased my monthly payments by consolidating.
I went to Hofstra University, which is by no means an inexpensive school to attend. Hofstra undergrad tuition was approx. $17,000 per term, so I could have very easily fallen into some serious debt if I did not consolidate my student loans.
My decision to consolidate essentially centralized my loans to just one monthly bill, and lowered my monthly payments to a reasonable rate. It also allowed me 30 years to pay back, as opposed to a much stricter time frame that a credit card company would have provided.
Increasing my length of repayment period ended up costing me more in interest, but it was the best option because now my monthly payments are much easier to deal with. I could have had $70,000 to pay back in a ten-year frame, but now I can take my time and pay it off over 30 years.
Consolidation also took away some of the stress associated with receiving multiple monthly bills. Before I consolidated, it seemed like I was getting a different bill every week. I had direct subsidized loans, a federal Perkins loan and an FFEL program loan, coming through in the mail in what seemed like almost every day.
I used the Federal Direct Consolidation Loan online calculator to make sure I received an accurate estimate for my repayment plan, and it was smooth sailing from there on out. The Federal Student Aid website also guided me in the right direction to help me learn more about student loan consolidation.
Student loan consolidation may not be the best option for everyone, but it was definitely the best financial decision I made in my 20s.
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- Financial Aid