"How do I handle my debts and still go into missions?"
Student loans often present a hurdle for people headed to the mission field. Pay them off as quickly as you can!
"Follow a loan repayment plan or include loan payments in your mission budget."
Answer from Kyle, a missionary with Pioneers, serving in Asia with his wife and two children.
Debt in my opinion is one of the biggest hindrances for college grads and families wanting to serve in missions. The choices we make in this area can affect whether we get onto the field. I read recently that the average college student graduates over thirty thousand dollars in debt. Two approaches to handling debt are to pay off the debt before leaving for the field or to include loan payments in your mission budget and go now.
Answer from Kelly, serving in Southeast Asia.
You must follow the leadership of the Holy Spirit in all that you do. When we left our secular careers for Bible school, we had a lot of personal debt. God always met our needs. When we left for the mission field, we had some personal debt again. As we prayed about this, we sensed God's peace, and while we were on the field we were able to pay off all our debt!
Answer from David, director of mobilization with WEC International. David has been a missionary for twenty-five years as a field worker in West Africa and at WEC USA headquarters.
I would say work hard for a couple of years, live very frugally, and pay your debts. Find ways to decrease your expenses and pay down debt as fast as you can. While God has the ability to provide everything immediately, he may well have practical and academic lessons for you to learn.
Answer from Karin, who served as an English teacher in China for five years.
We had strong convictions to be out of debt before we went on the mission field. Once we arrived, we were so glad that we were out of debt. The families under the most stress and anxiety were the ones who had left debts behind at home. While this may have just been our experience, it was sad to see what some families were going through. Their budgets were tight, much of our fellowship time together was spent on their finances, they were not free to minister as they wanted. Two families had to return home to take care of the bills. Pray that God will quickly provide the finances for you to clear your debts.
Answer from John McVay, who has served in missions mobilization for more than twenty-five years.
Look at the U.S. Department of Education's student loan repayment programs, including Income-Based Repayment (IBR). Under this plan your payment amount is based on your income level, not the amount of your loan. We particularly recommend you consider IBR if you are planning to leave for the mission field within the next year. If you plan to serve internationally, you may find that under IBR your monthly educational loan payments would be extremely low or even $0. If you repay under IBR for twenty-five years, any remaining loan balance will be cancelled.
"Look into MedSend grants if you will be a medical missionary."
Answer from David, executive director of MedSend. David served with TEAM in South America for six years.
If you are headed to a career in medical missions, learn about Project MedSend. These educational-loan repayment grants are for qualified applicants who have borrowed carefully, lived a restrained lifestyle, and started repaying at the first opportunity. Project MedSend provides financial counsel and resources that help health professionals in training or prehealth students learn more about Christian financial management.
Answer from Luke, who works with The GO Fund.
Are you a college graduate who wants to go long-term to the unreached but cannot because of student loans? Take a look at The GO Fund. It can take over your student loans while you are on the field.
how long to pay off my house
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The first time we logged onto our online mortgage account after we paid off the balance, it was great to see those three little words: PAID IN FULL. It was even in all caps, which seemed to make it that much sweeter. If you have been able to pay off your mortgage, you know the feeling.
It’s gratifying, liberating and so many different things all rolled into one. It’s ironic, but after working so many years in the banking industry helping people qualify for mortgages, I really had no idea what happens after you pay off your mortgage until I paid off my own.
However, it was something I was more than happy to learn through personal experience. Here’s what happens after you pay off your house.
When you got your original mortgage, you had to sign a mortgage note and deed of trust, which stated the loan terms and allowed the lender to place a lien against your house. After you pay off your house, the lender may send that original note and deed back to you, although some don’t.
If you don’t receive yours back, at the very least your lender should send you a payoff notice to show you now have a zero balance on your home and a notice of your lien being released.
If you’re worried about it, after a couple of months, you can check with a title company to ensure that their lien has been removed from county records or pull your credit report to make sure your mortgage account shows a zero balance.
