How to Manage a Budget to Pay Down Student Loans
You’ve graduated, you’ve got your first real job, but you’ve also got that pesky student debt. Having loan payments hanging over your head can be stressful, but here are some financial planning tips to make them go away more quickly.
Keep Track of Every Penny
The bottom line is, if you don’t know where your money is going, you cannot effectively manage it. It may sound like a chore, but tracking your income and outgo is the single most important financial planning tip you will get.
The problem is that it’s easy to lose track of all the little expenses like coffees, snacks, and whatnot. Small as they seem, they do add up – sometimes to substantial amounts. There are apps available from many banks that can do this for you, or it can be as simple as making a spreadsheet yourself. Whichever method you choose, be accurate; don’t leave anything out.
Once you see where the cash flows, you have a better understand of where to cut out unnecessary expenses and reducing those little splurges, like a daily latte. You may be surprised how much less you can spend and still be comfortable. Reallocate that new-found money into paying down your debt.
What You Don’t See Is What You Get
Modern life brings with it many conveniences, and one of these happens to be an excellent financial planning tip: automatic payment. Experts suggest using automatic payments for necessary expenditures like car payments and mortgage or rent. These are priorities to be paid first, and what is left over is what you have in order to pay off debt. Plus, a history of on-time payments will also give your credit rating a boost, so it’s a win-win situation.
However, it is important to consider the other side of the coin when it comes to automatic withdrawals as well. As handy as it is to have ‘out of sight out of mind’ payments, it’s too easy these days to rack up hidden expenses, such as music or video streaming service subscriptions, which are often automatically renewed. It’s a painless expense because it’s behind the scenes. Try making it more difficult to buy online: don’t register a default payment method, or put your credit card in a drawer in another room. Do whatever it takes to slow the fiduciary leak.
When Your Dollar Can’t Stretch Far Enough
You’re working full-time and have been making qualifying payments for at least ten years, but it’s just not enough. Financial planning tips may not always solve the problem. Don’t despair though – you may be eligible for the federal government’s Public Sector Loan Forgiveness (PSLF) program. PSLF was signed into law by George W Bush as part of the College Cost Reduction and Access Act of 2007.
Not everyone will be eligible for the program; the requirements to qualify for the PSLF are many, and it can be a bit confusing. Contact us, and take our free assessment for eligibility. We can simplify the process for you and get you connected to the experts.