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Good Debt vs. Bad Debt: It Doesn’t Exist

Good Debt vs. Bad Debt_ It Doesn't Exist

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You hear it constantly, people sharing what is considered good debt and what is considered bad debt. But, who ever decided what was good and what was bad? And I don’t know about you, but I tend to find different sources saying different ones are good and bad.

I also find that it’s bad in some situations, but good in others. Like, if you pay off your credit cards and never pay interest, then it’s good debt since you’re getting the rewards, but carry a balance and it is immediately bad debt.

This is what tends to bother me in the personal finance world, people creating these one set systems for people to use. Don’t get me wrong, I think it’s great to have a structure to follow when you’re first dipping your toes into your own personal finance.

It’s nice to have something to follow and guide you at first, but there is a very important word in the phrase personal finance, it’s personal! You need to create your own system eventually that works for you and your finances.

Why there is no good debt or bad debt.

Ultimately, the decision is yours to make what you consider good debt or bad debt. In certain situations, debt is a great way to achieve your ultimate long term goals. All debt is obviously not created equally and it needs to be treated that way.

Every person’s unique situation changes if a debt would be considered good or bad. In one situation the debt may be considered a good choice, but in another, it would be considered bad. This is why it comes down to you and your personal decisions related to your finances and your long term goals.

For example, I consider my student loans a bad debt choice. Most people would consider student loans good debt, but what it comes down to is if it was a good financial move. For me, my student loans totaled 4X the salary I got when I graduated, I couldn’t even afford my minimum payments and housing. If I lived in other places in the country, my salary would have been lower and my debt would have been 5X my starting salary.

This was absolutely a bad money move on my part. I didn’t know better and didn’t know how to manage my money or how to make college more affordable for me.

On the other hand, I recently bought a car and took out a car loan. The reason I did this was because it had a very low interest rate of 0.9% and I was able to put a significant amount down and had a trade in. The car is worth a lot more than my loan and the money I would have needed to cash flow this purchase will now be able to go towards my student loans.

You can’t look at debt as good or bad exclusively, rather look at it as a good money move or not to move you closer to your long term goals.

How to determine if it is a good money move to use debt.

What it ultimately comes down to is if it aligns with your long term goals and helps you to get there. If it’s going to be a burden on you and will not make financial sense for you, then it’s not a good move.

For example, I use credit cards. I have never carried a credit card balance and have always paid them off in full. I use them because it is easier for me to track, I can easily dispute charges and it’s not my current money I need (if I used a debit card and someone got my account info, those charges would take time to get refunded and ultimately be my own money I lost), and it gives me cash back.

I would consider this a good money move because I don’t pay any interest, I have the money set aside in my bank account before the purchase, and it gives me some cash back.

Another example is that I refinanced my student loans to get a lower interest rate. This made my monthly payments more, but it decreased the life of the loan and lower my rate from 7% to 4.97%. This ultimately saves me money in the long run in interest. If you want to check out Earnest, you can use my referral link to get $200 when you refinance!

Ultimately, it comes down to your values and how you view your personal finances. What I feel is a good money move, may sound ridiculous to you, and vice versus. You need to make each decision about your finances and make sure that it helps you to reach your long term goals.

If it prevents you or makes it more challenging to reach your goals, then maybe it isn’t a good money move for you. By understanding what your goals are and what you value, it will allow you to decide what are good and bad money moves. What are some of the big money moves that you have made? 



7 Secrets You Will Not Want To Know About Student Loans

7 Secrets You Will Not Want To Know About Student Loans

This post may contain affiliate links. Check out my Disclosure Policy for more information.

Every since I wrote my post about blind student loan payments, I have been getting a ton of questions about student loans. It is crazy to me that student loan providers are allowed to do the things that they do. It’s absolutely terrible, which is why I think student loans are probably one of the worst debts.

There are so many things people don’t know about student loans, but they let 18 year olds sign their lives away to them. It’s insane! And I was one of them that unknowingly did it! But, I want that to change, I want every person that gets a student loan to know the reality of them.

They can be a tool to use to better your future, but they need to be taken out with education about what these debts really are. Student loans are unlike any other kind of loan, which can ruin people’s financial future.

