Thanks again for 1,00 subscribers! Reminder that 1 of my first 10,000 subscribers will win $1,000, and 5 will each win $100. You will be randomly selected and announced within the first week of hitting 10,000 subscribers!
I paid off $60k in federal student debt in a little over 3 years working a tech job in CA. I hated the job and the absurdly expensive suburban hellhole that I lived in. I definitely lost some money paying the loans off that fast, but it allowed me to leave that job much faster. Being debt free allowed me the breathing room to take some time to transition into a different field (from hardware to software). I enjoy the work I do now! I would have absolutely paid $10k to get out of that awful job a year early if I had had the money, so that's how I view the opportunity cost of the lost investment interest.
Congratz! Proof that people can work crappy jobs (temporarily) so that they get into a better situation and can afford to work a better job that just might pay less
I think the advice in this video is correct, but only if the person actually invests the excess cash. I'm under the impression that the average person who choses to pay the minimum will not invest the cash and instead use the cash to enhance their living standards (eating out, car loans, fun stuff). As a result, I think the advice is only suitable for some.
It’s only not suitable for people who aren’t financially literate and lack basic self control. Not a good reason to choose to do something else. It’s not that hard. Just automate your investments with the excess
For me, I couldn't handle 40k looming over me. I payed it down to 15k and don't mind focusing on saving for a home and investing more now. I needed the amount to be easy to handle if I had to fall back on a minimum wage job.
Truth of the matter is this, it's up to you how you personally want to attack student loans. If you follow any one of these 3 options, you're crushing anybody who is ignoring their debt. It's down to if you value your peace of mind or more digits in the bank account
I won't lie, I support Dave Ramsay method. It just leaves a bad taste in my mouth that someone is earning millions of dollars in interest off the dreams of young adults. We, the people, need to become better at finances and pass it on to future generations. The government, to some degree, is profiting off the student loans and their interest. They aren't changing fast enough to help. So we have too. Sorry for ranting...
I got lucky and got a job in the oilfield in 2012 and was able to pay off my $85k student loans within 18 months. I wanted that peace of mind. I refuse to borrow for any additional schooling.
The answer to this question should be decided by looking at your habits and your personal finance discipline. I would trust somebody like Caleb to make the decision to pay off after investing as he seems to show discipline and intentionality with his money. I would say most people (I.E the people who have never seen this or any reputable finance channel or are getting their financial advice from social media influencers) should absolutely get out of student loan debt a fast as possible.
It's absolutely person to person. I would love to see us get to a point where the average American has discipline and intentionality with their money... luckily, I think we might be seeing the start of a shift towards people self educating via books and other sources like here!
I have like ~$270K in federal student loans after finishing health professional school. Just paid off my car loan for my 2021 SUV in 1 year. No credit card debt. I work for the federal government, so paying minimum income based amount for 10 years to obtain PSLF is the right direction for me. Currently focus is saving enough downpayment (20% hopefully) to purchase a house in the near future.
This is a great video going into some of the nuances of student loan repayment. I would like to add another caveat. Age. The older the borrower the more important it is to pay off student loans. The goal being going into retirement without any debt makes being able to retire much more possible. I also watch the Money Guy show and they spell out student loan repayment based on age and interest rate. Basically once you are in your 40's any debt with 4% interest or more is considered high interest debt. I took those words to heart and paid off my student loan the interest rate was a touch over 4% so I thought it was low interest. But since I'm 47, not so. Keep up the good work!
@@CalebHammer Great video, and I am becoming a fan of your content. However, I respectfully disagree with what she said. I am in my 40s and facing the same thing. While no one wants to carry debt into retirement, you also have to realize the clock is ticking until retirement. Having debt can hurt your retirement, but not having a nest egg already built up will hurt it even worse. We also have to acknowledge the reality that some of us may be forced into retirement due to the company we work for, or have difficulties physically continuing to work until 65 or 67. I have seen both scenarios happen to relatives and coworkers. While still paying $300 a month on student loans in retirement would suck (although unless you went to school later in life, you should be able to pay off those loans from your 40s to 60s), losing years of compounding interest and bonuses like company 401k matches would suck even worse.
