By Steve Allender, CRPC®
If you’re a nurse in Denver, we want to thank you. You’re a hero in our community, and we appreciate the service and care you provide each and every day, especially over the past year.
We know you probably had to take out student loans to get your nursing degree, and we know that on average, nurses with a BSN graduate degree have over $20,000 in student loan debt. (1) If you have an MSN or higher, your student loans may be well over $50,000.
Your job is stressful, and when you’re under added stress from large debt balances, you can’t perform at your best. You’ve done so much for our community, and we want to give back to you. Here are 3 tips to help you pay off debt faster so you can focus more on what you do best.
1. Create (And Strategize) Your Budget
The beauty of having a budget is twofold. Not only does a budget help you see exactly where all your hard-earned money is going (delivery service, anyone?), but it also helps you strategize how to optimize your cash flow and free up more money to pay off debt faster.
If you’re serious about paying off your debt but don’t know where to start, you should do at least one of the following two things: cut your expenses or increase your income. Or both. Having an up-to-date budget allows you to see exactly how much you’re spending each month. Perhaps when you see how much you’re really spending on wine each month, boxed wine won’t sound so bad.
If reducing expenses doesn’t feel possible, your budget might encourage you to bring in more income where you can. Could you pick up one extra shift at work per week? Could you open an Etsy shop and sell the crafts you’ve been making during Netflix binges? There are lots of ways to make extra money in this world, you just need to find what works for you.
2. Snowball Or Avalanche Your Debt Payments
Once you’ve created your budget and solved some cash flow problems, it’s time to develop a debt repayment strategy. Dave Ramsey is known for promoting the snowball repayment method, which states that if you pay off your lowest balance first and then roll the payments from that balance into payments toward your next lowest balance. This method can be motivational as you see more and more balances disappear quickly.
The avalanche repayment method is more cost effective, but it may take longer to see results. This method recommends that you pay off the balance that carries the highest interest rate first because this balance is costing you the most money. Once that balance is paid, you reallocate the money from those payments into the balance with the next highest interest rate. This method can save you hundreds or thousands of dollars in interest, and even cut your repayment time by a few months.
3. Take Advantage Of Public Service Loan Forgiveness
As a healthcare worker, you may be able to take advantage of Public Service Loan Forgiveness (PSLF), which is a federal program that incentivizes graduating students to take relatively low-paying jobs in their field at government or nonprofit organizations. For example, working for a state hospital in Colorado might allow you to qualify for the PSLF program.
Here’s how it works: You must work full-time for a qualified employer and make 120 payments toward your student loans. After 10 years of payments, the government will forgive the remaining balance on your federal student loans tax-free. Private loans are not covered under this program. (2)
It’s worth checking with your employer to see if you can take advantage of the PSLF program. If you’re just starting your nursing career—or you’re in between jobs—you may want to prioritize applying for government or nonprofit organizations to have part of your student loan debt forgiven, especially if you’re carrying a high amount of debt.
How We Help
Determining the best payoff strategy for your situation is complex, and you may be weighing many different options. For instance, should you pay off debt quickly, or save money for a down payment on a house? Should you increase retirement savings, or put that off until you’ve paid down your debt?
The answers to these questions depend entirely on your goals, your values, and your priorities. A trusted partner like the team at Acute WealthCare, LLC can help you answer these questions and more, developing a strategy to help you get from where you are now to where you want to be in the future. Schedule a 15-minute introductory phone call to get started!
About SteveSteve Allender is a Partner and Wealth Advisor at Acute WealthCare, an independent, fee-based comprehensive financial management firm. Steve is a Chartered Retirement Planning Counselor (CRPC®) who spends his days helping women in the healthcare professions build a secure financial future through investment management and financial planning. Steve loves building long-term relationships with his clients and helping them carry their financial burden so they can focus on what they love and how they want to spend their time. While Steve has officially been in the financial industry for over 20 years, he became hooked on learning about finances as a child when his parents taught him the basics of saving, spending, and giving. Steve enjoys all the outdoor activities living in Colorado provides, and you can often find him backpacking, snowshoeing, rafting, mountain biking, fishing, and exploring old mining communities. His claim to fame is that he is a Colorado Trail thru-hike completer, covering 486 miles of the most beautiful country on earth. Steve also enjoys a good book about Lincoln and the Civil War, and is committed to his community, mentoring through Save Our Youth and helping the elderly and single moms with household maintenance through the Minute Man Ministry. Learn more about Steve by connecting with him on LinkedIn. You can also register for his latest webinar on What We Do & How We Help.