Student loans are tough. You’ve just graduated college, you’ve (hopefully) found your dream job, and now that the typical 6-month grace period is over, it’s time to start repaying your student loans. 2013’s graduates are looking at leaving college with debt averaging $29,400. That can be hard to manage.
As a recent grad working in NYC, I’ve been there. I know how hard it is to balance loan payments with everything else, but I’ve learned a lot about budgeting. These tips really helped me get on track, and can help you avoid making your own financial mistakes.
1. Start planning now.
Don’t be shocked by your student loans. You know they’re coming, so plan ahead. Even before your first payment is due, even before you graduate, start thinking about how you’ll pay for your loans. Know how much you owe so you can prepare to add that amount into your budget each month. Planning for your payments will help make the transition into repayment much easier.
It’s never too early to start planning your finances. What is the best way to repay your loan based on your situation? Consider your options for payment and you’ll be ready when the time comes to start paying back your loans.
2. Learn how to manage your loan payment.
Managing your loans is crucial. You’ll likely be paying them back for 10 years after graduation and your interest keeps adding up over that period. If you take longer, you’ll pay much more in interest. Be smart about repaying your student debt and avoid damaging situations, like paying below the minimum monthly payment or running up your credit card debt.
Avoid dragging out your loan repayment if at all possible. You can save tons by repaying your loans sooner. Focus on the loans with higher interest rates first. If you can afford to make bigger payments toward these loans, do it. Even an extra $10 or $20 a month can help cut down your debt.
3. Be smart with your money, but don’t cut out all the fun stuff.
Don’t automatically say no to that trip back to visit your college friends at homecoming. Don’t skip out on seeing a band you love when they come to town. Don’t cut out movies, shopping or TV completely. Just spend your money smarter.
Instead of seeing every movie in theaters, only go to the ones you’re dying to see and pick up the others from Redbox or wait until they’re on Netflix. And when you do visit the theater, visit a cheaper theater or go to a midday showing and spend less on tickets and snacks. If you need entertainment at home, don’t feel like you need to completely cut out TV. Don’t do without TV service, but cut out the premium channels that cost a fortune each month or try other ways to save like shopping around for new service.
Use sites like Groupon and Living Social to find special deals on the fun stuff, like restaurants, tech accessories, clothes, trips and more. And always ask for student discounts! Look for companies that offer student discounts to recent grads.
4. Prioritize your spending.
Don’t let the amount of money you owe make you crazy. With planning and prioritizing, you can easily get into a good repayment schedule. If things get tight one month, know exactly how you can prioritize your spending to keep your loan payments in check.
Is it more important to you to go out to a fancy dinner, go shopping or take a trip? Is it more important to put extra money in your savings account or to pay a little extra back on your loans each month? There are plenty of ways you could spend your hard-earned cash, but being smart about your payments can really help you keep your spending under control.
5. Save your money.
Your parents have been telling you to save your money every time you talk to them. It might drive you crazy, but they’re right. The world was very different when your parents were in their early 20s, but their advice is still important. Retirement seems like a lifetime away, but you’ll want to be prepared when the time comes!
Leave room in your budget for savings. If your employer offers a 401(k), start putting money into that as soon as possible. And don’t forget to set aside some money to do fun stuff! Don’t put off your dream vacation just because of your loans. Remember that it’s okay to dip into your savings sometimes!
Leah Hillson is a freelance writer currently living in NYC. Through careful budgeting she has managed to land herself a hipster apartment in Brooklyn and travel to India, England, and occasionally even Manhattan. Find her at @leahmailDOTCOM.
Image Credit: Shutterstock.com