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With 45 million student loan borrowers in the US, the student loan debt is a huge burden for many. The average student graduates with $37,500 in debt. So where to even begin?
Yahoo Finance had a team of experts answer your questions. We covered it all in our livestream, and are answering a few more of your questions below.
Yahoo Finance reporter Jeanie Ahn teamed up with HuffPost reporters Casey Bond and Michael Hobbes, and Journey to Launch podcast host Jamilla Souffrant to answer your questions. We covered it all in our livestream, and are answering a more of your questions below.
RELATED: 13 pieces of financial advice you can't afford to miss:
13 pieces of money advice you can't afford to ignore
13 pieces of money advice you can't afford to ignore
1. Pay yourself first
"People still don't grasp the fact that they need to save a dime out of every dollar," author and self-made millionaire David Bach told Business Insider in a Facebook Live interview. He said the average American who's saving money is saving just 15 minutes a day of their income, when they should be saving an hour.
Bach noted troubling research from the Federal Reserve that revealed nearly half of Americans wouldn't have enough money on hand to cover a $400 emergency. Yet, he continued, millions of those people will buy a coffee at Starbucks today and expect to buy the new $800 iPhone next year. Americans have money, he says, but we aren't saving it.
So get on the "pay-yourself-first plan," as Bach calls it, and automatically save an hour a day of your income. "When that money is moved before you can touch it, that's how real wealth is built," he said.
2. Beware of lifestyle creep
There's a lot of pressure in your 20s and 30s to keep up with your friends. Maybe they're buying a nicer car or a house, but if you're not in the financial position to keep up, don't try.
"I always refer to it as 'lifestyle creep' because one of the big things that people can do — that's an advantage to them — is keep their fixed expenses somewhat stable and reasonable for what they make," Katie Brewer, a Dallas-based certified financial planner who founded Your Richest Life, told Business Insider.
Planning for your recurring costs — like mortgage, rent, a car payment, and insurance — ensures that expenses won't creep up on you and derail your financial future. Of course, Brewer said, if you're making good money you should have the freedom to spend it how you wish, as long as your lifestyle doesn't overtake your income.
In short: Live below your means.
3. Take advantage of an employer-sponsored 401(k)
Putting money into a retirement plan as early as you can, no matter the amount, is a smart and easy way to pay yourself first.
If your company offers a 401(k) plan, take advantage of it. In some cases, employers will offer a contribution match. "That means the company contributes a set amount — say, 50 cents for a dollar — for every dollar you contribute up to a specified percentage of your salary," Beth Kobliner writes in her book "Get a Financial Life: Personal Finance In Your Twenties and Thirties."
"That's free money, equivalent to a 50% or 100% return. There's nowhere you can beat this!" she writes.
Plus, 401(k)s allow you to contribute your pre-tax money, meaning the more you contribute now, the greater the growth (thanks, compound interest) and the more money you'll have down the road, though you will be taxed when you withdraw the money for retirement. For 2017, the maximum contribution to a 401(k) is $18,000.
4. Invest in the stock market, just don't try to time it
"No one can time the market, so know that if there is a decline, it's going to bounce back. Over time, being in the market pays off more so than staying out of it," Michael Solari, a certified financial planner with Solari Financial Planning, told Business Insider.
Sometimes known as "set it and forget it" investments, these diversified funds automatically adjust their asset allocation and risk exposure based on your age and retirement horizon. Early on, when the need for that money is still a couple decades away, the fund will adopt a more growth-focused strategy. As you ripen toward retirement, it dials back the risk.
You may not get the average annual return of 11% in your target date fund — given you'll be invested in a blend of stocks, bonds, and alternative assets — but if you get even 6% per year, an original $10,000 investment will be worth more than $32,000 in 20 years without you having to do a single thing. Compare that with $12,200 in your high-yield savings account or $10,020.20 in your traditional savings account.
kid put coin to piggy bank on the vintage wood background, a saving money for future education concept and copy space for input text.
5. Build an emergency fund
Let's face it: It's really not a matter of if you'll need to fork over cash for a car or home repair, child expense, or medical emergency, but a matter of when.
"No matter how well you plan or how positively you think, there are always things out of your control that can go wrong," Bach writes in his bestseller "The Automatic Millionaire."
