Episode 27
Crush Your Student Debt: A Roadmap to Financial Freedom
Episode Description
Join us on episode 27 of The Big Bo $how as your host, Big Bo (A.K.A Jason Blumstein, CFA®, CEO & Founder of Julius Wealth Advisors, LLC) takes you through a comprehensive guide to managing student debt and building wealth. In "Crush Your Student Debt: A Roadmap to Financial Freedom," Big Bo shares a simple, effective three-step plan to help you tackle your student loans head-on.
Learn how to get a full picture of your debt, formulate a plan to pay it off, and seek the right professional help to start your journey toward sustainable wealth.
Whether you're feeling overwhelmed by student loans or looking for strategies to build a brighter financial future, this episode is packed with practical advice and insights to help you achieve financial independence. Tune in and take the first step towards crushing your student debt and securing a prosperous future.
Episode Transcript
Welcome back to the Big Bow $how presented by Julius Wealth Advisors, where we tackle the tough financial issues and help you take control of your money. I'm your host, Jason Blumstein, CEO and founder of Julius Wealth Advisors, a.k.a. Big Bo, and today we're diving into a topic that affects millions of people—student debt. If you come out of school with a bill that looks more like a mortgage, you're not alone. Did you know that the average student loan debt in the U. S. can be as high as $54,708.52? But don't worry, we've got a plan to help you manage the debt and start building the future that you've been working so hard for.
So, sit back, relax, and welcome to episode 27 of the Big Bo $how.
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Alright, so let's get after episode 27 of The Big Bo $how. And let's talk numbers. Did you know the average student loan debt in the U. S. is a staggering $ 54,708? 52? That's a big chunk of change, and it can feel overwhelming. This debt often means postponing big life milestones like buying a house, buying a car, taking a vacation, or even starting to invest and build your personal wealth.
But here's the good news. With the right strategy, you can manage your student debt and still achieve the lifestyle you're aiming for. Let's break it down for you in a simple three-step plan to kickstart your journey to sustainable wealth.
Step one, get the full picture.
First things first, you need to get the full picture of your fixed debt. Sit down, write it all out. Start with your student loan, then list every other fixed debt you have, like your mortgage or car loan. Be detailed, include how much you owe to whom and the interest rates on each debt. Understanding the interest rate is crucial as it affects how much you're really paying. Don't forget to check if any of the interest is tax deductible, which will give you a true after-tax interest rate. Add it all up, get a single figure, this will be your mountain to climb. But knowing is just the first step to conquering.
Step two, we got to formulate a plan.
Next up, you need to create a plan. Start listing your variable debts like your credit cards and any other mandatory monthly expense. Prioritize these, again, by interest rate. Focus on paying off the highest interest rates first. Remember, variable debts, like credit cards, usually have much higher interest rates than fixed debts, like mortgages or even student loans. The higher the interest rate, the quicker you should aim to pay it off.
Now we got to talk about budgeting. Create a personal cash flow statement. This is all your income in one source, breaking it down into a monthly basis. Then, line up all your mandatory monthly expenses, like rent, utilities, insurance payments, and, of course, don't forget taxes. Uncle Sam always wants to get paid.
Hopefully, you'll have some income left over to start paying off your debt. Remember, tackle the highest interest-rate debt first.
A deeper concept to understand once you have your cash flow statement is a hurdle rate. A hurdle rate is the after-tax effective interest rate you're paying on your debt.
This number is your quote-unquote hurdle, just like running a race. When you watch the Olympics, if there's a hurdle race, if the hurdle is too high, you're going to need to remove it to get faster to get around the track. If the hurdle is so low that you can easily leap over it, it's not going to slow you down.
So, how does this relate to student loans and debt? If your interest rate is so high that you do not think you can make a return on your money greater than this rate, you should pay off that debt burden. If your interest rate is so low that you think you can easily leap over it and make a return higher, then you should pay it off when you have to and only pay off what you have to.
A great example of this is your student debt. Some student debt, depending on if it's a private loan or a subsidized loan from the government, can have a materially different interest rate. Also, if you took out your loans, say 5, 10 plus years ago when interest rates were low, it will have a materially different rate than today, given where interest rates are. So, if your student loan is, say, a three percent rate, like my student loan was when I went to school, should you quickly pay this off?
Well, today, you can just make five percent sitting in your cash in a bank account or a money market fund. So, you would make two percent more just by sitting in cash. Over 20 years, that 2 percent difference is 25, 000, potentially more in your pocket if your rate is, say, 10 percent on your student loan. Do you think you can conservatively make a 10 percent plus return on your money? Conservatively speaking, odds are you cannot so pay this off. If you're making five percent on cash and paying ten percent interest, you are losing five percent on your money every year.
This is all part of creating a plan that is right for you. It's called personal finance because it's personal. Not everyone is going to be in the same situation as you. So now, let's take a quick break and come back and discuss the final, most important step in this process.
Alright, welcome back. And let's get after the final, most important step in tackling your student loan. Get help.
This is the final step. Planning and research are great, but having the right person in your corner can make all the difference. Think about it. When your toilet breaks, do you do it yourself, or do you call a plumber? When you're sick, do you try to figure out what's wrong with you and go prescribe yourself your own medicine? No, you go to a doctor.
Debt and wealth management are no different. When you have enough income to manage your long-term debt and your expenses, it's time to think about building sustainable wealth. This is where a professional financial advisor comes in.
Find someone you can trust, someone who understands money, numbers, long-term investing, and planning. A financial advisor can help you make informed decisions and guide you through the complexities of wealth building. At Julius Wealth Advisors, we understand the changes and challenges you face. Our boutique service delivers concierge advantage with integrity, knowledge, and passion.
We're committed to guiding you through the game of wealth-building. When you're ready to take that step, we're just a click away at www.juliuswealthadvisors.com or call us at 201-408-4644 or you can email info@juliuswealth.com. Remember, building wealth is by choice, not chance. So that's it for today's episode of the Big Bo $how.
If you're struggling with student debt, know that there's a way forward. Follow these steps, get the full picture, formulate a plan, and get the right help, and you'll be on your way to a brighter financial future. Thanks for tuning in, and don't forget to subscribe, leave a review, or share the podcast with anyone who might benefit.
Until next time, keep living a life of integrity, obtaining as much knowledge as possible, and always live a life that you're passionate of. All the best.
Thank you for tuning in to The Big Bo $how!
Disclosure:
The content is developed from sources believed to be providing accurate information. The information in this podcast is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Julius Wealth Advisors, LLC (“JWA”) is a registered investment adviser located in Englewood, NJ. Registration as an investment adviser does not imply a certain level of skill or training. The publication of The Big Bo $how should not be construed by any consumer or prospective client as JWA’s solicitation or attempt to effect transactions in securities, or the rendering of personalized investment advice over the Internet. A copy of JWA’s current written disclosure statement as set forth on Form ADV, discussing JWA’s business operations, services, and fees is available from JWA upon written request. JWA does not make any representations as to the accuracy, timeliness, suitability, or completeness of any information prepared by any unaffiliated third party, whether linked to or incorporated herein. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. JWA is neither your attorneys nor your accountants and no portion of this podcast should be interpreted by you as legal, accounting, or tax advice. We recommend that you seek the advice of a qualified attorney and accountant.