Dreaded student loans, really best friends? (Part 1)

I’m sure that if you are a newly graduated college student and are reading this you most likely have student loans in one form or another. When I graduated I had about $38,000 in commercial student loans and $20,000 in government Stafford student loans, for a grand total of $58,000 not including my to-be wife’s loans of $20,000 (one more reason why she was such a great find ;-)

I’m sure some of you are fortunate and have parents who could chip in with money and others of you worked like a dog to pay for much of school, but I know some of you, especially if you headed on to grad school, have much bigger amounts hovering over your head. How are you going to handle these often huge loans?

I have three suggestions that have worked for me and I’m sure will work, to some extent, for most of you: consolidate your loans, pay the minimum on some of your loans and make money with your loans. We’ll start with the first one today.

If you are like me you probably get several pounds of junk mail every month related to consolidating my student loans. Consolidating your loans consists of taking loans that have a variable interest rate (a rate that can change over time) and combining them into a single loan with a fixed interest rate that won’t change. The government used to offer this when Stafford loan rates were variable I locked in my Stafford loans at 3.125% as I recall. New Stafford loans have rates fixed at 6.8% so there’s no need to consolidate the new loans. If you have a Stafford loan made before July 2006 and are in school, the rate is 6.54% or 7.14% if you are out of your grace period. I would definitely consolidate if I were in either category because rates will probably rise as much as a quarter point by June.
For people with private loans there is also a new product offered by several lenders for loans that have a variable interest rate, a private consolidation loan (Citibank example). With this type of loan you can take all your private loans that usually have much higher interest rates and roll them into one with a fixed interest rate so if the interest rates go higher you won’t be affected. The only problem is that you usually have to apply to see what interest rate you will qualify for but if the interest rate you are paying is over 8.5% or so and you have great credit it could be a very good deal.

If there is anything I didn’t cover that you have a question on or if you disagree with anything let me know I’m always open to suggestions. Next we’ll look at why paying the minimum on some of your student loans is better then trying to pay them off quickly.

Well I've not posted in awhile but I had a moment at work and wanted to get some feedback on some possible business names that I've been mulling over. I am planning on starting a financial advising business as a part time endeavor for a little extra income and to keep my finance skills sharp. These are some names I'm thinking about, any feedback would be much appreciated. Also any people who need some financial guidance I'm always ready to listen and give some feedback.

Here's the names I've come up with so far, let me know any additions and likes/dislikes. I know some are kinda lame but I figured I'd list them anyway.

Worth Wealth Management
Worth Investing
Midwest Wealth Management
Great Worth Wealth Management
Worth Wealth Financial Advisers
Great Lakes Wealth Management
Worth Growing Wealth
High Worth Investing
High Worth Management
Great Worth Management
High Worth Wealth Management
Investworth Wealth Management
Wealthvest Financial Advisers
Suburban Wealth Management
Worth Financial Advisers
Worth Financial
Oak Tree Wealth Management
Kingdom Financial
Heritage Financial
Heritage Wealth Management
Heritage Financial Advisers
Legacy Wealth Management

I promise I'll post more often now too.

I’m going to begin by letting you in on a fundamental principal about money based on experiences from my own life. When I was a 5-year-old Kindergartner, I walked to school every day (something unheard of these days). On my way to school, I always passed three things: a newspaper machine, a pay phone and the school playground. Seems pretty typical, doesn’t it? I’ll bet most of you can likely picture similar scenes from your memories of walking to school. (As a kid I took to heart the phrase “a penny saved is a penny earned.” I cannot recall any occasion where I threw my own money in a wishing well or flicked pennies at people across the room.) Anyway, every day on my way to and from school I checked each of the aforementioned spots I passed for money people may have dropped. I looked in the change return slot, I looked at the ground around the phone, and I spent 50 percent of my time during recess in search of a dropped quarter or neglected penny.

So what does this anecdote prove other than John was a pretty weird kid in Kindergarten? First, it teaches to never neglect “free” money. Let’s say I found 25 cents every day on my way to school. That was 1987. Without doing a more advanced calculation, let’s assume we’re dealing with a 6 percent rate of return. If I found 25 cents every day and put it in the bank I now would have an extra $3,234, and by the time I turned 55, it would be a little more than $29,000. Not too shabby for the few dimes, quarters and pennies found while I was just walking around.

Second, always be on the lookout for unique sources of income. As a kid, this meant searching vending machines for forgotten change. In college, it was being a resident advisor and sitting security 10 p.m. until 4 a.m. In the working world, I’m still searching for those unique sources but I guess they will be in the form of rental income and freelancing.

Finally, consider this interesting set of facts. Pennies minted 1962 until 1982 contained 95 percent copper. This amounts to approximately 2.89 grams of copper, and at $3.4772 per pound the copper in the penny is worth about $.0221. So if you found 2000 pre-1982 pennies, they would actually be worth $44.20. What a way to double your investment while holding cash -- not bad if you ask me.

I hope you now consider bending over to pick up that Lincoln from the sidewalk and take a second look at the ground near the pop machine. Who knows -- that penny could really be worth my two cents.