Cover? Check. Dress? Check. Diploma? Check. Are you planning to repay your student loan? Wait what
Student loans are an especially intimidating source of debt. When you embarked on your college trip, your student loans were something that would “someday” come – something you just didn’t have to worry about in the present moment.
But suddenly that day has come and you could panic completely for good reason. This generation has more student loan debt than anyone before, with national student debt around $ 1.3 trillion. This amount is enough to scare even the bravest of postgraduates.
When you arm yourself with knowledge, you can prepare yourself to repay your student loan with confidence and pragmatism. Read our tips on how to deal with student debt below. Think of it as Student Loans 101.
Step 1: create a plan of action
The first step in handling your student loan is to gather all the information and formulate a plan.
Find out when to start paying back your loans – usually six months after you graduate. If you don’t already know, find out how much you owe.
Student loan interest may apply even while you are in school. Hence, this amount is likely to be higher than you remember. Student loan interest rates tend to be quite high, so that number also affects how much you have to pay each month to make a dent.
Fortunately, your loan repayment homepage can help you calculate how much to pay monthly over a 30 year period.
When you have all of your credit information gathered, use your monthly income and savings to find out what you can afford to pay each month. Make sure to factor in your guaranteed monthly expenses like groceries, rent and utilities.
And while it may seem high, consider putting a portion aside each month to save (consider opening a separate savings account for this). You may think saving is a stretch when it comes to repaying loans, but your 30-year-old self will thank you when considering buying a home.
It can be helpful to set some financial goals to keep you motivated on your money-saving journey.
Once you’ve settled every dollar, create a budget or use budgeting tools. This budget will be the cornerstone of your financial future. The hardest part? Stick to it.
Step 2: stick to your budget
There is nothing more important than sticking to your budget. Hopefully you have set aside some money to have fun each month, but do your best not to exceed this amount.
When shopping for groceries, look for cheap options and go for a minimum. Especially if you’ve just started a new job, you’ll find that your new income will come in much faster if you keep your expenses to a minimum each month. Ultimately, you benefit more from the rewards of being frugal than the tempting impulse purchases.
While you may feel that self-imposed financial pressures make you bored and old, they will make you much more comfortable when you get bored and old and are debt free later on.
Step 3: Make additional payments if possible
If you get a big bonus or generous Christmas present from mom and dad at work, put it on top of your student loan debt.
Remember, the lower the number on your debt account, the slower the interest will accrue.
Every large chunk you can put into your loans goes a long way in reducing debt-related stress.
Step 4: don’t forget to have a life
Pinching a few cents can be rough. Even if you need to save as much as you can, make sure you have some cash for fun.
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There are many ways to have fun on a budget. Look for free activities in your city. Parks, libraries, and museums often have free events.
If you still live in the city where you graduated, find out about meetings across the city from your alumni association. With a little creativity, you can still have fun while you pay off your student loan.
Student loans are intimidating, but repaying them is not an impossible task. With patience and diligence, you can achieve your goal of being debt free, saving for your future, and still living a life.
If you are overwhelmed by student debt and your credit rating is being hit, help in your battle against student debt is at your disposal as you learn how to improve your credit score.
Also, did you know that you can even start a business while you have student loans?
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