Foguth Financial Group President Michael Foguth joined Flint’s ABC 12 to offer some great tips for paying off student loans.
Read on for a full transcript of the video. Paying back student loansWJRT-TV CH 12 FLINT-SAGINAW ANNOUNCER: This is ABC-12 News Saturday morning. HOST MARK BULLION: It’s that time of year. Many college students walking across the stage to get that diploma, but what’s next may not be so exciting. We have Michael Foguth here with Foguth Financial to talk about some great tips on paying back your student loans. It’s a biggie. MICHAEL FOGUTH, FOGUTH FINANCIAL: It’s that time. HOST: What are the first steps people should take, you know, right after graduation? FOGUTH: I think you need to assess everything that’s happened. Right? So four or five years that have lead up to this point. Now that you’ve graduated and you’ve accepted your first job – hopefully. Right? And now we say, okay, we have to pay this back. And we were just chatting that it’s almost like a second mortgage, if you will. Right? If you’re going to buy a home and now you have this – HOST: It’s a lot of money. FOGUTH: It’s a lot of money. So assess what you have. I really want to tell people to consolidate. Focus on keeping it simple. So if you have multiple loans throughout the year, consolidate them down into one account if you can do that. HOST: Okay. Now, one fixed rate is better than several. Why is that? FOGUTH: Because I look at it as competition. Right? So if you have these companies out there and they’re all vying for your business, if you will, because they want that interest payment to go to them, no to multiple places. So you can consolidate your debt into one. More importantly, I think it’s simple. So when you get your deductions every year – because you can write off the interest that you pay on your student loans. That’s a big one – off their taxes. So a lot of people don’t realize that. You get to write off that interest that you pay. So then simplify it. You can consolidate down to one and you get one tax slip, you make one payment every single month. It’s a lot easier for these people to really consolidate down into one. HOST: Now, obviously, when you graduate, some might have that mindset, you know, I want to pay it down as quickly as possible. FOGUTH: Yes. HOST: But you’re saying hold off. FOGUTH: Hold off, yeah. It is something that you do want to get rid of, that debt lingering over your heard. But I look at interest rates a lot of times. And with interest rates being so low right now, when you’re paying this money back, you’re better off to take that money that you would have extra to pay and save it. Because, again, we’re talking about interest rates. They’re very low. You’ve getting tax deductions on the interest. If you have additional money, save it and then save it into the right tax-effective way so that you can do that along the way. HOST: Okay. Now, what’s important to know about tax – or you just obviously answered that question. Any last bit of advice, though, for recent grads, you know, with all this? Dealing with, you know, it can be like a mountain to climb. You know, you’re excited, but at the same, too, it’s like, oh my gosh, you’re very overwhelmed. FOGUTH: Simplify it, like I said. Get it down into one account. Let them go out there and vie for your business. You know, make sure that you have your credit score and all your ducks in a row. Because if you have a bad credit score, you’re going to get a higher interest rate if you go out there and try to consolidate it. So make sure you have all your ducks in a row. Simply it. Get into that one account and let them kind of go out and say, okay, who’s going to give me the lowest interest rate, the longest period of time to pay it back, and then just kind of set it and forget it. Put it on autopilot. Auto deduct it every single month. Make sure it’s getting done. And, again, it’s really going to help you long-term not to pay it back too aggressively and save that money in other places. HOST: Maybe some other little tips that, you know, you can kind of accumulate here and there to throw toward that, you know, just to kind of offset it. You know, if you are, you know, a little bit more financially savvy. FOGUTH: Yeah, yeah. And, again, look at your taxes. Right? So if you’re paying back big lump sums, you’re going to lose that tax deduction at the end of the year. So, again, to me it’s all about if you’re going to save or you have additional, focus on taxes. So either, you know, talk with your financial advisor or talk to your tax preparer and say, look, I have this additional money. What’s going to be the most effective way for me to save or to pay this down? HOST: Awesome. Michael Foguth, thank you so much for being here. Always a pleasure having you on the show. FOGUTH: Thanks. HOST: And, again, here’s some great tips when it comes to paying back those loans. Consolidate the loans. One fixed interest rate is better than several. Don’t pay off those loans quickly. Save the extra money. Research other institutions for lower interest rates. And student loan interest is a tax write-off. Got questions?
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