Dave takes a call from Stockton from Arizona, and he just recently graduated but has $200,000 in student debt at a 7% interest rate. So he is in a bit of a bind. His question is how to get out of this debt but still have a home. He believes that Home debt is ok because it’s an investment. But if a home will cost him as much as paying his student loan off, is it better to rent or compile his debt?
Dave quickly does the math and figures he will be paying over $15,000 a year over the course of 10 years. Stockton is making 80k a year, and Dave thinks that’s just where it starts that he should be growing every year. Meaning that he will be able to pay more and clear his debt. The trick is to live now on the way less than your means because if Stockton can live on 35k a year, his debt will be cleared before the interest gets out of hand.
The trouble with this plan is where Stockton currently lives; the lower-income housing available are not in good neighborhoods. In addition, he currently pays $1600 a month, which doesn’t include all the extra fees that go along with living. He wants to provide a good life for his family, but Ken Coleman adds this little tidbit of information for Stockton that being a homeowner is quite expensive when it comes to repairs and other costs.
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