Ask me anything 4th edition
By glblguy
Photo by: NickStarr
Each week I give the readers of Gather Little by Little a chance to ask me anything. The only real rule is that I can decline to answer. I’ll do my best to answer as many questions as I can though. Have a question you would like answered? Just drop me a line or leave a comment!
I received two questions since last weeks Ask me Anything post. The first questions is from Jennifer who asks:
Is it better to take out student loans to pay off extreme credit card debt (over 12K), or to say no to the loans (not needed for living expenses due to a scholarship and family support). These are graduate school loans, both
subsidized and unsubsidized. Thanks!
Jennifer, to be real honest, I am not all that familiar with the process of student loans. My understanding is that student loans are to be used to pay for educational expenses. Assuming your credit card debt is due to education expenses and assuming the student loans would provide a lower interest rate than your credit cards, than yes I would recommend moving the debt from your credit cards to student loans.
Remember though, you aren’t paying off your credit card debt by doing this, just moving the debt from one place to another. Before you do this, I would recommend you really take a hard look at your spending and change your habits, otherwise you might end up in a situation where you move the debt over only to rack up the credit card debt once again.
If you can, go cold turkey on the credit cards. Establish yourself an emergency fund, cut up the credit cards, and begin paying off the student loans as quickly as you can.
The second question this week comes from Eric who asks:
Hey Glblguy! What do you do for fun?
Hi Eric, thanks for the question. Well, besides writing here on Gather Little by Little and working on my other various internet projects, I like to do lots of things. I enjoy reading both fiction and non-fiction. Expect some book reviews coming soon as I got a great deal of reading done while on vacation for the past week.
I also enjoy playing with my kids, going out to dinner every so often with my wife, playing video games with my wife and kids on our Wii, working on our house (most of the time), watching movies, taking care of my fish aquariums, and playing Dungeons & Dragons with my kids and some friends (yes, I’m a bit of a geek).
Shawn writes:
Mac or PC?
PC, but only because I can’t afford a Mac right now. If I could afford one, I’d buy a Macbook Pro. Since college, I’ve long been a fan of Apple products. My current PC is a laptop running Windows XP.
July 10th, 2008 at 8:46 am
Jennifer (and others), just a word of caution with the student loans.
Although it IS a better deal (lower interest, deferred payments and tax deductibility) a friend of mine got stung when she took out student loans to pay off joint cc debt. She left her husband, and in the divorce proceedings, got all of the student loan debt (since she was the student and it was in her name) even though she could prove it was used to pay off HIS original debt.
July 10th, 2008 at 9:56 am
Good point about the student loans. They will stay with you forever or until paid off which ever comes first. Not even bankruptcy will erase student loans. Just a word of caution.
July 10th, 2008 at 9:59 am
Love your blog and love these posts!
Jennifer – I’ve done the payoff of credit cards with student loans. Some things to remember – Yes, student loans typically have lower interest rates so it’s nice to use them to clear credit card debt, BUT in the end, if it came down to you not being able to pay either, you would still be stuck paying student loans since they do not go away by filing for bankruptcy. Go ahead and pay off the debt if it makes you feel better, however like it was mentioned here – you have to check your spending. If you pay off your cards only to max them out again, it does you no good to take out the loans. Good luck!
July 10th, 2008 at 11:44 am
So, what do you think of the D&D 4th Edition? I’m pretty convinced it’s not real and has been released by a 3rd tier RPG company trying to rip off D&D and doing it poorly.
July 11th, 2008 at 4:54 am
Jennifer should definitely take the student loan to pay off the credit cards. You should always aim to borrow money at the lowest interest rate possible, and credit cards are usually at a very high rate of interest. The key thing to remember is that you can’t keep using the credit cards! Cut them up, otherwise you will wind up with student loan and credit card. Learn to live within your budget now and you will reap the benefits when you leave school.
August 26th, 2008 at 6:00 pm
I have a question for you. I am trying to determine a reasonable budget for food in NYC. I’ve tracked my expenses in the past and had wildly different numbers month to month. Is there a good rule of thumb on what I should be spending to feed both my husband and I in a big city? Thanks!