Related posts:

4 Steps to Decide If Refinancing Your Student Loans Is For You

How Student Loans Impacted My Credit

A Honest Review: Round Up To Zero

How to Pay Off Debt on a Low Income

1. Minimum payments on student loans don’t need to cover all of the interest.

This is what separates student loans from most other loans. Most loans, you are at least covering the interest that accrues throughout the month. Student loans are completely different. You can be making your minimum payment, but not paying off your interest every month. This will cause your loan to grow and grow and you will never pay it off.

This is why you need to stop making blind student loan payments and check to see if you are paying off at least your interest every month. If you aren’t, you need to make a change in order to ever pay off your student loans.

2. Your student loan interest deduction on your taxes is making you lose money.

We all get wrapped up in tax deductions and sometimes it does financially make sense to make certain money moves that allow you another deduction. But, being able to deduct your student loan interest every year is not helping your financial picture.

I have heard so many people tell me they aren’t rushing to pay their student loans off because they get a tax deduction. You get to claim $2,500 every year, but add up how much you lose every single month to your student loans. Think about how much you’d be saving in a year if you just paid them off. I know for myself, I’d be saving about $40k, way more than the $2,500 I get to deduct.

3. Your family will still be responsible for your student loans if something happens to you.

There are some programs in place for federal loans and some private loans as well, but most student loans are not forgiven in the event that the borrower passes. The crazy part about this is that with most other debt, there is a tangible item attached to the debt. For example, if you have a car loan, your family can sell the car to help with the debt associated with it, similar to a house and a mortgage. With student loans, your education will not help pay for that cost if you pass.

This is important to keep in mind, especially if your parents or other family member cosigned your student loans.

4. Your wages can be garnished, if you’re delinquent on your student loans.

This is a vicious cycle. You can’t afford your monthly payment on your student loans, your wages are then garnished. If a recent graduate has an entry level job and can’t afford their monthly payment, it will be hard to get ahead when their wages are garnished. This is super important to keep in mind if you’re struggling to make your payments each month.

If you are delinquent, they can also garnish any social security benefits, disability benefits, or federal refund checks.

5. In some states, you can lose your driver’s license for not paying your student loans.

This is different in every state, but it’s something to keep in mind. This is yet another vicious cycle. If you lose your driver’s license, it then may be hard for you to get to work, if you live in an area that doesn’t have public transport.

6. In some states, you can have your professional license suspended for not paying your student loans.

This would prevent you from working in the field that you took the student loan out for. Which would prevent you from making a payment on your student loans potentially. This would prevent you from turning things around and getting back on track to paying your student loans.

7. You can be sued for not paying your student loans.

In the event that you are not paying your student loans, you can be sued by the company. This happens much more frequently with private student loans because they don’t have programs in place to help borrowers afford their monthly payment. However, they also don’t have programs that can grow your student loans, like I mentioned in number 1.

I encourage all of you to get educated about your student loans. Ask questions, do research, know what your student loans mean. If you haven’t taken any out yet, but are thinking about it, understand the reality of them and consider alternate plans. If you’re struggling to make your payments, get on a budget and get on a better financial path, so you don’t have to deal with any of what I mentioned above. How have you helped yourself to learn more about student loans?



When to Slow Down Debt Payments

When to Slow Down Debt Payments

When you’re paying off debt it can be difficult to slow down the process. I know for myself, I am so focused on paying off my debt that I sometimes need to be brought back to reality. It’s important to remember that a debt free journey is part of a bigger plan.

For myself, my bigger plan is to be able to live a life I love without having to think about money. But that also means that sometimes I need to not focus so heavily on my debt free journey and think about the reality of life. When you’re so focused on paying off your debt and the life you will live after your debt is gone, this can be difficult.

Sometimes, it’s important to slow down or stop extra debt payments all together. It depends on your life and what your goals are, but sometimes it needs to happen for what makes sense in the long term.

1. Unexpected life events would require you stopping extra debt payments.

This can be a long list and really depends on what your income is. But, any unexpected events, like job loss, or medical issues, could mean slowing down or stopping extra debt payments all together. If you’re single, this would definitely require you to stop making extra debt payments. But, if you have another income to rely on, it’s possible that this wouldn’t be the case.

