Student
loan consolidation is excellent - for for some people. Discover the
hidden trap that could ruin your life, but remember that a clever
animal can get a meal from a trap without being caught!
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* Part I Don't get into debt. Ways to avoid it.
* Part II This article
* Part III Idea beats student loan consolidation and creates a winning mindset.
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Part II
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Imagine two people
Each has a student loan consolidation debt of $100 000. The born loser
will soon have borrowed more. The investor uses the student loan
consolidation as a springboard to become a millionaire.
What's different between them? The mindset, and only the mindset. Get the right mindset.
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The big trap
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Have you a strong willpower? Will you go on a spending spree and owe
$5000 on each card tomorrow? A student loan consolidation is not for
you. Read Part III of this article.
Have you the will power to master your finances? Combine student loan consolidation with Part III.
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What is Student Loan Consolidation?
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You transfer all your existing loans to one low-interest account.
What's in student loan consolidation for you?
* If you have Stafford loans in the USA, you’ll have a grace period of
six months after graduation to take out a student loan consolidation.
* Interest rates are lower
* Easier to remember payment dates with one loan
* Improved credit rating
Credit cards might charge 20% interest. Wouldn't a student loan consolidation at 5% be better?
Look for extra discounts on student loan consolidation during the grace
period. Do you get an extra discount after 2 years of prompt payments.
Do your homework properly. Were you only paying 3% fixed interest on
your Stafford loans and interest rates have gone up to 8% variable rate
on your student loan consolidation? How high could the rates go? If you
get a fixed rate student loan consolidation, and new student loan
consolidations fall to 3%?
Computers calculate your credit rating. Suppose you took out a
subsidised and an unsubsidised Stafford loan for each of four years.
Computers can't really think. They see that you have 8 long-term loans
and never paid back a single cent. You’re obviously a very bad credit
risk before your student loan consolidation!
After your student loan consolidation computers see that you've only 1
loan and you're making regular payments. They give you an excellent
credit rating. Don't spoil it with new credit card debts.
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Avoiding student loans
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In part 1 you read about vital life skills that mean lower student
loans for student loan consolidation, or even none. You can make your
money go twice as far, which means that you'll effectively be twice as
rich, and the IRS can't touch you for it.
Without these life skills, you'll be helpless when you suddenly have to
pay for food and lodgings, credit card, car loan, mortgage, health...
it's never-ending! Many students can't handle it. Part III will help
you even if you have a student loan consolidation.
Have you decided on student loan consolidation?
* Check how much they will lend
* Can you consolidate your other debts... credit card and car loan?
* Will you need proof of income?
* Can you choose between fixed and variable interest?
* Are there pre-payment penalties? Avoid them like the plague!
* What are the penalties if you default? If you are unemployed or lack self-discipline you are likely to default.
* What other loans must you get - mortgage, kid's schooling?
Avoid lenders that make you start repayments of your student loan
consolidation the day after the grace period. Check for special
incentives. A 1% discount after 2 years regular payments may not sound
like much, but it adds up over time.
Negotiate. Lenders are eager to lend you money, however much they
bluff. They are legally allowed to lend 35 times as much money as they
have, and they make no profit until they lend it.
"No start-up costs" may be good, but low interest rates and absence of
prepayment penalties for your student loan consolidation are better.
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What's in Part III
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A better alternative to student loan consolidation?
* Build self discipline.
* How will interest rates for student loan consolidation change next 20
years? Don't know? Then student loan consolidation might not be the
best bargain.
* You’ll be in control... not at the mercy of student loan consolidation providers.
Don't be a loan addict all your life. The ideas in
part III were used by an Australian to become a millionaire.