"People lose their jobs, their health, their spouses. The economy can go sour, the stock market can drop, businesses can go bankrupt. Circumstances change. If there's anything you can count on, it's that life is filled with unexpected changes," he wrote.
Most financial planners suggest stockpiling anywhere from three to nine months worth of expenses in an emergency fund that you can turn to when in need. If you don't have savings at the ready, you run the risk of having to rely on family or friends for help, or worse, falling into debt.
6. Pay off your credit card balance in full every month
Sometimes a credit card can feel like free money, until you're slapped with the bill. Even then, most credit cards only require you to pay 1% to 3% of your balance each month, which can be an alluring prospect if your budget is tight. But consistently paying the minimum could cost you a fortune in the long run, damage your credit score, and affect your ability to qualify for a mortgage.
Not only did she swipe her credit card with no reservations and adopt the bad habit of paying just the minimum amount — Torabi said she once forgot to pay the bill all together.
She remembered incurring a late fee that showed up on her credit report and gave her a true "wake-up call." The incident happened before she "realized the power of automating" her bills, a practice that can save you money on late fees and relinquish you from remembering due dates and the embarrassment of missing a payment.
Though you're "never going to kill your financial future" by accumulating money, Brewer says, "you're losing out on opportunity costs by having money sitting around ... especially if it's sitting in an account making barely anything in interest."
If you're risk-averse, one way to manage savings overflow is to move your money into a high-yield savings account, where you could be earning 1% interest on your money, rather than the 0.01% earned in a traditional savings account. Or, as previously mentioned, stick it in a low-cost target date fund and see your returns balloon over time, with little to no work required.
8. Have more than one credit card
It may seem financially reckless to have a wallet full of credit cards, but it's actually smart. According to John Ulzheimer, credit expert at CreditSesame.com, having a single credit card can damage your credit score, thanks to something called your credit utilization ratio — that is, how much of your available credit you're actually using.
"That percentage is very, very influential in your credit score," explains Ulzheimer. "People say that you're in good shape if you keep your utilization within 50% of your available credit, or 30%, but really, it should be below 10%."
Available credit counts all the cards you have: If you have one card with an $8,000 limit and one with a $6,000 limit, your total available credit is $14,000, even if you only spend $1,000 a month. With a single card, you have no unused credit cushioning the impact of your spending. The closer you get to your limit, the harder the hit on your credit score.
"Say you have $5,000 of credit card debt at an 18% interest rate. Say you happen upon $5,000 of money. If you take some of the advice out there, and split the use of that $5,000 (half to establish an emergency fund, half to pay down credit card debt), you still have $2,500 of credit card debt and $2,500 of money sitting in cash.
"The $2,500 of credit card debt at an 18% interest rate costs you $450 a year. The emergency fund earns almost nothing in interest. So you're out $450."
Bottom line: You'll save more paying off the debt than you'd earn if you invested it, whether in a high-yield savings account or the stock market.
10. Always be insured
Every American citizen is required to have health insurance, or be fined hundreds of dollars by the IRS each year. Kobliner advises signing up for insurance should be "your No. 1 financial priority" because it'll protect you from unforeseen accidents or illness, and prevent yourself or your family from going bankrupt in the case of an emergency.
If your employer offers health insurance, take it, Kobliner says. It's almost always cheaper than buying a policy on your own (but keep in mind that you can be covered by your parent's insurance until age 26). Before signing up, though, make sure you understand the cost and extent of the plan, including your deductible, or how much you'll be paying out-of-pocket before insurance takes over.
If you do end up needing to purchase a policy on your own, head over to healthcare.gov to compare plans and pricing.
11. Track your spending
Business Insider's Libby Kane has written, edited, and read hundreds, maybe thousands, of stories about money during her career, and says she's learned that "the best, most critical first step you can take to improve your finances is to track your spending."
Keeping tabs on where your money is going, whether fixed expenses like rent or mortgage payments and transportation costs or discretionary spending like dining out and travel, is a crucial part of mastering your money.
"Whether you owe money to the tax man at the end of the year or not, it's always a smart move to file your taxes," Kobliner advises.
And be aware that you can save money on taxes by taking advantage of deductions, or the specific expenses you're allowed to take out of your income before calculating your owed taxes. The standard deduction — $6,300 for singles and $12,600 for couples — is a good place to start, Kobliner says.
