00:00 Speaker A
All week, we’ve been giving you everything you need to know about paying back your student loans. Today we get insight from someone with experience paying back a mountain of student loan debt. Jade Warshaw, she is Ramsey Solutions’ personal finance expert and co-host of the Ramsey Show. Jade, you and your husband had over $400,000 of debt, $280,000 of which was in student loans. What mindset shift helped you tackle that balance head on? And how long did it take?
00:44 Jade Warshaw
You know, first off, thanks for having me. The first thought is, hey, nobody’s coming to save us. You know, my husband and I realized that pretty early on. No one’s coming to forgive these loans. No one’s going to swoop in and pay the balance for us. Uh, so it’s something that you really have to take control of and look at those things that you can do day by day, step by step, to really make an impact on your own personal student loans.
01:16 Speaker A
Well, let’s talk about that step by step approach. What were the strategies that you implemented to make sure that you had the most impact?
01:28 Jade Warshaw
Yeah. So finding a good financial plan is so important. And so for my husband and I, we decided on the Ramsey plan, which comprises of those seven baby steps that a lot of us have heard of. Uh, the first step was, hey, you’re about to tackle a lot of debt. So let’s get a little bit of cushion, a little bit of savings to the side. So saving $1,000 first. That was an important thing. And then the next step is you do start to tackle the debt. Now that you’ve got that little cushion of savings, and the way you tackle that debt is using the debt snowball method, which is listing the debts by balance from smallest to largest. And what you do is you pay minimum payments on everything. And then whatever’s left, you throw at that smallest debt. And you can find, you know, that in, that inspiration and that motivation every time you pay off one debt, it’s like, woo hoo, we did it. And not only that, but now you get to take all that money that’s freed up and throw it on the next smallest debt.
02:44 Speaker A
So for someone overwhelmed by student loans right now, what’s the very first action that they should take?
02:53 Jade Warshaw
The first action that I tell people is to just stop borrowing money, right? A lot of times we think we have to do a million things at once, but the first step really is a mental step. It takes place in your own mind, in your own emotions to say, you know what? Borrowing money is the problem, and I can’t solve a problem while simultaneously creating it. So I need to stop the problem at the root. The root cause is I’m a person who borrows money, whether it’s for student loans or cars or credit cards, that’s how I get the things that I want in life and that’s what’s gotten me into trouble. So I need to stop that practice today. And so like I said, it’s a mental exercise, but it really is the first step, uh, is drawing that line in the sand. And then from there, we can start to tackle, you know, the debt by getting on a budget and start to work, uh, that debt snowball.
03:58 Speaker A
And now that student loan payments have resumed after that long COVID pause, what’s your advice for borrowers trying to get back on track, especially if they’ve gotten used to not budgeting that in their monthly expenses?
04:15 Jade Warshaw
Yeah, the first thing is to realize, hey, what happened in the past years since COVID in the last five years, that really was a point in time that we’ll never see again, right? The government kind of extended their hand, uh, for far too long, and a lot of us did get comfortable, and we started to almost feel like we’re entitled to have this extra money, and we shouldn’t have to pay back the money that we borrowed and signed on the dotted line for, right? And so the first part of that is kind of taking ownership and say, hey, I kind of got a get out of jail free card for a while. That time is over. I’ve got to take my head out of the sand and I’ve got to really accept the fact that these are my loans and I have to pay them, right? So I think that’s the part that a lot of Americans are struggling with is, hey, give me back the money you were giving me. Give me back the pause you were giving me. It’s kind of like a, uh, a moment that we can’t accept, but we really do need to accept that.
05:27 Speaker A
And for someone that’s about to head off to school, what’s your best advice to help them avoid the kind of debt that you had and set them up for financial success after graduation?
05:40 Jade Warshaw
Yeah, what you said is really important. You can’t wait until you’re about to head off to school to start making a plan for heading off to school. That really needs to start a lot earlier on in the teen years, and it’s up to parents to really start those conversations early and have them often. What are the expectations around college? And I can tell you right now, the most important choice, uh, when it comes to college is the college or a school that you choose. That’s really indicative of whether or not you’re going to be able to pay cash for college or not. And so I tell folks all the time, parents especially, tell your kids, you’re going to an in-state school because we’re not paying out of school tuition. You’re going to bump up the cost astronomically. We can’t afford that. Second, let’s talk about community college, uh, for an opportunity there to get your gen eds out of the way at a very low cost. And then once those gen eds are out of the way, now we can go to a state school. Let’s talk about what it looks like to do work studies, to apply for scholarships, to get grants. All of these things, they’re free money, and they’re money that’s right at our fingertips if we’re willing to do a little bit of work to get it.
06:54 Speaker A
And now that your debt is paid off, what’s your top advice for building lasting financial health and maintaining that financial freedom that ultimately we’re all looking to achieve?
07:06 Jade Warshaw
You know, my biggest piece of advice is the time is going to pass anyway. It’s really, you know, you look at this mountain of debt, and you think, oh my gosh, I can never climb that hill. I can never pay this off. But seven years is going to pass. Five years is going to pass. A decade is going to pass. And during that time, you really can make a lot of headway. It took my husband and I really five, it was seven years total, but to really pay off that bulk of student loans, it was really about four years to really cut into that. And that time is going to pass regardless. So you can either be very productive, or you can make a bunch of excuses and keep putting it off and putting it off. But I guarantee you, if you start today, you are going to look up five years from now, and that debt is going to be gone. Working the Ramsey plan, we see that the average person is able to pay off all of their consumer debt in two years or less. So I’m really giving you a bump to say in five years is going to all be gone.
08:18 Speaker A
All right, Jade. Great advice to wrap up our student loan week. Thank you so much.
08:25 Jade Warshaw
You bet. Thanks.
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