Posted: 10/17/2008 5:50:09 PM EDT
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I have a good friend who works at the jail with me. He has three different loans from school and would like some advice. Here are the amounts with interest: $5,000 @11.5% $5,300 @ 6.25% $12,000 @ 11.5% I am not good with money myself. I have everything that I do because of my wife. If someone could point me in the right direction I'll print it up and give it to my friend. Much obliged, |
| What sort of advice is he looking for exactly? Off the top of my head he should see what sort of rates he can get by consolidating them. If the new rate is less than the weighted average of the existing loans (I'd guess they would be) then he should do that as a start. Is there any other outstanding debt to go along with this? Depending on the type of debt, the interest rates, etc. would determine what he should do also. |
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The textbook answer would be to knock out the highest interest rate loan(s) first. Dave Ramsey would say to clean out the smallest one first to get rid of an entire payment. So, it would seem that putting any extra $ into the $5K @11.5% is the no brainer. I have no idea how to figure the advantage of consolidation, but with interest rates likely to drop in the short term, he could ask around about what is available for that kind of loan. If he has a good FICO, perhaps he could get somewhere with that. Do you have a credit union where you work? They seem to be sitting pretty of late since they have not traditionally participated in the speculative crap that is taking the system down. |