You have your diploma in hand, you've walked the aisle, spent four plus hours fidgeting at your graduation ceremony, you've earned this. It's your college degree.
Just when you think college - and all of its studying, tests, and lectures - is behind you...it's not. Now, you have a pile of student debt that will haunt you for at least the next ten years. Ahhh, college.
It's too late now to look back on decisions already made. It's time to look ahead to a bright and cheery future...a debt repayment plan!
You heard it right. It's time to start planning how you will repay all that money you borrowed for four years of education! What takes four years to learn, takes TEN to payoff. Well, not for this gal. My plan is to get rid of that debt as fast as my paychecks will allow.
Lucky for me, and for you, this doesn't have to be too complicated. Start with three steps.
How Much Money Are Ya Makin'?
What do you make every month? You don't have to tell me...But write it down. And get ready to do some serious math. JK...it's probably second grade level math.
Divide That Cash Into Three Categories
1. 50% Fixed Expenses: Rent, car payment, utility bills, subscriptions, anything that you pay every month is considered "fixed."
2. 30% Financial Goals: Paying down debt (this is where student loans come in...or credit cards...), Saving money, Retirement Fund
3. 20% Flexible Spending: Groceries, gas, fun stuff
You can rearrange these categories as you deem necessary, but beware! Experts say you should save at least 10% of your net monthly income, so don't go blowing your paycheck in the fun category when you really should be paying your student loan.
I always learn better by copying examples, so here's one!
Wanda makes $1,800/month.
50% = $900, which will cover rent ($525), car payment ($175), electric bill ($45), Netflix ($8), Car Insurance ($70), Phone Bill, on family plan ($25), Internet ($50) = $898.00
30% = $540, and $180 will go toward savings (10%), $108 goes toward a retirement fund (6%), which leaves $252 for student loans.
20% = $360, which will cover about $200 toward groceries, $80 toward gas, $40 for eating out/entertainment, and $40 for miscellaneous spending.
What Can You Afford to Put Toward Student Loans?
We all know that money doesn't just flow out of faucets. Maybe one day someone will invent that.
But for now, we'll deal with what we have. Your budget. You can see where your money is going, and you can shuffle things around if necessary!
There is a lot that goes into money-shuffling. Without careful consideration, you can change the entire flow of your budget, and could upset the balance. However, if your goal is to pay more on your student loans (which is my intent), then you have to make some sacrifices.
This involves some careful examination: where can you cut back, and what can you cut out...without disrupting the flow of your budget?
You could choose to cut out optional expenses, like the internet, and rely solely on public WiFi, or internet at work. You could also consider things like getting a roommate. (I know, I know, you've worked so hard to finally get into your own place, but hey! you can still claim the biggest bedroom!)
You can also try to decrease your electric bill by....(I think you've got this one)...using less electricity!!
You could always go to the extreme, and use public transit instead of a owning a car! AHHH! I know. Crazy idea. But when the cost of insurance alone is like $800 or $900 per year, that's enough to make me want to get in my cardio workout by running to the grocery store.
Now, these are ways to cut back spending (obviously), so that you can reach your financial goal of FINALLY PAYING OFF STUDENT DEBT. (Can you tell the subject gets me fired up?).
Other options do exist. You can make more money.
Some of us have our eyes on the prize, money, and love to work. Thankfully, there are jobs for people like us! Getting a weekend job, starting your own side business, doing freelance work...these are all just a few ideas.
Here's the final point: Take that extra money you're either making or saving, and put it toward your student loans!
The thing is...the faster you can pay off your loans, the better. Less interest will accrue, and you'll end up paying less. So let's get those student loans paid off, people!
Good luck to ya,