Paying Back a Student Loan of $62 000

I am lucky to have my mum who is able to provide for my education and not needing me to borrow from the bank for my education. When I first entered university, I realised that many of my peers had an education loan where they would need to start paying back a small amount each month followed by a larger sum when they graduate. Recently, I came across this video about student loans in the United States.




Seeing how the woman has to pay back her debt with a crazy high interest rate is sad because what she pays back as seen in the video is actually mostly just the interest rate and late fees that have been incurred meaning that only a small proportion goes to paying back the principal.



In the video, she mentions about entering college and seeing everyone sign up for student loans and she thought that was the way for every student so she did just that. However, after she graduated in 2009 which was the financial crisis. she received a call about the loan that she had taken. The amount was astronomical and she had to pay it back.




Of course, she would definitely need to pay it back but in the video she mentioned about not having any knowledge about loans and no one was there to explain to her about loans. I think at that time because her family was unable to support her for her education hence she just went ahead with taking the student loans without thinking much. I find this really depressing because it is tough having debts where you know you cannot have as much freedom to spend due to this load on yourself. I think in life, a choice made can change the direction of your life and many of the comments wrote that because her degree was a drama and communications hence she was not able to get a good job to pay off her debts.

I do feel affected because the degree that I am taking is not reputable in terms of it's course and school but I am a little glad that I do not have any loans to pay back unlike some of my peers. With that, I can only make myself work harder and hopefully smarter to secure a better job when I graduate this year.




I have a Facebook page for easy access. Do give it a like if you like my stuff:) Facebook: SingaporeanTalksMoney   

Having a good credit score

Recently, I came across this YouTube video about this real estate investor from U.S.emphasing about the need of having at least one credit card as early as you can afford to. He starts the video by talking about his family situation since young where his family was very opposed to having debts in cluding credit cards. So his family did not have a good impression of credit cards and everything should be paid in cash. Credit cards also made his parents became bankrupt and so he was really into cash. 

 

As a real estate investor he wanted to purchase a few good properties and needed money to invest in. So he used $200 000 which he had as savings in cash. He then went to a few banks and wanted to use 25% of the $200 000 as down payment. The rest would be a loan from the bank so that he could purchase a few properties. He was rejected by all the banks that he went to. He was very confused as he had ZERO debt and had a huge sum of money in his savings account.

He asked himself, "WHY?" and he later found out it was because the banks had no record of him being able to pay back his bills on time and he had no credibility. Hence he had to build it up by having a credit card set up and showed that he was capable of paying back. 

I find it really interesting for me as I too at first felt that being debt-free is a sign of being able to manage your finances well and that credit cards are actually redundant. But records matter for banks especially if you were to take a loan from them. So credit cards to the bank serve as a form of your capability to pay your bills and manage your finances well.