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After the high of graduating college fades away, you’re faced with a major obstacle – how to pay off your student loans.
Don’t panic. You can do this. The first step is to create your first budget that factors in your student loan debt. The good news is without classes, you can get a job or work more hours to help pay down your debt faster.
With student debt climbing to $1.5 trillion in 2018, millions are feeling the pain. While it will take time, having a strategy in place helps you pay off your loans faster than you might think.
Figure Out What You Can Cut
It’s always best to get the worst part out of the way first. What can you cut from your budget? For instance, do you really need four different streaming services? While cutting out $10 or so per month might not seem like much, that’s $10 towards something else, such as groceries.
You should still leave some wiggle room to do something fun during the month, but cut back as much as possible. The less you’re spending, the more you’ll be able to pay on your student loans every month.
Find Ways To Lower Your Payments
Obviously, you have to make the minimum payment every month, but that doesn’t mean there aren’t ways to lower this amount. First, if you have multiple student loans, work with your bank to see if you can consolidate your loans. Having one payment versus multiple payments means you’ll pay less each month.
The next step is to inquire about refinancing. While it’s not always possible, you may be able to lower your interest rate. You’ll need great credit to negotiate lower rates. Once you have a stable job, refinancing is much easier.
It’s important to note that you can’t lower the interest rate for federal student loans. These are fixed for the life of the loan. Federal Student Aid breaks down the types of federal student loans, how interest is calculated and how to repay your loan.
For other types of student loans, Nerd Wallet breaks down interest rates and your options for lowering those rates based on your type of loan.
Sometimes, you’ll have to pay for a few years before you can lower your interest rates. Keep checking each year to see if there’s any way to lower your rates to help save money and pay off your debt faster.
Setting Your Budget
If your first loan payment isn’t due yet, you may want to use a loan calculator to help you calculate just how much you’ll need to budget for each month. Some great loan calculator options include:
Once you know what to expect, use a budgeting sheet to setup your first post-college budget. You can use apps or a template, such as those that come free with WPS Office. Fill in your categories, expenses and available finances. From here, you can see exactly which areas are sending you over your budget and where to cut back.
Helping Your Budget
If you’re coming up short, you do have options. First, if you don’t have a job just yet, it may be time to find at least a part-time job to help pay the bills until you find a full-time job.
One thing you might not even know about is student loan forgiveness programs. Student Loan Hero provides a full list of student loan forgiveness programs and a list of jobs that include student loan forgiveness as a benefit. Even if it’s not your dream job, having the help for now can leave you free to pursue your dreams a little later.
No matter what you do, create a budget that’s reasonable. Spending $5 on something special for yourself once a month shouldn’t destroy your budget. If you stick to what you create, though, you’ll be well on your way to being debt free.