My suggestion for any unexpected life events, is to stop extra debt payments and hoard any extra money. The reason this is important is because there is so much unknown in these events, for example, the recent government shutdown. Anyone who experienced the shutdown knows that the end is unknown. This means that you don’t know when you will be paid.

This is why it is important to stack any money you have coming in, even if you have a bit extra at any given time to throw at debt. That extra money will be there once you get through this unexpected event. Once things have settled down, then you can assess your finances and make an extra debt payment.

2. Any unknowns in the future could slow down your debt payments.

If you’re unsure about things in the future, you may want to consider slowing down or stopping your debt payments. This could be something like your job security being unknown, you may want to stop making payments or at least slow down.

This could also be something that you’re planning to do. For example, I am right now unsure of where I’ll be working and am planning to move this year. So, I am not stopping my extra debt payments, but I am slowing it down to put more money into my emergency fund to plan for it. This way I will have extra money to cover the unknowns of the second half of this year. Once things get settled for me, I can assess my finances and make an extra debt payment.

It is more important to plan for these unknowns when you know they are coming, then to simply hope things go according to plan. Hopefully the money you save up won’t be needed, but in the event that it is needed, it will be nice to have.

3. Needing to cash flow necessary expenses.

Life happens and sometimes you need to purchase things that wasn’t planned for, think car or house problems. It is better to slow down or stop debt payments to cash flow the purchase, then to go into more debt to purchase something. It’s pretty counter productive to being sending extra money to debt, but going into debt at the same time.

One way to avoid this is to cash flow the expense, meaning you send all extra money until you have the cash saved up for the purchase. If it is an expense that won’t be needed for a while, you can also start a sinking fund for it.

Everyone is different and decides what is considered a necessary expense, but it’s important not to go into debt for these things, if it can be avoided.

Keep in mind your long term goals when planning your debt free journey

Everyone wants to get out of debt quickly, but life happens and sometimes our plans don’t work out. It’s important to remember what you have planned for the long term, then to make extra debt payments. Sometimes, it makes much more sense to slow down or stop extra debt payments to get through a specific situation life has thrown at you. Just remind yourself of your long term goals in these situations. Have you had to stop or slow down extra debt payments?


Why You Need to Stop Making Blind Loan Payments

Why You Need to Stop Making Blind Loan PaymentsThis post may contain affiliate links. Check out my Disclosure Policy for more information.

There are so many terms with student loan payments and really anything financial. The real tricky part is usually a Google search doesn’t even really help you, at least not quickly. Most of the time, you need to have some background knowledge about student loan payments to navigate your way through the answers.

Unfortunately, this is why you hear stories all the time about people borrowing X amount of student loans and now owe 3X after making all their loan payments on time. The world of debt and student loans is scary misleading and filled with unknowns, if you don’t understand the small print.

That’s why I’m writing about this. I don’t want there to be any more stories like the one I shared above. I don’t want people signing up for different payment plans or forbearance or deferment and not knowing the whole picture. These plans all have significant implications to your financial future and need to be carefully considered from every single angle.

The main reason we hear those stories is because people sign up for forbearance, deferment, income driven repayment plans, or something of the like. These are usually offered when a person can’t make their minimum payment and a lot of times are used to solve a problem quickly. However, I caution you to use these quick fix options for your loan payments because they carry major consequences in the long run.

Student Loan Forbearance & Deferment

Student loan forbearance and deferment can be requested when minimum loan payments can’t be made. It can be used as a fix to avoid default on your loans. However, you may be responsible for all interest that accrues on your loans during the time of forbearance or deferment. You will need to find out the details from your loan provider to find out how it works for your situation.

It is super important to find out what happens with your interest during the time you are in forbearance or deferment. The reason this is so important is because if you are responsible, then you will either pay it each month, or it will be capitalized at the end. What this means is that your interest will be added to your principal, ultimately making your student loans larger.

If your interest will be capitalized at the end, this will increase your principal and interest will accrue on your new principal balance. This increases your monthly interest amount because more interest will accrue each day. This ultimately will make it even more difficult to pay off your student loans in the long run.

