In addition to making a budget and allocating for your monthly payment, set aside money in a savings account in the event you may get laid off, fired, have a medical problem, or some other emergency. This would enable you to continue making your student loan payments and meeting other financial obligations.
Ideally, this account should have enough funds for 6 months of expenses, but to make it a little less overwhelming, aim for 1 month of expenses and keep going from there. Figure out how much you can afford to put into savings each month and do automatically. If you can only do $10.00 a month, that's better than nothing.
Keep your discretionary spending under control when paying off a student loan. For example: if you eat a lot of snacks and drink coffee, soda, or tea, to minimize excess snack and drink purchases, consider buying snacks in bulk and then taking some with you to work or wherever you are going for the day. Most people don't realize what $1.00 cup of coffee from the local convenience store adds up to over a year.
Just for reality's sake, say you work 20 days out of each month, or 240 days per year, and you get a cup of coffee every day before work. If you pay for a $1.00 cup of coffee each day, that's $240.00! Wow. Imagine what you could do with $240.00. That could be a car payment or rent for many people. And many people have several cups per day. Your work place may have free or cheap coffee, or you could bring a thermos with you.
Another way to curb your expenses would be to consider your entertainment budget. For example, if you have cable TV, Netflix, and you also go out to the movies once a week, can you cut out one of those? You could cut either the cable TV or Netflix and still be able to see plenty of movies and TV shows with the other option.
If you are a young adult, paying off your student loans is just the beginning of many financial responsibilities you will be asked to meet. Making payments on time every time will help to ensure that you maintain a good credit record, so that you can someday get other credit to buy a car or home if you want. It is a complicated process that can be made much easier with some simple planning and budgeting.
Don't worry. Being frugal is the new chic these days.
By Barbara P. from KS
By Janette from Parkersburg, WV
My daughter, who we convinced to go to college, graduated this past summer and now owes over $100,000 in student loans. They are not federal loans and they want her to start paying $600 a month. She is just a student hire right now and making enough to pay for her apartment and living expenses. Someone talked about consolidating them, but am scared she will be in further debt. Does anyone have any advice? Thanks!
By Vickie from Dayton, OH
By MelissaF12/14/2009My brother is in the same situation. His payments are around $900. He tried to consolidate his but it didn't work out of him. They were going to raise his interest rates so he undid it. So it wouldn't hurt to try! You don't have to except the proposal from the bank.
I have my loans though Wells Fargo. I just recently got my rate lowered just for graduating! Look and see ways to lower the rate. You can get it lowered for graduating and signing up for direct deposit.
If those don't work out for you, you can defer the payments. She will probably still be adding up interest, but at least she can get some time to get on her feet!
Talk to the banks. They will try to help you find the best solution! Good luck!
I have three student loans. I have heard that there is something offered, possibly through the government, to consolidate student loans with a low rate (not higher than what I pay now). Does anyone have any experience with this and have any tips?
- Chris
By Connie.
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Getting a Student Loan When on Disability