Dmitri Martin is hilarious. If you have yet to see him on Comedy Central on Wednesdays, please, do it as soon as possible.
Ok, back to the subject at hand; What would you do if you had so many student loans, you didn't know where they were all taken out and what the amounts were? Last night while talking at the bar with a few friends, one of my dear friends found out she wasn't paying a student loan and it went to collection, she didn't even knew she had it. She also began to explain that she had about twelve different loans and she doesn't even know where to send money to pay them all. Something about a lack of organization and structure in her life..
This posed a very interesting question; Would it be easier for her to ask her parents to take out a personal loan for the full amount of her student loans and she would pay them back? Or should she suck it up, get organized and pay them individually?
While those options are a possibility, here are a few of the solutions we came up with:
1. First and foremost, figure out where all your loans are from, minimum payments, balances and interest rates.
2. Check your credit ASAP (she had a collection agency call her-there could be more in the future).
3. Once you have all of the information, figure out the interest rate you need to have in order to break even or save money. This is essential when it comes to consolidating. *shown below
4. If her parents agree to her idea, go ahead with it. But be sure to keep one or two loans in her name to help her build credit.
5. If parents say no, look into other options. Like...
a. Consolidate loans that are private, consolidate government loans, consolidate personal loans (keeping in mind the interest you need to reach). This will downsize the number of loans she has.
6. If nothing else works, hire an assistant to track your expenses and pay your bills. :)
Point blank; if you have loans out that you don't have organized, get organized. Find a friend that is great at it and have him/her help you out. Information is power, and knowing everything about your loans and what loans would work best for you are essential to saving money in your future.
Although my friend isn't organized and admittedly says she can't keep track of multiple payments each month, its something she has to do better at.
If you aren't sure how to figure out what interest rate you need to save money when consolidating here is how in shorthand:
Principal Amount X % = $$ (Do this for each loan)
Add up $$ for each loan
Now, add up the principal for all of your loans.
$$/Principal= % needed to break even/save money.
Here is an example:
8,000 @ 5.5%
5,000 @ 6.0%
10,000 @ 6.0 %
$8,000 X 5.5 = $440
$5,000 X 6.0 = $300
$10,000 X 6.0 = $600
600 + 300 + 440= 1340
1340/23000 = 5.82 %
This is not that difficult. Especially if you have a calculator.
Now block off some time to sit down, look at all of your loans and your credit and figure out if you can save more money on your giant pile of debt obtained through getting a degree.
Once you have that figured out, open Excel and start to track it. Track your payments, how much principal you pay and how much your interest rate fluctuates (if it does). Tracking your loan can help you see how much you really do pay each month (and year) and give you a motivational boost to pay more than the minimum amount (as long as there isn't a penalty).
As for my friend, well, I'll get working on her sooner or later. :)