Debt and student loans
Understand interest before you sign anything.
A prudent person sees danger and takes refuge. Reading the terms before signing is wisdom, not pessimism.
Proverbs 22:3
Debt is a price, not a personality
Borrowing can be reasonable when it buys something that grows in value, like an education or a reliable car for work, and unreasonable when it funds a lifestyle. The deciding factor is the interest rate and whether the thing you bought is worth more than the debt. A 29% credit card balance funding a vacation is the fastest way to lose money you have not earned yet.
Avalanche versus snowball
The avalanche method pays minimums on everything and throws extra money at the highest interest rate first, which saves the most money. The snowball method pays the smallest balance first for momentum, which keeps people going. Both beat doing nothing. Choose based on whether you need the math or the motivation more.
Key terms
Principal: The original amount borrowed, separate from interest.
Compound interest: Interest charged on interest already accrued, which makes balances grow quickly.
This week's money move
Get ahead of college costs
0 of 4 done
Week 7 check
3 questions · no grade, just a gut check
1. Which is generally the safer way to borrow for school?
2. Net price means…
3. The avalanche method pays extra toward…