Education debt is one of the most stressful realities for recent college graduates. Former students entering the real world find themselves hundreds, and sometimes tens of thousands of dollars, in student loans. Unfortunately, they must scramble for any job that can help pay the bills instead of beginning an exciting career in a field they are passionate about.
However, there are steps borrowers can take in order to budget their income and gradually pay off their loans. The first step is to review private and government backed loan documents to make sure they understand all of the loan's terms and conditions including payment deadlines. And it's not a bad idea to always keep copies of documents, including the loan itself, and payment receipts.
In addition to the original loan, graduates are responsible for any interest accumulated and any other charges or fees. Grads should make sure they understand rates and fees, interest fluctuation, and the specific tax laws concerning their loan.
As a newly minted professional, one way to track post college spending is to keep records of all spending over several weeks. This means to keep record of every penny spent and how it was spent. In addition, monitor what was used more - cash or credit cards.
Limit Credit Card Use
A quagmire of debt will only be made worse by using a credit card excessively. To help ease this financial burden, one must simplify the expenses. The easiest way to do that is to cut out any unnecessary use of credit cards. Credit cards should only be used in an emergency, and should not be used for superfluous items like clothing and jewelry.
Itemize Expenses and Income
Compare the monthly income to a total tally of monthly expenses. Itemize all expenses into groups, including: utilities, food, rent, car, insurance, entertainment, clothing, personal care, credit card debt, etc. Total both the monthly income and the monthly expenses in order to understand the parameters of the budget. There may be what's name as a "positive cash flow," which means there's money left over. If this is the case, they are spending less than they're earning. The leftover money can go toward relieving their college debt. "Negative cash flow" means the expenses outweigh the income. The borrower, at this point, must start making modifications in order to trim expenses.
Search for Hidden Expenses
Frequently, newly professionals would claim they have no expenses they could cut out of their monthly budget. Under careful scrutiny, this is found to rarely be the case. Oftentimes, an individual sees a luxury item as an "essential" when it is not. Trips to a Starbucks are not essentials, for example. It helps to have a third party examine one's budget in order to weed out these hidden unnecessary expenses.
Ask for Help
Budgeting is hard work! Never be afraid to ask for financial help from outside sources in order to lessen the burden of the cost of higher education. Borrowers should never feel that they are alone even if their parents and grandparents don't have money to ease their debt. Private investors can take care of some of the burden. However, in exchange they will ask for a percentage of equity in any earnings. It's simple to find debt consolidation resources where experts would be glad to field any concerns or questions about debt and budgeting.
If a college student can manage it, they should get a part-time job, while still in school, and start hacking away at that loan debt before they graduate. That way, the burden is lessened when they finish their studies. Also, focus on graduating in four years to avoid unnecessary expenses.
Acquire Health Insurance
One of the most frequent ways people go bankrupt is medical expenses. For the healthy and young, consider acquiring high-deductible insurance in coordination with a health savings plan to help cover emergency contingencies. These kinds of plans won't cover every medical need, but they protect patients in times of catastrophic injury so they will not go bankrupt while in the hospital.
For those who find themselves still living a starving student lifestyle, there is still hope. While education loans cannot be expunged, borrowers can sometimes defer or forbear some loan payments. Another option is to consolidate all other bills onto a debt consolidation loan. By doing this, one can free up enough money in their budget to pay a standard monthly charge.
Remember, there is always hope! Graduates, who find themselves in debt, should never feel isolated or embarrassed. Millions of people find themselves in the same situation annually, and there are systems in place to help relieve debt burdens. The key is to understand one's financial limitations, and to ask the appropriate authorities for help before it's too late. Finally, check out free online resources like the Federal Citizen Information Center for their recommendations of the many avenues to becoming debt free.