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Loans Reduce Net Worth
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Unfortunately, student loans and others without collateral do NOT automatically add value to your net worth and will impact your worth MORE than loans with collateral. But then what are they worth? While you can’t quantify your education, YOU are the collateral in this case and what you earn due to your school will hopefully be translated to greater savings and investments. If you’re fresh out of school, this can be daunting since you may be unemployed or untrained in the workplace, but given enough time, you should have a better savings account than someone without those student loans.
Tips
- Loans without collateral lack an asset component.
- Your income won’t count, but you can save money.
- This looks especially bad to fresh graduates– start saving!