Chances are, if you graduated from college, you have at least one student loan to pay off. If that’s the case, my condolences. However, you’re not alone. All the better to budget with. If you’re forced to save a set amount of money every month, you’re more likely to learn how to budget, and learn fast. There are a number of ways to cut costs in your daily life.
The first step is to make a budget that allocates a set amount of money toward bills, food, rent/mortgage, and daily expenses. Then, figure out how much is left over based on your income. If you’re in the States, find a tool that calculates whether you qualify for income-based repayment — via President Obama’s William D. Ford Direct Loan Program — and go from there. However, a warning: there are a number of different options for student loan repayment now, so beware of private companies that want you to refinance with them so that they can make a profit. Here’s an infographic with a flow chart that’s easy to understand:
While it may be tempting to simply allow your student loans to go into default, it’s probably not wise in the long run. Defaulting can result in wage garnishment, tax refund withholding, even the revoking of your driver’s license! That’s nothing to fool around with. Better to go with the twenty-five year plan, if you’re short on cash — as many of us are these days. There are a number of steps you can take to gain more control over your finances, even if you don’t feel like you have a lot of expendable income.
First, focus on what you can control. How much money is left after you put aside your basic monthly expenses and student loan expenses? As difficult as it might seem, try to set aside a little each month for a savings account. You’ll be grateful when an unexpected expense comes along. And try not to rack up a lot of excess credit card debt. If you can’t afford to pay for something, maybe it’s not worth the additional expense every month. If there isn’t enough money at the end of the day to simply get by, perhaps it’s time to reevaluate your career path and consider setting a goal to get a better job or return to school for a specialized certificate or a different career altogether.
A good rule of thumb in selecting a program of study is a) Are you passionate about this subject and, b) Is it practical? That is, are you going to school for a position that’s highly in demand? An example of a field that is always growing and expanding is healthcare. (I would say education too, but there are the salaries to consider.) To give you an idea, here’s a visual with some useful numbers as ball park estimates. Basically, you’re looking at 90K a year, at minimum. With that kind of salary, you should be able to pay off your student loans fairly quickly — within ten years, as opposed to twenty-five years. If you’re concerned about choosing between a second degree and quitting your job, fear not: there are now a plethora of online programs in nursing and healthcare for you to choose from.
If, on the other hand, you’re a burgeoning entrepreneur looking to think outside the box and go the route of starting a business rather than working for a company, you could always begin building your business while still in school. If you go this route, you’ll likely have other types of loans to contend with: business loans. How do you go about juggling student loans and business expenses, all while trying to raise enough capital for your business to grow? Well, nowadays we have the Internet, and along with it come innovative crowdsourcing platforms like Kickstarter and Indiegogo. Interestingly enough, crowdsourcing is fast becoming a mainstream source of capital generation for startups, considering the increasingly important role social media is assuming in effective business marketing campaigns.
So take heart and have courage: you can do whatever you set out to do with your money or your career. Just take things one proverbial step at a time, and you’ll be fine. If you have ideas to contribute about successfully balancing college, money, and career goals, either in or out of school, post them in the comments below.
This article was contributed by guest author Daphne Stanford.