Income Driven Repayment Plans

If you have the option to do an income driven repayment plan, it can be an option to be considered, but you need to be sure you understand the implications of it. Every plan is different and you need to make sure that you follow your plan exactly and find out exactly what this plan means in the long run.

Some plans allow you to be on a plan for 10 years and after all on time payments, the rest is forgiven. However, this means that you will have a payment for 10 years and if your income increases significantly, you will need to have a minimum payment that reflects that.

The other issue with income driven repayment plans is that most plans do not pay off the interest each month. Your interest will capitalize and your student loan principal will get bigger, similar to what I explained with deferment and forbearance. This needs to be carefully used because it can end up costing you so much more down the road.

However, income driven repayment plans can be used as a great tool. I currently have my federal student loans in one while I pay off my private loans. The reason I did this is because my minimum payments were going to be $600 and my loans accrue about $300 in interest every month. Even though my payment currently is $250, I always make sure to pay off the interest on them while I focus on paying off my private loans. This allows me to pay off my private loans faster and keep my federal loans from getting larger.


Refinancing your student loans can be a great tool to use, especially if you are struggling to make your payments each month. Of course, you need to make sure you understand the implications of refinancing though. If you need help deciding if refinancing is for you, I wrote a post that walks you through deciding, you can find it here.

Typically when you refinance you are changing something about the terms of your loan. The principal is staying the same, but your length and interest rate is typically changing, which changes your minimum payment.

If your credit score and salary has increased significantly since you took out your original private loan, I think it’s a great idea to look into refinancing. The reason being that chances are you will qualify for a better interest rate, which may lower your payment each month and total amount you pay in the long run.

For example, I refinanced my private student loans to save me money in interest. I did this by lowering my interest rate, shortening the life of my loan, and increasing my minimum monthly payment. Refinancing can be a great tool to save money in interest when done properly. I refinanced with Earnest and recommend them, if you would like to refinance your loans, you’ll get $200 with my referral link when you qualify!

However, with refinancing you need to be careful that you don’t end up adding more to what you are going to have to pay in the long run in interest. If you need to lower your monthly payment, this may be an option for you, just know that you may increase the amount you pay throughout the life of your loan.

Changing habits, tracking expenses, and budgeting may be a better option when you can’t make your loan payments.

These are all options when you can’t afford your monthly payment, but they all carry some pretty signifiant baggage that can hurt you financially in the long run. I highly suggest reflecting on your spending habits, tracking your expenses, maybe adding a side job and getting on a budget instead of utilizing some of these to lower your payment. If you need help setting up a budget, I have a template for you! The reason I suggest this is because you will allow yourself to change your financial future in a positive way by doing this. By utilizing some of these, you potentially hurt your financial future. I want to hear from you! What are your thoughts on these student loan programs?




$34k of Debt Paid off in 2018

$34k of Debt Paid off in 2018

This post may contain affiliate links. Check out my Disclosure Policy for more information.

I may be the only one that feels this way, but 2018 flew by. I feel like I was just ringing in 2018 and here we are in 2019 already. Where did the time go?? 2018 was a crazy year with lots of changes in my finances.

I went into the year with intense focus to pay off my debt as fast as possible. I made huge sacrifices and worked lots of side jobs to try to get my debt free date to be closer and closer. That was my plan for 2019, until June when my car once again had issues that needed to be fixed.

I switched gears and started cash flowing for a new to me car because my car had so many issues in warranty that I was nervous to keep it out of warranty. All of those costs would have fallen on me once it was out of warranty. So, I spent a few months cash flowing to that fund and paid minimums on my debt.

Then I realized that instead of getting a new to me car, I would just keep this as a car sinking fund and keep my car for as long as I could. This has so far worked out really well for me. I have a large sinking fund that I have already used a few times to fix my car.

I ended the year back in hyper focus to pay off my debt. In November, I hit my 3 year date of being on my debt free journey and managed to pay off $105k on my teaching salary. I added side jobs and have been working diligently to increase my income to pay off my debt as fast as possible. My debt holds me back from so much and I can’t wait until it no longer prevents me from doing things. I also finally wrote my ebook in 2018 that outlines how to master your finances as a twenty something, I share all my tips and tricks in it!