I find it interesting that so many people talk about retiring at ages 60-65. Both of my parents are still working in their 70s, one full-time and one 2 days a week, because they enjoy working. I guess that's also the benefit of finding a fulfilling job that you like.
damn. i dont like my school but i have a full scholarship covering tuition and i commuted for the first 2 years and now have money that i earned to pay for my own housing. the only money i owe is $500 on a credit card. i dont like the city too much but im realizing how fortunate it is i will graduate debt free and into some high paying tech job. financial freedom is everything
Luckily for me, I qualified for fafsa, so I would receive Pell grants every semester. I only owe around $5,000 in loans. I acquired an internship at Microsoft as a software engineer. Would it be wise to just pay it all then ?
I think most ppl just want the reassurance that their bills/loans are paid off especially if we’re headed for a major recession. That is more important, in the immediate future, then financial savviness bc saving is optional and paying one’s bills is NOT. See below for FICO score. 🙄😂😂😂
The biggest thing for me is retiring and still having student loans. It’s really a new problem. Six figures of loans and when you retire they may still be there. So even if you invest money then you’ll have to either pay them off while alive or keep paying monthly payments until the day you die. I personally want to pay off asap. Not to mention all my loans are over 7% 😂
I was looking to see if i should pay minimum, monthly payments on federal student loans and just invest more in the stock market but it's crazy the amount of growth your channel has had man congratulations you've definitely have changed my mindset on alot of things money wise keep killing it Caleb!
I regret trying to pay down loans first (even though I targeted higher interest loans first) for my first two years out of college. After that point I started investing more and also once the student loan repayment freeze came into effect I stopped paying altogether however I did put most of my money in at a bad time when I started investing, but I’m just going to keep aggressively investing now while the market is down. I’m hoping we get loan forgiveness (but not counting on it) but I hope they only forgive $10,000 worth because otherwise people like me who paid down our loans get screwed for being fiscally responsible people.
Can you make a video that goes over Income based repayment vs like 10year repayment? Like IBR is really cheap (Comparatively) but lasts forever, but with the recent changes…
Does the “pay off private student loan debt immediately” still apply if you have a decent interest rate? Mine is 4.33% on private loans, not sure if that recommendations was based on the assumption that private loans will have higher interest rates.
I think that the suggestion to pay off private student loans comes from the fact that private loans never go away. They can't be forgiven, so it makes sense that you would still want to get rid of them, because if anything were to happen, they wouldn't stop.
There's a fatal flaw with this logic and the reason is taught in formal financial education. Having debt by nature carries inherent risk, and in finance, when one investment is riskier than the other you cannot compare apples to apples. A beta must be applied to the mathematical equation to account for the risk, which is completely missing from your advice. You didn't "work out the math" because you failed to apply a beta for risk. Your advice in that sense is flawed.
Hi! Great video! How would I go about investing in the Spx 500 fund. I have clue where to go or how to start and would really like some guidance to first start. Thanks!
They fluctuate from year to year, but they typically average around a ≈10% return over long term investment(like 10 years) which makes these projections mostly accurate(but yes there could be some slight differences). Some years may be 8% but some may be 12% so it would balance out(or other examples like that). But that is assuming you’re investing wisely and not being risky with your investments. Even if you don’t know much about investing, you can do that by investing in some index funds which are pretty safe bets and diversifying your portfolio(investing in a lot of different stocks and not just putting all your money in a few of your favorite/random companies). Most stocks in the market tend to fluctuate together as a whole so as long as you diversify your portfolio, aren’t extremely unlucky, and the US/world economy doesn’t go to complete shit where money is no longer a form of currency, you should have some decent annual returns in the long term(10+ years).
This is a really nitpicky point, but around 5:30, you mentioned the amount of interest paid and it was almost exactly half as that of the 10 year payment. Wouldnt it be lower, as the principal would decrease a lot faster per month, so the interest rate would be multiplied to a smaller balance? It wouldnt be insanely lower, but I just wanted to check if you did that or just multiplied the interest rate by the initial balance for 5 years.
