Teresa Ghilarducci, Professor of Economics at The New School, joined TheStreet to discuss how to balance saving for retirement while paying off student loans.
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00:00What is the strategy, or the tools, or the advice that you give?
00:04I mean, you have a lot of people who are saddled by student loan debt, right?
00:09And so how do you pay off the student loan debt,
00:13and also keep in mind of building this retirement nest egg
00:18where you can get that compounding interest going?
00:21Yeah, so I want to talk to people who are on their own right now.
00:27Congress should do a lot, but we need to do a lot for ourselves
00:31as we wait for Congress to do the right thing.
00:34If you are in a situation of debt, you're paying off student debt,
00:39but you also could be paying off a credit card because you were sick,
00:42or you loan money to your brother or to your parents.
00:45We have a lot of communities where the kid who goes to college
00:49is actually a source of money for their parents.
00:52I actually, now that I think about it, was in that situation.
00:55I loaned money to my mother from my student loan.
00:58A lot of people have those kinds of web of connections.
01:02So you have to put your savings in buckets.
01:06I'm a financial counselor for the Boy Scouts, and this is what I learned.
01:10You have to learn to, out of your paycheck has to go short-term savings or debt payoff.
01:17Out of your paycheck has to go medium-term savings,
01:21and out of your paycheck has to go your life cycle savings or your retirement savings.
01:26So you need to have little envelopes, and you have to put money into those envelopes.
01:31And so the only answer is you have to take it out of your own current consumption.
01:36That's the only way you get savings.
01:38There's a lot of tips in my new book that we forgot to mention,
01:42Work, Retirement, Repeat.
01:44And I have a section, What to Do While You Wait for Congress.
01:47But people can't do this on their own.
01:50There's no worker on this planet except Americans that are expected to do this on their own,
01:59and it is planning for their retirement.
02:01Other countries that are just as capitalist as we are and free-marketing as we are
02:07have a different and a better system.
02:09And it wouldn't take much for us to go from here to there.