WASHINGTON D.C., DC — October is Financial Planning month. Experts say this is an ideal time of year to get your finances in order, before heading into the holidays and a new year.
The government’s unprecedented three-year pause of federal student loans ended Oct. 1. That left roughly 28 million borrowers to start making payments again. Jonathan Wright is CEO of Wright Time Financial. He offered some tips on how to get back on track repaying loans and even getting the amount you owe, reduced.
Student Loans
Question: How do you go about adding loan payments back into your budget after three years?
Jonathan Wright: “Once you understand what your discretionary, meaning what you have to pay every month, vs. things you can decide, ask yourself things like do I want to eat out this month? Do I want to go on that trip? Taking inventory of those things you might have to have some delayed gratification to make room for that student loan.”
Wright also says setting your loans for automatic withdrawals can reduce the amount you pay. According to Lending Tree, the most common rate reduction offered by federal student loans is 0.25 percentage point on your interest rate.
Creating a budget
Question: What advice to you have for someone creating a budget?
Jonathan Wright: “I think you have to be flexible and have to give yourself grace. You work hard for your money, you don’t want to have to budget every single penny. It’s good to have a guideline though, and you want someone who is going to keep you accountable. Share your budget with someone you care about.”
- Determine discretionary vs. fun spending
- Document all your expenses
- Check your budget every two weeks
- Adjust if necessary to remain on track
- Have an accountability partner
Generational Wealth
Question: What is the best way to create generational wealth for your family?
Jonathan Wright: “If we’re talking about finances specifically, take inventory of your life insurance policies. Life insurance is one of the best ways to pass on a legacy, because it’s tax free. You can also work with an estate planner who has tools such as trusts and wills. You can also look at long-term care insurance, which also protects and prevents you from spending down on your assets in retirement.”
Wright Time Financial has free, weekly 101 Financial Planning sessions available for the community.
