Vern's Story

Like many students, Vern had to take out student loans to afford his education. In fact, his first two years of college were largely financed from loans. Now, as an upperclassman, he has begun to think about how to pay back these loans. "I need to pay off my debt for peace of mind," he says. "It hangs over my head, and I want to work hard so I can pay it off quickly once it's due."

However, saving money is not always so easy. Vern says that it is too tempting to spend the money in his checking account. Therefore, to trick himself into saving, he began having his paychecks deposited directly into his savings account. This way, he can earn a little interest and only have the money he needs for bills and other expenses in his checking account. "It's psychological," he says. "If I don't see the money in my checking account, I'm less likely to spend it."

Because Vern will need his savings upon graduation, he does not want to use risky investments. However, whenever interest rates are high, he takes out CDs of various lengths. These CDs help him earn money to pay back his student loans, while keeping his investment risk at a minimum.

Things to Consider >>