Paying off Business and Student Loan Debt
There are many ways to pay off student loan debt for midwives like working for a non-profit organization and applying for the loan forgiveness program. That doesn’t apply when you start your own private practice. This debt including business start up expenses are your responsibility. Use a tool called Velocity Banking to accelerate loan pay off.
This strategy can be used for any debt (especially long term loans like 30 year house loans). I have used it to pay off rental properties faster, credit card debt, school loans, and business loans. It is taking your extra funds from personal and business income and putting them towards debt in a specific way instead of sitting in a savings account.
For example, I have $100,000 in graduate school debt (not that unrealistic for a Nurse Midwife graduate). I have an extra $500 coming in each month going towards savings. Instead of putting that a bank account making less than 1% interest, take a low interest credit card or home equity line of credit with a fixed interest rate versus amortized interest rate of school or business loans. Say your home equity line of credit interest rate is 5%. Pay $3000 from your home equity line of credit (fixed interest rate) towards grad school loan amortized interest rate). When payment is made, call school loan provider and make additional payment is off principal only (not interest).
Each month, each month your $500 savings will go to pay off $3,000 debt on your home equity line of credit. In 6 months, $3000 debt will be paid off the loan. Do the same step again with grad school loan, pay another $3,000 off principal only. Each month that extra $500 savings will be placed towards home equity line used to pay grad school loan. Key to this strategy is chunking away an amortized long term loan with daily fixed interest loans like home equity line of credit.
Every time a large chunk of the principal is paid off on grad school debt, less interest in paid from amortized curve of the loan. Loan will be paid off faster and less interest will be paid overall. Each person’s needs are different and encourage you to talk with an accountant about your individual situation before implementing this strategy. Great tool if used appropriately to pay off school or business debt faster!
Great video about Velocity Banking!
Amazon has a great Kindle resource to read!