The explanation you gave is precisely why the interest paid for the 5 year payment is lower than exactly half of that of the 10 year payment and not actually exactly half. It’s just that a 4% interest rate is extremely low and won’t have as much of an impact on paying it early as most people would think, which is exactly why it’s more beneficial to invest that extra money for an annual ≈10% return
What about parents. We have student loans for our children. I paid my own way for college but my kids couldn't even get in to college without parent student loans. I feel cheated. And it wasn't even my education
Thanks again for 1,00 subscribers! Reminder that 1 of my first 10,000 subscribers will win $1,000, and 5 will each win $100. You will be randomly selected and announced within the first week of hitting 10,000 subscribers!
I paid off $60k in federal student debt in a little over 3 years working a tech job in CA. I hated the job and the absurdly expensive suburban hellhole that I lived in. I definitely lost some money paying the loans off that fast, but it allowed me to leave that job much faster. Being debt free allowed me the breathing room to take some time to transition into a different field (from hardware to software). I enjoy the work I do now! I would have absolutely paid $10k to get out of that awful job a year early if I had had the money, so that's how I view the opportunity cost of the lost investment interest.
Congratz! Proof that people can work crappy jobs (temporarily) so that they get into a better situation and can afford to work a better job that just might pay less
I think the advice in this video is correct, but only if the person actually invests the excess cash. I'm under the impression that the average person who choses to pay the minimum will not invest the cash and instead use the cash to enhance their living standards (eating out, car loans, fun stuff). As a result, I think the advice is only suitable for some.
YES, has to invest the extra to actually make this work!
It’s only not suitable for people who aren’t financially literate and lack basic self control. Not a good reason to choose to do something else. It’s not that hard. Just automate your investments with the excess
@@astrahl I think you only need to watch Financial Audit to realise that it is the minority of people who have the self control needed.
I’m always flipping on whether I want to pay off student loans faster, invest more, or put more in my house down payment fund.
I’m in the same boat haha… what did you end up doing?
Yes thats my life even though ive been turbocharging my loan payments as of now
I trying to find answer to how do I attack the student loan when paying off large sum
Im doing both. Part time job goes to student loans, extra income from main job goes to investments
For me, I couldn't handle 40k looming over me. I payed it down to 15k and don't mind focusing on saving for a home and investing more now. I needed the amount to be easy to handle if I had to fall back on a minimum wage job.
Truth of the matter is this, it's up to you how you personally want to attack student loans. If you follow any one of these 3 options, you're crushing anybody who is ignoring their debt. It's down to if you value your peace of mind or more digits in the bank account
I won't lie, I support Dave Ramsay method. It just leaves a bad taste in my mouth that someone is earning millions of dollars in interest off the dreams of young adults. We, the people, need to become better at finances and pass it on to future generations. The government, to some degree, is profiting off the student loans and their interest. They aren't changing fast enough to help. So we have too.
Sorry for ranting...
I got lucky and got a job in the oilfield in 2012 and was able to pay off my $85k student loans within 18 months. I wanted that peace of mind. I refuse to borrow for any additional schooling.
The answer to this question should be decided by looking at your habits and your personal finance discipline. I would trust somebody like Caleb to make the decision to pay off after investing as he seems to show discipline and intentionality with his money. I would say most people (I.E the people who have never seen this or any reputable finance channel or are getting their financial advice from social media influencers) should absolutely get out of student loan debt a fast as possible.
It's absolutely person to person. I would love to see us get to a point where the average American has discipline and intentionality with their money... luckily, I think we might be seeing the start of a shift towards people self educating via books and other sources like here!
I spent a year just paying student loans off ~5 years ago, freed up $400/month.
I have like ~$270K in federal student loans after finishing health professional school. Just paid off my car loan for my 2021 SUV in 1 year. No credit card debt. I work for the federal government, so paying minimum income based amount for 10 years to obtain PSLF is the right direction for me. Currently focus is saving enough downpayment (20% hopefully) to purchase a house in the near future.
If you can't handle a student loan, good luck with a mortgage.
If you can't handle a student loan, good luck with a mortgage.
This was a terrible idea….
