Written By: Stella Walker
While you might be aware of the challenges presented by student loan debt after college, it’s difficult to truly grasp how it will affect your life until you live it. Those monthly payments going to Sallie Mae, ACS, or Wells Fargo can put a big dent in your savings, and disrupt those grandiose post-college plans to live like a king. With a lousy economy and the resulting likelihood that your job will pay you less than you expected, it’s important to modify your lifestyle so that you can pay what you owe, build good credit, and avoid adding to the record number of student loans in default.
Your first course of action should be to liquidate those pricey assets you collected each semester — textbooks. Sure, you probably spent $1,000 on them each bundle and will only get a fraction of that in return, but at the very least, it could cover your first couple of student loan payments. It’s a good start. Also, if you’re fortunate enough to receive graduation gifts in the form of checks, save them and use the money to reduce your debt — you can always pay more than the minimum monthly payment. Those big plans to take a trip or put a down payment on a dream car can wait. After all, you’re an adult, and it’s time to think practically (to an extent, anyway).
That means sacrifices will have to be made. More and more college grads are moving back home with mom and dad — 85% according to a recent study — due to the aforementioned economy and lack of job prospects. Chances are, a majority of your friends, even those with jobs, will be living at home during the first several months after graduation. There’s no shame in it. And instead of paying for rent and utilities, they’ll be able to significantly reduce their debt. Plus, in all likelihood, your parents will be happy to have you back, and will cover other expenses such as meals — a home cooked meal always beats a TV dinner. But, if you can’t stand your parents, you can find a roommate, which will still save you a ton of money in the long run.
Minimizing your debt should be priority No. 1. Your financial future depends on it. Keep in mind, however, that there are options for students who’ve accumulated several loans. Consolidation reduces your payments to one per month with only a slightly higher interest rate. It’ll simplify the process and enable you to stay on track with your payments. Remember, repaying you loan quickly will ultimately save you money.
This post was contributed by Stella Walker.