You can also itemize deductions to maximize your savings by listing specific deductions, including expenses for housing costs like mortgage interest or property taxes, and charitable donations, or making use of tax credits.
And if you don't file your taxes? You could pay a penalty fee of at least $135, plus interest on the money you owe, and lose ground on your credit report, among a host of other financial consequences.
13. Be patient
When bestselling author and motivational speaker Tony Robbins asked billionaire Warren Buffett a few years ago, "What made you the wealthiest man in the world?" Buffett replied, "Three things: Living in America for the great opportunities, having good genes so I lived a long time, and compound interest."
"The biggest thing about making money is time," the investor, who's now worth more than $76 billion, said in a recent HBO documentary about his life. "You don't have to be particularly smart, you just have to be patient."
In his latest letter to Berkshire Hathaway shareholders, Buffett announced that he was on his way to winning a $1 million bet he made in 2007 that his investment in an S&P 500 index fund would outperform five hedge funds over a decade.
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Q: I have been sick for many years and have my loan deferred. Is there a way to get it legally forgiven?
Yahoo Finance Reporter Jeanie Ahn: If your medical condition has not improved and you’re unable to work because of a permanent disability, you can apply for a total and permanent discharge (TPD). If you’re eligible, you will no longer have to repay the following Federal loans: Direct Loans, Perkins loans, Family Education loans, and TEACH loans. But you need to prove to the Department of Education that you are completely unable to work and earn a living to repay these loans. Private loans, on the other hand, will be tough to get out of.
If you eventually feel better and are able to get back on track, look into one of the four income-driven repayment plans that works best for your budget:
For all of these plans, your remaining balance is forgiven once you’ve reached the end of the repayment period (typically 20 years). One thing to keep in mind is that the year your remaining balance is forgiven, you will be taxed on that amount.
Q: If I’m already on an income-based repayment plan (I’m on IBR), can I switch to another plan, like PAYE or REPAYE without restarting the clock toward forgiveness? I owe $120k and am wondering if I made the wrong choice.
HuffPost Lifestyle reporter Casey Bond: Yes, you can! According to the Department of Education’s website, if you switch from one income-driven plan to another, payments made under both plans should count toward the 20-25 years required for forgiveness (as long as you meet all the other requirements of the plan(s) as well). Also, if you switch from the standard repayment plan to an income-driven repayment plan, payments you made on the standard plan will count toward those 20-25 years of payments as well.
Q: I have $20K in savings and $40K in private student loans one year out of school. Is it wise to drain the majority or all of my savings just to see the interest savings? What are my options here?
Journey to Launch podcast host Jamilla Souffrant: Great job saving so much at such a young age! What are the interest rates on your student loans? Are they lower than what you can get if you invested some of your savings? It really depends on your debt tolerance and risk tolerance. If you want to aggressively pay off debt regardless of interest rates, go for it. Mathematically it may make more sense to invest some of that as you can earn more on that money invested than what you are paying in interest on the student loans.
Q: What’s the solution? Younger generations are totally inundated with student loan debt, and a lot of us are having a hard time seeing a light at the end of the tunnel. What has to happen for us to finally make a change?
HuffPost Business Reporter Michael Hobbes: The most important thing to do is get involved politically. States and cities are working on plans to make college cheaper. Contact all your representatives (from the city council to the U.S. Senate) and ask them what they’re doing to make college cheaper and relieve student debt. Politicians like to pretend that their hands are tied on issues like college spending and bank regulation, but that changes once they start getting pressure from their constituents. Become that pressure.
More broadly, we need to change the way we think about the economy. Twenty years ago, Harvard economist Amartya Sen won a Nobel prize for showing that no famine had ever occurred in a functioning democracy. Before, we thought famines happened because populations didn’t have enough food. What Sen showed was that famines happened because of how food was distributed — politicians took it away from the people growing it and never gave it back.
We need to start thinking about poverty, low wages and, yes, high education costs the same way. From college endowments to military spending, this country has the resources to make college free and relieve student debt. Of course it does. We’ve simply chosen to distribute it to other things and to other people.
I know that’s not much help when you get this month’s student loan invoice. But even as we all do our best to pay off our debts however we can, we need to make sure we don’t fall into the trap of thinking that this is inevitable or natural or something we’ve done wrong. We’re the only country where college costs this much. And we need to start demanding that it doesn’t.