Create a Budget and Cut Expenses

It took me 7 years to pay off my student loan and I had only a small loan. When paying off your student loans, you need to create a budget where you allocate for making that payment every month. With my mortgage, I have found it much easier to allocate for the payment by subtracting 1/2 of it out of each paycheck, but then later writing the actual check. That way I am not left with virtually nothing after making the payment. This approach would work for student loans also.


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 Pope from KS

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