I have $100,000 in student loan debt. Is there a special place in the Baby Steps plan for it?

Dear Dave,

I have $100,000 in student loan debt. Since the amount is so large, is there a special place in your Baby Steps plan for it?

Jules

Dear Jules,

I hope you have a nice, large income with which to fight that big pile of student loan debt. I’ve seen even worse situations, though. I’ve talked to people who went $200,000 into debt for a four-year degree in a field where they’ll make $45,000. Yes, that kind of thinking and behavior is out there, and it’s ridiculous.

The fact that it’s a large amount of student loan debt doesn’t change anything. Baby Step 2 is where you pay off all debt except for your home. So, don’t let this student loan debt hang around for years and years. You’ve got to get focused and intense about getting control of your money. That means living on a strict, basics-only monthly budget. After that, start throwing every nickel and dime you can scrape together, and save toward paying off those student loans as fast as possible.

Your income is your largest wealth-building tool, Jules. You can’t save, and plan for the future, when all your money is flying out the door to pay off debt.

— Dave

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