Now that you have graduated and are approaching the six-month mark since you left school, your student loan payments will be coming due. This can be a nerve racking time, especially if you graduating with the national average of $37,173 in student debt and are already on a tight budget.
So, how do you fit your student loan repayment into your budget and where should it land on the totem pole? Below, we will evaluate this for you and provide you with some tips to help you make the right decision.
1. Pay Your Necessities FIRST
There are some things that you NEED in life including a roof over your head and food in your belly. You cannot survive without these things and will find yourself homeless if you do not make these payments.
Your student loan repayment is important, but it should NOT come before your needs and necessities. When we talk about “necessities,” we are strictly talking about your rent or mortgage, utility bills, and food. You do not NEED cable to live and this is not a necessity.
Before you make any payments on your student loans, find out how much money you have each month and then subject your necessities from it. Then, the leftover amount is what you have to work with when it comes to your student loan repayment and luxuries.
2. Put Luxuries Last
Student loan payments should come BEFORE any luxuries. You would hate to have a negative credit score and go into default because you couldn’t give up that daily $10 coffee.
You will need to sacrifice some to afford your student loan payments and this is okay. Once you have made your student loan payment for the month, you can sit down and find out how much money you have leftover. The amount left is the amount you have to put towards luxuries such as the Internet, cell phone, cable, eating out, etc.
3. Ask for an Income-Driven Repayment Plan
If you find that you are struggling to make your student loan payments, you may want to talk to your lender and find out if there are any options available to you. Many students who can afford something, but not all of their payment are often placed on an income-driven repayment plan. This type of plan will determine your monthly payment based on your family size and income.
There are other options such as extending your loan repayment term, forbearance, deferment, and more. All you have to do is talk to your lender and find out which option is the best for you and your situation.
Affording your student loan repayment is a priority, but it should not come before your necessities, but it does need to come before your luxuries. If you do find yourself in a financial pickle, there are options to help you out, but you need to speak up about them.
Remember, your student loans must be paid back, so you should watch how much money you borrow and try to only borrow the amount you truly need.
Author: Jeff Gitlen
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