Because most people escrow the taxes and homeowner’s insurance associated with their property, it’s important to update your mortgagee after you pay off your mortgage. There should be no mortgagee associated with either entity once you own your house free and clear, and all it takes is a simple phone call to your insurance agent.
If your house burned down and your lender was still the mortgagee listed on your homeowner’s policy, you’d have to deal with them before you could even get your insurance check, and that would certainly delay the process.
For tax purposes, since you are now responsible for paying your annual property tax bill, you want to make sure you receive the invoice instead of your old lender. If you forget and miss the invoice, you will face a pretty hefty late penalty.
You Gain a Sense of Freedom after you pay off your mortgage
Although I’m not exactly primed for retirement just yet, I do feel a sense of freedom now that I don’t owe anyone any money. For instance, I quit my banking job a year and a half ago because I didn’t like working at a job that felt monotonous, and now I feel like I can do whatever it is I want to do, like freelance writing.
I make less money at freelancing than I did with my day job, but because I no longer have debt, that’s okay. I’m not chasing that dollar anymore. Instead, I’m doing something that I enjoy while making money at it, and I couldn’t be happier.
Typically, a mortgage is the last debt that you pay off, due in part to the fact that it’s probably your largest debt. Making that last debt payment is a surefire way to commit yourself to staying debt free for the rest of your life. After that last payment is made, you can kiss debt goodbye for good (or kick it out the door if you prefer.)
When you pay off your mortgage, you can put that money that you were using to pay it down each month toward other things. While you could just spend the money, a much wiser move would be to allocate it toward other financial goals.
For example, you could put half of it toward college saving for a child and half in a brokerage account to invest and save for retirement. Or, you could put it toward any other number of concrete goals you are working toward (saving for a car or other purchase, for example.)
That being said, it can be difficult to know how to allocate those extra funds and manage all your financial accounts. It’s easy to let something go unnoticed or simply not recognize money savings opportunities.
Once you pay off your mortgage you have even more money you can put to work for you so it’s important not to miss those opportunities. One good way to manage the extra cash flow is to put the funds in a high yield savings account until you decide what to do.
Banks like Ally or Barclays Savings pay at least 1.10%, let you stay liquid for the time being and earn something on the cash until you decide what to do.
The best way I’ve found to find opportunities and manage our finances holistically is Personal Capital. Personal Capital is a free to use platform that connects all your financial accounts in one place.
You can combine banking accounts, brokerage accounts, credit cards, mortgages (but, that’s paid off , monthly bills and more.
As you can see in the screenshots below, Personal Capital allows you to track your spending, analyze investments against their benchmarks, provide a tax analyzer, monitor your net worth and much more.
Obviously, after you pay off your mortgage you will have quite a bit in excess funds to use for other long-term goals. By using a free tool like Personal Capital you can stay on top of your entire financial picture, directing it on the course you choose.
Once you do finally make that final payment, I think it’s entirely appropriate to treat yourself to something nice to celebrate. I don’t normally like to say, “You deserve it,” but if you’ve officially reached debt free status then I do think you deserve to take a break and enjoy something you had to do without while paying off your debt.
Enjoy a fancy dinner out with your significant other and drink too much wine. Take a day or two off work and travel to a bed and breakfast for a long weekend. Go to an expensive amusement park if that’s what floats your boat. You’ve reached the end of your goal, so now it’s time to breathe a sigh of relief and celebrate a little.
Additional resource: If you’re in a similar situation and want to invest some of your excess funds but don’t know where to look, check out one of my favorite brokerages – Betterment. Betterment is the top robo-advisor in the space. They manage your investments for you in low-cost index funds and have proprietary tools that help you maximize your specific tax situation and longer-term retirement goals. The best part – they offer this at a fraction of the cost you’d pay a traditional financial advisor!
Have you paid off any huge debt recently? How did you celebrate? Have you paid off your mortgage? If you still have debt, are you planning on doing something special once you’re debt free?