With student loans totaling more debt than all the car loans in the US, it is quite evident that you are facing quite a complicated task for at least several years, if not more: you will have to pay back your student loan. Here is some solid advice on how to manage the loans you contracted to take you through college, without pain.
Do you know how much you owe and to whom?
It may sound like a little bit on the nose to ask such a question, but the truth is that your student loan situation can be quite complicated. If you have both federal and private loans, you will need to know all the details you can have on them. One way to do that is by consulting the National Student Loan Data System, where all your federal loans are listed.
For private loans, you should consult your credit report that can be obtained online. This way, you will know your entire list of creditors, and you will be able to bring yourself up to speed with everything such loans entail.
Don’t use your grace period to slack
Many creditors will allow a 6-month grace period after you graduate so that you can use that time to find a job and get settled. It may sound great, but the truth is that these months can count toward lost time and nothing else.
If you start paying right away, some advantages cannot be denied. First of all, you will be 6 months closer to your goal of being debt free if you don’t use your grace period. Second of all, you get used to putting aside the necessary amount for paying off your debt, and that habit will help you manage your debt situation better.
Pay more than the monthly installment
It doesn’t matter how much extra cash you can put for each installment. Even if you just put 20 bucks on top of what you owe every month, that will show. Setting up automatic payments with the extra included will help out a lot. As long as that money won’t be available to spend, it will go to a higher goal, which is to help you become debt-free.
Deal with the highest-rate loans first
It may sound like a bit of work to have the loans with the highest interest rates dealt with first, but, in the long run, you will be able to save some serious cash. Because these loans are the most expensive, they will accumulate the most debt, as the time passes. Try to get rid of them as soon as possible, even if it means to opt for a more restrained, financially wise, lifestyle, for a while.
Don’t forget about your credit card debt
Most college graduates do not have only their student loans to worry about. They also have credit card debt to worry about, and forgetting about that can only mean your downfall at a later date. Your plan to pay off debt should include everything you owe and not just your student loans.
Don’t give up on your college lifestyle just yet
It is a good idea to continue to live frugal for a few years so that you can get rid of all the student debt you have. Even if it is not a good idea to eat ramen every day, you can make a long list of things that can help you keep your spending to a minimum so that you can pay more toward your loan.
Expensive shoes, dinners at fancy restaurants, and other things you do not need can wait until you’re debt-free. A day at the beach with your friends will only require a beach umbrella and a towel, plus a bottle of soda, unlike other, costlier, activities.
Put some money aside for emergencies
Nothing can prepare you for unforeseen circumstances than an emergency kit. We are not talking here about the kind with bandages and iodine, although that may help, as well. We talk about a small cash amount that you should have at home when something happens that requires money.
That will stop you from reaching for your credit card for all the little things. The cash that you pay from your pocket don’t come with interest rates, and that counts a lot.