The day you graduate college will forever be a memory you’ll never forget. But for a lot of students, a new challenge begins. Whether you were in school for only two years or ten, it’s time to start paying back your student loan debt. And that’s easier said than done. Most people struggle with this, even if they got a good job right after.
Depending on the job market, you probably won’t get a great job right after. And if you do, there’s a lot of ladder steps to climb before you get to your desired salary. Life after college isn’t easy. Just tell the millions of people who went to college during the decade-long recession. Many graduates were stuck working fast food because that’s the only work they could get.
Regardless of your job situation, your first month of student loan debt payments begin in a few months. Whether you’re ready for it or not. Are you settled into your new place? Do you have transportation? Can you afford health insurance? None of those questions matter to your debtors. You owe them money and it’s time to pay them back.
So, what is your first step? Perhaps you have a lot of expectations about life after college. This includes people who have long graduated but still don’t have your bearings yet. You can attest to the unique challenges that happen to college grads with mounds of student loan debt. The worst part is, this mountain of debt will forever follow you around.
The Student Loan Debt Crisis
Here is the grim reality for those with student loan debt: 72% of graduates from the Class of 2017 owe on average $37,000. That can take a decade or longer to fully pay off if meeting minimum payments. This is never a great way to start adulthood. It’s forcing former students to delay major life decisions while they figure it out.
If you have student loan debt or are about to graduate this year, you need a plan. You have to figure out a way to keep your budget intact. That might mean living on as little as possible while pumping every extra dollar you have into your debt. That’s the only way to become free of it sooner rather than later.
Here are ways you can budget your money properly to conquer your student loan debt:
1) Create a Budget
This might seem like an obvious step, but you’d be amazed by the number of people who don’t budget. What they can’t afford on their own, they just grab with credit and worry about it later. Getting caught in this trap is the worst thing you can do. Paying back hundreds per month towards your student loan debt won’t give you much extra money.
Making payments towards credit purchases, including interest, is the wrong choice. Yet, this is what a lot of people do. If this sounds like you, it’s time for a bit of financial discipline. Put yourself on a budget. Sit down with your books and plan out the next months and years in advance. Determine what you need for food and other essentials and go from there.
2) Live Like You’re Back in College
Once you’ve created a budget, you’ll get a larger picture of where you’re at. But there are still financial decisions you might not be thinking of in your mid-20s, like retirement. Many people with student loan debt don’t have enough extra money to worry about retirement or a rainy-day fund.
That’s because they’re so busy trying to live it up. They have expensive cable packages, brand new cars, and grab the latest model smartphone each year. Of course, this doesn’t describe every young adult. Many have started a family and live paycheck-to-paycheck. Yet, despite this, there are things we can cut out of our budget.
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In the short term, consider living like you’re still in college. Share the rent and utilities with roommates. Eat cheaply. Get Netflix and Hulu instead of expensive cable. Carpool and use public transportation. Cut costs wherever you can. If you pour every available dollar you have into your student loan debt, you can pay it off in a few short years.
Once your debt is paid off, you will be financially free! Your credit score will be dramatically improved and life outside of college can begin.