The things I did to pay off so much debt in 2018

If you’ve been following my journey, then you know that I have had the same salary from my teaching job since 2016. It’s hard to be on a debt free journey and not have your main source of income even come close to matching the rate of inflation. Fortunately, I didn’t let this stop me. I decided to work a before and after school program to supplement my income.

Yes, this takes away from my own time and extends my school day, but it’s worth it when it’s adding a significant amount to my income. This does take away time from my side hustles and free time, but I know that this is all temporary.

Also, I have been slowly decluttering my space and selling the things that are worth it. It’s not much, but it has added up to about $300 total. Of course, I continue to work my side jobs of tutoring and babysitting, I really committed to babysitting this year and it has definitely paid off.

One of the biggest moves I made was refinancing my high interest private student loans from 7% to 4.97%. My monthly minimum payment increased, but the amount I will pay in interest decreased. If you’re considering refinancing, check out my post that outlines how you can make the decision if it’s right for you!

My plan for 2019 to pay off debt

2019 is going to be such an exciting year for me, I can’t wait to see where it takes me. I am planning to do everything I can to lower my expenses and increase my income until June. I’ll do this by following a strict budget, you can find the template I use here. My goal is to get as close to paying off my private loans as I can before July.

The reality is that I won’t be able to completely pay off this loan before July, the numbers just don’t add up. But, I want to get as close as possible because I am planning to move out in July and my private loans carry a hefty $865/month minimum payment. If I can get this out of my budget, it will make it much more affordable to move out.

Also, I am planning to find a new job in June and I can’t wait to see where that takes me. I’m so excited to start something new and see what I can do in a new role. This also means that I have so many things in my budget that are totally up in the air once July hits. Normally, this would totally freak me out, but I’m so excited for it!

The first 6 months of 2019 will be all about sticking to a very tight budget and sending all extra money to my debt. I plan to find more ways to increase my income, declutter my space to prepare to move out, and enjoy every minute of this year making memories with loved ones. What do you plan to accomplish in 2019?


The Best Time to Declutter

The Best Time to DeclutterWe’ve all been there. We look around where we live and see how much stuff we have accumulated. I mean, where did it all come from and how much money did I spend on all of it?! As time goes on, things just enter your house and if you’re not consciously taking the time to declutter, it’s going to accumulate.

It can also feel overwhelming when you look at your entire living space as a whole. Trying to tackle everything at once is setting yourself up to fail. That’s a lot of work! But, there is a time when you will find yourself much more motivated to declutter your living space.

When you start paying off debt you’re going to get angry at your debt and want to throw all the money at it. I know for myself, I looked around my room and saw so much stuff I never used. I got angry. I had spent money on these things and it was a complete waste!

That’s why when you’re paying off debt, it’s the best time to declutter your living space, for a few different reasons.

1. It’s free to declutter

It doesn’t cost anything to clear out your living space, you actually could make money (I’ll get to that). When you’re paying off debt, you want to find ways to fill your time with activities that don’t cost any money. Why not spend some down time being productive and getting rid of the things you no longer use.

Spending some time to declutter the spaces in your home is a great way to use up time. I know for myself, I get stir crazy at home, but I feel much better if I am productive and see how much better my space looks when it’s done.

2. You can make money when you declutter

I know when I am clearing out a spot in my room, I always have three piles, trash, donate, and sell. This allows me to quickly get a space decluttered and I can deal with the piles when I’m all done. The trash obviously is quickly taken care of right away and usually I can get the donate pile sorted within a day or so. The tricky part can be the sell pile.

I have a strict rule for myself. If I can’t get it to sell within a couple weeks, I donate it. Otherwise it spends months sitting in my room doing nothing for me. I use a couple different resources to sell my things, I have had garage sales, used Facebook, Poshmark, and sellbackyourbook.com. Depending on what I am trying to sell, I put it on a different platform.

If I am planning to have a garage sale I usually advertise it on Facebook and then whatever doesn’t sell, I put online to sell. It’s pretty simple and allows me to put the extra money towards my debt.

3. You’ll find things you forgot about when you declutter

This can be dangerous. You’ll of course find things that you totally forgot you had. This can sometimes lead you to keep things simply out of potentially needing it one day. Don’t fall into this trap. When I say you’ll find things you forgot about, I mean it in a positive way.

