Investing with Student Debt

At a young age our parents, society, and people we know all tell us we need to go to college and get a degree. A student who graduates from college leaves with an average of five-digit debt. We went to college in hopes of landing a better job once we graduated. The reality is students don't always find better jobs after graduation and their student loan debt burdens them for many years to come with large monthly payments preventing them from investing in their future. 

Invest When You Have Student Loan Debt 

Monthly payments that account for up to hundreds if not thousands of dollars each month will stop most people from doing what they want in their lives. Investing when you have a large amount of student debt might sound like an impossible feat, but I'm here to tell you it can be done.

Often times in the "real world" when you surround yourself with people who most could consider to be financially sound or financially savvy you hear the terms good debt and bad debt. Bad debt is often referred to as credit card or car loan debt. Basically anything with high interest and terms that are restricting to you financially are considered bad debt.

When looking into real estate it is important that you understand what bad debt is very early on. Bad debt can cause you many issues for years and years, with your goal of being financially free at a young age this is a bad thing!

Good debt is anything with low interest and often tax deductible. Real estate is considered good debt. It is good debt because generally it has low debt, you build equity over time, and its tax deductible. Do I mention you build equity over time, not lose it like with a car? Get the idea now?

But How Can I Invest in Real Estate?

Going to a bank and getting a loan like everyone else would be the best route, but that just generally isn't possible when you are burdened with student loan debt. When your on the outside looking in and the numbers are not in your favor with student debt there are other ways you need to look at things. Other things as outside of the traditional banking world. 

1.) Repayment Plan - Income Driven

 Fannie Mae made a huge change in 2017 in regards to people who are berried in student loan debt. Certain people who qualify for an income-driven repayment program can basically get their monthly payment down to $0 per month for a short period of time. Why did they do this? It allows the average people to qualify for traditional types of loans like mortgages that they may be having issues with otherwise.

Banks look at your debt-to-income ratio and that plays a key role in their decision to lend you money. By allowing people to take a $0 monthly payment, the idea is your will have a better debt-to-income ratio. Being in the banking world myself I know this is true, but also that banks that see the $0 payment generally if not always account for 1% of your balance as your monthly payment.

2.) Alternative Lenders

An alternative form of lending that doesn’t even look at your existing student loan debts is a place to start as well. Thankfully, there are lots of alternatives in today’s market hard money lenders, private money lenders, home equity loans, and crowdfunding.

You just need to realize there are other options out in today's marketplace other than a traditional bank loan.

3.) Attack Your Debt

 

 Above all else you need to learn how to attack your debt. Not just your student debt, but all of it. The single best thing you can be doing if your fresh out of college or simply stuck with loads of student debt is to pay it down. GET LEAN AND MEAN, because making the minimum monthly payment on your debt isn't going to get you where you want to be.

Work your a** off for for 12-24 months, pick up a side gig like Uber or just any regular ole job. If you can cut down your debt quicker you will look better on paper, plus the debt-to-income ratio we talked about does nothing but get better once you start making more money!

 

Solve The Problem:

Don't know what the problem is? The problem is you need to start investing now. You need to pay off your debt. You need to live life and enjoy it. Your reading this because you want more, you want a better life, you want what you believe is ultimate goal. Investing in Real Estate is not for everyone, but for those who do it and learn how to do it well, it's great! The number one thing all investors say is, "I wish I would have started earlier". You will never hear someone say I wish I didn't start until I was 35, or 40. The sooner the better, you can only live so long and that 25-30 year mortgage being paid off when you 45 sounds a lot better than getting paid off when your 65 right?

You are the only thing in the way of Investing in Real Estate. Investing may seem like an impossible feat for you, and you might be right. You could be so far in debt that there is simply no way, but if you stay on track and plan ahead for your goal of investing in real estate then I am here to tell you that. You will make it, you will get there, and once you get there it will be a beautiful thing!

DON'T GIVE UP AND DON'T BE HELD BACK

This is your life and you have the choice to make it exactly the way you want it to be. Student loan debt seems like a never ending mountain to climb and pay off finally, however there are other ways to get in real estate and once your in use that monthly cash flow to eliminate the student debt once and for all!

Follow a budget, GET LEAN AND MEAN, and work your a** off until you achieve your goal of owning real estate. 

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America's Favorite
The Small Time Investor

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