This is for you 20-to-35-year-olds out there. In terms of statistics, being in debt is pretty normal. There is of course the well-known distinction that is made between good debt and bad debt. Good debt is something that goes up in value over time, whereas bad debt declines in value. Education is a good example of good debt. I will be talking about student loan debt as it is one of the largest types of debts that twenty-somethings and thirty-somethings face. They are a barrier towards wealth building and careful planning can help you pay them off.

Student loans are basically a burden. The average student graduates with about $20000 in student loans. Declaring bankruptcy cannot make this go away either. It is vital to pay down your debt by focusing on how much you contribute towards your monthly payments. Even an additional $100 every month can take off a lot of time that you would need to finish paying off the student loans.

Let’s look at an example. “John,” my roommate graduated from the University of Minnesota and has $20000 in student loan debt. His monthly payment will be $230 if he were to pay off this debt over a decade and he will be paying $7600 in interest. Let’s say he pays an extra $100 more monthly. Now he will be able to finish repaying his loans in around 6.3 years and pay just $4751 in interest.

There are financial calculators on www.dinkytown.net which is a website that is based in Minneapolis that me and a lot of my friends would use to see how different payments affect the time to repay. Sometimes the trouble is you may just not be able to come up with extra money to pay down debt. Then you’ll just have to call the bank and it tends to work. One call could save you thousands of dollars. It’s all about negotiation! Lenders will be able to assist you in finding a more suitable way to make your payments.