Personally, I don’t buy things very frequently, except groceries and gas. Everything else that I purchase is always thought about, researched and then bought when I have found the best product for the best price. However, there have been times when I have been waiting to purchase something and have found something that can be used in my house.

These are great finds because it fills a purpose that I was planning to spend money on that I now won’t have to. I always search around my house before purchasing anything, you never know what you’ll find!

4. You’ll save time later when you declutter

After decluttering your spaces, it is so much easier to do things in your daily routine. I know for myself, I am able to tidy things up so much faster when I have a decluttered, organized space. Time is everything for me, especially since I work so many jobs to earn more money to apply to my student loans.

By saving time in the routine tasks throughout the week, I am able to spend more time on self care and on my side hustles. It’s crazy how spending the time to declutter has saved me so much time in my weekly routines.

Trying to declutter your living space can be overwhelming, but if you take the time to break down the tasks into smaller, manageable tasks, you will be more successful. For example, one day declutter a bathroom, separate your kitchen into different sections, and separate your clothes by what kind they are. This way you’re experiencing the small wins and won’t be so overwhelmed. Have you spent the time to declutter your space? When did you do it?


A Honest Review: Round Up To Zero

A Honest Review_ Round Up To Zero

This post may contain affiliate links. Check out my Disclosure Policy for more information.

Student loans are something that most people have to deal with directly, or know someone close to them that is dealing with them. Without a solid plan, student loans can seem daunting and overwhelming. I know I felt like I was drowning when I faced my $200k in student loans. But, with a solid plan I managed to pay off $105k in 3 years.

Luckily there are so much tools out there now that is encouraging student loan plans that allow you to get out of debt faster. One of those tools that I have recently found is Round Up To Zero, which allows you to round up your purchases to the nearest dollar and then make a student loan payment with the money.

The company is pretty awesome and is made up of people that have dealt with student loans. They created this platform because they wanted to do something to help other people get out of student loan debt.

How Round Up To Zero Works

After you create your account, you’ll connect your bank accounts and student loan accounts to the platform. Basically how it works is that they will round up all of your purchases to the next dollar. That money will get added to your account and eventually be transferred to your student loan. The platform allows you to play around to see how much extra payments will impact your pay off date and interest paid.

What is really cool and unique about this platform is that they let you connect other people to your account. This allows you to pay off your loan faster. Basically what happens is that your purchases and their purchases will get rounded up. The more people you add, the more money will get rounded up and applied to your student loans.

There is a fee that comes with using this service. Right now, they are charging 0.99/month to use the platform. Also, there is a transaction fee of 4.97% of the transaction. These fees cover the banking fees that the company gets charged for completing these transactions for you. Round Up To Zero hopes to make this service free eventually.

You’re able to set limits on how much extra is applied to your debt each month, if you want. For example, if you’re someone that has a zero based budget, you can set the limit you want to go to your debt.


My Opinion of Round Up To Zero

Personally, I think the platform is really well designed and easy to use. The people behind the platform are incredible and have the desire to help people get out of student loan debt. I will support most companies that are trying to help people get out of student loan debt, since I am dealing with them myself.

With that being said, I’m not the biggest fan of charging the fees, but I do understand why they are there. Round Up To Zero would have to foot all the transaction charges that they get without having the fees. That just isn’t realistic. I do appreciate that their ultimate goal is to make the platform free to use eventually.

Who Round Up To Zero is for

Round Up To Zero is perfect for someone that wants to effortlessly pay extra on their debt. If you are just starting to think about applying extra to your debt, this may be a platform to look into. This platform would be great for someone that is overwhelmed by their debt, and can afford to pay a little extra each month. It also would be great for people that have family or friends that want to help you pay off your debt.

I wouldn’t recommend this for someone that is already budgeting strictly and is putting extra money to their debt. If you are doing what the platform provides already, there is no reason to use this service. Some options for you would be to utilize undebt.it to plan your payoff strategy, or consider refinancing your loans to get a better rate.

Overall, I think Round Up To Zero is a great platform for a specific group of people. I love the company’s goal of helping people get out of student loan debt and I think they have created a platform to do this. How do you plan to pay off your student loans?