I know we don’t like talking about it but student loans are such a large epidemic in the US I’m gonna talk about it until I turn blue in the face. Because it’s just that freaking important. It’s not a sexy topic, it’s not a fun topic, but it is a topic that requires you to be informed in order to make student loans your bitch.
So you’ve graduated from college, you have your dream degree and your “dream job” is still out of reach. Sallie Mae doesn’t care about that. They give you a six month grace period and then expect an unrealistic amount of money monthly that will probably financially cripple you. But it’s not all fire and brimstone I promise you. Student loans suck, and they can make your life seem extremely chaotic, but once you take control of them you’ll be in a better life position.
5 Ways To Take Control Of Your Student Loans
1. Discuss Your Options: Sallie Mae is essentially always available for a phone call. Day and night. So whenever you’ve garnered enough strength… give that chick a call and here’s why. You need to discuss the various payment options you have, that you might not know about. Graduated repayment is not the only option you have and depending on how much you make you may be eligible for income based repayment. The main important thing about discussing your options is that you have the knowledge to make the decision that fits best into your lifestyle.
2. Create A Plan: Once you know your options create a plan. I mean a real plan. I find that my best plans are written down so open up the notes on your iPhone or grab an old fashioned notebook and start jotting down your plan of action. Your plan should involve an end goal. My end goal is May 2020. That is when my final loan payment will be made if I stick to the plan I set in motion. Your goal may be different but you should have one that you are working towards. Once you have the end goal, work backwards and figure out the steps you need to take in your personal plan to achieve that goal. Without a plan you will end up making interest only payments for the rest of your days… trust me.
3. Make Extra Payments: Paying interest only payments is a pointless pain in the ass. You need to pay down that principle in order to effectively decrease your monthly payment as you progress. Everyone’s situation is different. When I initially graduated from college I spent 2 years making interest only payments, and one year on an income based repayment plan. During those three years I didn’t make a dent in that principle at all. I was essentially paying 6,000 a year in interest and wasting my life. Once I called to discuss my options, and set a plan in motion I was able to make one extra payment a year. That sounds like nothing right? Yes and no. My one extra payment a year completely wipes out the principle on one of my loans. So each year I get rid of a loan completely. Now… if you are unable to do so… you can make small extra payments per month. Even paying an extra 10 dollars a month will add up to an extra 120 a year going towards your principle.
4. Put Aside A Rainy Day Fund: I have a friend who thinks I prepare far too much for rain, but I don’t see it that way. A rainy day fund helps alleviate the stress and anxiety of whatever it is that has popped up. I usually save about 12-17,000 a year in order to help with any unforeseen emergencies, my extra loan payment, and traveling. I aggressively build my rainy day fund to be able to cover my bills for 6-12 months if I am unable to work for some reason. Though that it is improbably I still like to have the cushion in case of the fall. When you are trying to get your student loans under control a rainy day fund (that you never touch/use) will be a useful tool when life becomes unpredictable. Build your rainy day fund in the best way that you can afford.
5. Side Hustle & Chill: Days of working one job and making ends meet are over. Unless you are truly financially free, then you are going to have to side hustle in order to have residual income coming in. Finding a side hustle can be tricky because you don’t want it to be something annoying that takes away too much time out of your life. You want to find a side hustle that you don’t have to actively stay on top of and will bring in income. Of course there are side hustles that require more attention (like this blog) but once you find something you are good at (photography, making clothes, selling your old things…etc) milk it and watch the coins stack up. This can be money you use towards your extra payments, your rainy day fund, or simply to do something nice for yourself without touching money from your main source of income.
Hopefully these tips were helpful and as always I wish you all health, wealth, and financial freedom! Follow along my witty musings about being a Millennial in debt and stay tuned for my new up and coming Millennial In Debt web series!