So many bad decisions in this comment
This is a great video going into some of the nuances of student loan repayment. I would like to add another caveat. Age. The older the borrower the more important it is to pay off student loans. The goal being going into retirement without any debt makes being able to retire much more possible. I also watch the Money Guy show and they spell out student loan repayment based on age and interest rate. Basically once you are in your 40's any debt with 4% interest or more is considered high interest debt. I took those words to heart and paid off my student loan the interest rate was a touch over 4% so I thought it was low interest. But since I'm 47, not so. Keep up the good work!
Yeah I absolutely would not want to go into retirement with student loans
@@CalebHammer Great video, and I am becoming a fan of your content. However, I respectfully disagree with what she said. I am in my 40s and facing the same thing. While no one wants to carry debt into retirement, you also have to realize the clock is ticking until retirement. Having debt can hurt your retirement, but not having a nest egg already built up will hurt it even worse. We also have to acknowledge the reality that some of us may be forced into retirement due to the company we work for, or have difficulties physically continuing to work until 65 or 67. I have seen both scenarios happen to relatives and coworkers. While still paying $300 a month on student loans in retirement would suck (although unless you went to school later in life, you should be able to pay off those loans from your 40s to 60s), losing years of compounding interest and bonuses like company 401k matches would suck even worse.
I find it interesting that so many people talk about retiring at ages 60-65. Both of my parents are still working in their 70s, one full-time and one 2 days a week, because they enjoy working. I guess that's also the benefit of finding a fulfilling job that you like.
Paid off Sallie Mae too. Paying the minimum on fed loans. Just bought my first home. Focusing on saving with how this economy is looking.
damn. i dont like my school but i have a full scholarship covering tuition and i commuted for the first 2 years and now have money that i earned to pay for my own housing. the only money i owe is $500 on a credit card. i dont like the city too much but im realizing how fortunate it is i will graduate debt free and into some high paying tech job. financial freedom is everything
Luckily for me, I qualified for fafsa, so I would receive Pell grants every semester. I only owe around $5,000 in loans. I acquired an internship at Microsoft as a software engineer. Would it be wise to just pay it all then ?
Yep you don’t want that hanging over your head acurring interest
You're assuming the market keeps giving 8-10%
Congratulations on the first 1k subs!
Thank you so much!
The sooner you repay a loan, the less interest you'll be paying. Interest is deductible, but it's not worth it.
I think most ppl just want the reassurance that their bills/loans are paid off especially if we’re headed for a major recession. That is more important, in the immediate future, then financial savviness bc saving is optional and paying one’s bills is NOT. See below for FICO score. 🙄😂😂😂
The biggest thing for me is retiring and still having student loans. It’s really a new problem. Six figures of loans and when you retire they may still be there. So even if you invest money then you’ll have to either pay them off while alive or keep paying monthly payments until the day you die.
I personally want to pay off asap. Not to mention all my loans are over 7% 😂
I was looking to see if i should pay minimum, monthly payments on federal student loans and just invest more in the stock market but it's crazy the amount of growth your channel has had man congratulations you've definitely have changed my mindset on alot of things money wise keep killing it Caleb!
I think you need to add a caveat to 4:30 because my private loans have a lower interest rate than my federal ones. Mine is a 3.66%
Pay it off. Guaranteed ROI equal to the interest rate, and you can't put a price on freedom.
I don’t feel not free lol
Great video, simply articulated
But why pay off Private Student Loans immediately? All of mine are fixed rate. Some are below my Fed interest rates.
it’ll fuck your credit up
I regret trying to pay down loans first (even though I targeted higher interest loans first) for my first two years out of college. After that point I started investing more and also once the student loan repayment freeze came into effect I stopped paying altogether however I did put most of my money in at a bad time when I started investing, but I’m just going to keep aggressively investing now while the market is down.
I’m hoping we get loan forgiveness (but not counting on it) but I hope they only forgive $10,000 worth because otherwise people like me who paid down our loans get screwed for being fiscally responsible people.
Buying the market at a discount currently!!
Saw your videos on TikTok super interesting! Do you have to be in debt/have poor spending habits to come on?
Thank you so much! And not at all! Are you near the Austin area?
