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Simple Steps To Begin Investing

Sad to say, almost every graduate of college or professional school enters the workaday world with student loans, and many also are carrying credit card debt. Young workers in this situation should set themselves two goals: first, to minimize the cost of these debts, and second, to get rid of them entirely.

Student borrowers whose loans are part of various government programs have a number of payment options. One worth considering right now is consolidating your loans to lock in today's relatively low rate. Rates are expected to jump sharply on July 1, so you should start looking into this issue now.

But be careful. There's a lot of hype out there, including promises of great savings that may not be as good as they sound. Some may be from brokers whose services you'd pay for but may not really need.

If you're having trouble figuring all this out, talk to people in your school's financial aid office -- even if you've graduated, they'll still talk to you; after all, they have a lot of your money -- and to your lender or lenders. If you have Stafford or PLUS loans all with one lender, that's whom you need to talk to. Many lenders also have Web sites with useful information.

Note also that many lenders offer ways to trim costs, such as by setting up a direct-debit payment arrangement through your bank. A good record of on-time, in-full payments may also entitle you to a reduction after a period of time.

There are also tax benefits for higher-education costs, including a deduction for student loan interest, that you may be eligible for. Don't miss out on these.

Credit card loans -- and that's what any unpaid balance is -- are expensive. Not only are rates high, but the interest is not tax-deductible. If you're struggling, here are some things that may help:

· Cut your spending. If you can't pay for it now, don't buy it. It's the first law of holes: When you find yourself in one, stop digging.

· Start paying attention to the solicitations you're probably getting. Six months interest-free? Move your balance. At the end of six months, do it again. But this is a stopgap tactic and could hurt your credit score if you do it more than once or twice. Use the time it buys you to make payments that reduce the balance.

· Make more than the minimum payment every month. You want to see your balance stop rising and then start to fall. Credit card companies love nothing so much as a debtor who never defaults but never manages to pay off. That's their idea of a money machine.

Debt isn't always bad. Borrowing to buy things of enduring value -- education, a home -- makes sense. But debt is also expensive, and getting out of it lets you turn the tables and become a lender or investor yourself, making your money work for you instead of for the other guy.

Building your own portfolio -- Once you are able to live within your income, you can think about additional investments.

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