# Don't Take Out a Student Loan Until You Do This

1.31 Trillion, with a T.

According to the Federal Reserve Bank of New York, on December 31, 2016, the United States student loan debt hit 1.31 trillion dollars. The interest on this debt each month will make your draw drop.

But I'm not here to bore you with federal debt numbers. I'm here to help you avoid becoming a statistic. Students, and parents, get saddled with more student loan debt each month. But, it's not the loan that kills you...it's the interest on the loan.

Q: So how do you avoid getting saddled with a mountain of debt?

I used to work with a guy who got married and bought a house when he was 28. His wife and him bought a \$300,000 house, and they put 30% of the purchase price as a down payment.

They finance the remainder of the loan at 5.5% for 20 years. Ahhh, but here's where it gets interesting. Instead of making the minimum monthly payment, they adopted a savvy strategy. They doubled, tripled, even quadrupled up payments when they could.

The result? They paid off their house in 4 years, instead of 20 years.

Just by fast paying their house, they saved an estimated 75,000 over the course of the loan. Now close your eyes for a moment, and think about what you could do with an extra \$75,000?

I want to show you the numbers behind the fast paying of a loan...

Consider a \$200,000 loan, for 20 years, at 6% annual rate of interest. Check out the loan calculator for the numbers. If you pay the regular monthly payment of \$1,432.86, over the course of 20 years, you end up paying \$343,886.40. If you subtract the original loan amount of \$200,000, you end paying an extra \$143,886.40!

Now what if you fast paid? Check out this fast payment calculator. Set up the same loan above. For payments made, enter 1. Now, for extra payment, put \$1,500. With an extra \$1,500 per month, here is what happens:

It appears that by paying an extra \$1,500 per month, you could save \$97,914 in interest (\$142,887 vs. \$44,973), and own the asset 13 years sooner than under your current schedule (19.9 years vs. 6.9 years).
Mind boggling, isn't it? If you could rewind time, 5, 10, or even 15 years, what would you do to have another \$100,000 or more in your pocket? Behold, the power of fast paying loans. Remember what Einstein said about compound interest

Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.

Author of One Second Math and Free Traffic Frenzy