Idk why but I have a hard time Comprehending index funds and compound interest
Honestly, I'd play with a compound interest calculator online! It helps you visualize things much easier.
Can you make a video that goes over Income based repayment vs like 10year repayment? Like IBR is really cheap (Comparatively) but lasts forever, but with the recent changes…
Does the “pay off private student loan debt immediately” still apply if you have a decent interest rate? Mine is 4.33% on private loans, not sure if that recommendations was based on the assumption that private loans will have higher interest rates.
I think that the suggestion to pay off private student loans comes from the fact that private loans never go away. They can't be forgiven, so it makes sense that you would still want to get rid of them, because if anything were to happen, they wouldn't stop.
..."black" v "white"...with no additional context...fantastic...
when and if we have to pay them... lol ok. I agree that investing is the best. option.
Do you still have student loans or did you pay them off?
what would you suggest for interest at 5.35 is that still too high and I should pay it off?
Did you include long term capital gains taxes in your calculation?
There's a fatal flaw with this logic and the reason is taught in formal financial education. Having debt by nature carries inherent risk, and in finance, when one investment is riskier than the other you cannot compare apples to apples. A beta must be applied to the mathematical equation to account for the risk, which is completely missing from your advice. You didn't "work out the math" because you failed to apply a beta for risk. Your advice in that sense is flawed.
How long does it take for you to make a video on average?
5-8ish hours, sometimes more.
Hi! Great video! How would I go about investing in the Spx 500 fund. I have clue where to go or how to start and would really like some guidance to first start. Thanks!
Open up a brokerage account with a company and then you can invest in one. If you still need help, let me know!
What's considered a high interest rate?
My interest rates are at 7.75% now
I would pay those off early!! Anything over 4-5%
@@CalebHammer thanks Caleb!
It's tied to be the LIBOR as well, which is increasing!
@@TheAlchemist1089 ooohhhhh wow 😬
Im financial illiterate but dont those interest rates in profit , dont they fluctuate and the projections are not 100% accurate ? investment wise.
They fluctuate from year to year, but they typically average around a ≈10% return over long term investment(like 10 years) which makes these projections mostly accurate(but yes there could be some slight differences). Some years may be 8% but some may be 12% so it would balance out(or other examples like that). But that is assuming you’re investing wisely and not being risky with your investments. Even if you don’t know much about investing, you can do that by investing in some index funds which are pretty safe bets and diversifying your portfolio(investing in a lot of different stocks and not just putting all your money in a few of your favorite/random companies).
Most stocks in the market tend to fluctuate together as a whole so as long as you diversify your portfolio, aren’t extremely unlucky, and the US/world economy doesn’t go to complete shit where money is no longer a form of currency, you should have some decent annual returns in the long term(10+ years).
... "There's always the chance that Biden or someone else will forgive those loans in the future."
Are you psychic Caleb?
Caleb you need to make an update 🙏🏾🙏🏾
If you don't know how to be responsible and pay off your loans. There is no way you will responsible to invest wisely and will just lose it all.
Would you recommend acorns for investing?
I use Acorns! I
This is a really nitpicky point, but around 5:30, you mentioned the amount of interest paid and it was almost exactly half as that of the 10 year payment. Wouldnt it be lower, as the principal would decrease a lot faster per month, so the interest rate would be multiplied to a smaller balance? It wouldnt be insanely lower, but I just wanted to check if you did that or just multiplied the interest rate by the initial balance for 5 years.
The explanation you gave is precisely why the interest paid for the 5 year payment is lower than exactly half of that of the 10 year payment and not actually exactly half. It’s just that a 4% interest rate is extremely low and won’t have as much of an impact on paying it early as most people would think, which is exactly why it’s more beneficial to invest that extra money for an annual ≈10% return
NO! Biden says he got this. 😄😄😄
🤑🤑🤑
He lied bro
Biggest advice I got from this is don’t date black women owing money lol
Can u talk more aboimut sp500
But why male models?
What about parents. We have student loans for our children. I paid my own way for college but my kids couldn't even get in to college without parent student loans. I feel cheated. And it wasn't even my education
You people must be rich