Many believe student loans are only a problem for college age students but after reading a report from the Consumer Financial Protection Bureau we’ve determined student loans are becoming a big issue for Americans over the age of 60. According to the CFPB report entitled Snapshot of older consumers and student loan debt the number of consumers age 60 and older with outstanding student loan debt quadrupled from 2005 to 2015. These 60 and older Americans in 2015 had on average $23,500 in student loan debt compared to an average of $12,100 in 2005. In total, Americans over the age of 60 owed $66.7 billion in outstanding student loans in 2015.
What might surprise you is most of these student loans are not for higher education of the individuals that took out the loans but to support their kids and grand kids college education. What scares us the most about this trend is people over the age of 60 generally have a fixed or declining incomes since they are moving into retirement. This should be the time in their life when debt is eliminated not incurred.
This can be corrected by implementing the personal financial principles we teach. You need to focus on eliminating this debt from your life and the first step is maximize the impact of your biggest wealth building tool; YOUR INCOME. The easiest way to do this is creating and using a zero-based budget. A zero-based budget essential has you define where every penny of each paycheck you receive will go. When using a zero-based budget you never leave “extra” money unassigned. This is a powerful concept because it forces you to be intentional with every penny you earn and make sure it is helping you reach your financial goal. Once you have your income focused you will also need to take advantage of a debt snowball to eliminate your debt. At E3 Financial Coaching we teach our clients to list out their debts from the smallest balance to the largest balance, excluding your home. You pay minimum payments on all those accounts except the smallest balance. When creating your zero-based budget every extra money you have is sent to the smallest balance debt in your debt snowball. Once you pay off that debt you apply all the funds you were paying to that debt to the next largest debt. This continues until you have paid off all the debt in your debt snowball. This method has proven to be highly effective.
If you are struggling with large amounts of student loan debt and can’t seem to find a way out, Tish and I would love to walk along side and serve you any way we can. To get started simple contact us for a free consultation.