You’ve worked hard for the past four years; you have your diploma in hand. You’re even lucky enough to have a job after you graduate. You racked up quite a bit of debt so far, in the form of students loans. Now that you have the college diploma and the dream job, how are you going to pay back those student loans? Here are a few tips to get you started:
Start paying back before you graduate
While you were busy studying and working hard to get that shiny new diploma, what you should have been doing was paying the interest on your student loans. Think about it, later on, would you rather be paying down the original amount you borrowed, or would you rather pay interest on the interest on the original amount? While it’s understandable that you’re a college student and can’t afford much, you should be a minimum of $20 a month toward your loans during the school year. When you have that full time summer job, you should increase that amount. Paying a little back at a time while you’re still in school will not only look great for you, it will make those loans a lot easier to pay back when you graduate.
Take payments out of your paycheck before you ever see it
Ask your employer if you can have student loan payments deducted directly from your paycheck. That will make it impossible to skip a payment because you really wanted to take that weekend trip or you just have to have those new shoes. If you never see the money, you can’t spend it and you’re guaranteed to have payments in on time!
Pay your loans with income tax refunds
Every year that check comes and most people run right out and spend it on shiny new things they can’t afford any other time. Instead of buying more shiny new things that you don’t really need, direct that payment to your student loans. Remember, the faster you pay those loans off, the less interest you are going to have to pay. Use your income tax refund to make a big dent in those loans and cut back the principle you’re paying interest on.
Make two monthly payments
Rather than just making the one payment you’re required to make, send two. You know you want to get those loans paid off as soon as possible, but you have to pay bills too. You can’t afford to have more coming out of that one paycheck. The solution is simple: make the one required payment first, and then send a little extra out of your next paycheck! You will be paying off your loans faster and it won’t hurt quite as much.
Don’t go nuts when you get that first job
A lot of people are tempted to go nuts when they get that first good paying job after college. Don’t be that person! Take it slow. Rather than rush out and buy a pretty new car, or move into a condo with an amazing view, spend an extra year living in that cheap apartment with the pizza stained furniture. Sure, it may not be impressive, but the loans you will qualify for because you have great credit will be impressive! Spend all that extra money on paying off your debt rather than increasing your living expenses. Remember, that condo is going to cost you and full coverage insurance really drains your financial resources. When you do finally get that new car or dream house, you will be in a better position, financially, without the extra expense of student loans, and will a good, solid credit rating to help you out along the way.