Reader Question: Where to Start with Debt?

It can be difficult to get started with paying down debt, especially when you have a great deal of it. I recently received this question from a reader:

I am writing in reference to my son, who has private loans in the

amount of over $100,000. He has already gone into deferments and it is

time for him to starting making payments. I have been searching many

ways to find out how he can staring paying off these loans. He's

currently living in Philadelphia with a part-time job and is willing to

return home in order to save money, find a full time job or several

part-time jobs which will help him set up a budget and staring paying

off these loans. I am lost as of where to start.

$100,000 is a lot. (And is a testament to the racket that the education industry and the student loan industry is running.) The important thing, though, is that you are getting started. Now, what works for you and your situation is going to be individual, and I am not a financial professional, so I'm just doing my best here, and this should not be construed as professional advice. But here are my suggestions as to where you can start:

1. Talk to your lenders: Keep the lenders in the loop. If your son is only working part-time, he might be eligible for a further deferral while you figure things out. Another option is to ask your lenders for a payment plan that gives you more time, or reduces the interest rate. You might also be able to consolidate all of your loans with one of the student loan lenders to make it easier to keep track.
2. Budget: If your son is willing to move home (and you are willing to have him there), that is a good start. He needs to do whatever he can to save money and get on a budget. He could sell some of his things, and cut back on entertainment expenses. And, of course, do what he can in terms of working and earning an income to get things under control.
3. Consult a professional: This situation is dire enough for professional help. Look for a fee only, or hourly rate, financial planner to help you figure out what you can do to get on track.
   

This is going to be a long, hard road. What you shouldn't do is tie this debt to your home through a home equity loan consolidation. Right now, these student loans are unsecured. Do not secure them with your house.