Preparing to Pay Back Student Loans
Congratulations on finishing school!
Now here comes the hard part, life. Real life. The type of life where bills have to be paid by you, on your own, on time and without any excuses.
Don't panic. If you must panic, just know that everyone else in your situation has had a similar panic, myself included. Most of us come out alright...all it takes is a plan.
Here is yours in six easy steps.
Step One: Pay down/pay off as many outstanding credit card bills as you can. Annihilate them now! Many student loan programs will give you a post graduation break before you are set to begin repayment. Be smart. Use this time to knock out other bills.
Step Two: Check your car? How is it? Have a professional give it a good look over. Better to find out any problems well before your student loan repayment starts.
Step Three: If you do not have credit card or other outstanding bills, start saving as much as possible before your loan repayment begins. You want to build a solid financial cushion. If something happens those bills still need to be paid. Prepare for the worst and hope it never happens.
Step Four: The first bills arrive... Call your lenders and ask to consolidate as many loans as possible. Once done, make minimum payments on all student loans, except for the one with the highest interest rate. For that loan, make 2 or 3x the required amount. This will result in you having to pay less in interest over time.
Step Five: Here is where you jump ahead of the pack. That cushion we talked about in Step Three? Make sure it is large enough to sustain your housing expenses for a year. This will help you survive should you lose your job or be otherwise unable to work. Once you do that, let it rest in a high yield savings account. Don't touch it!
Step Six: When your next paycheck comes, instead of putting more money in your savings account, you will now put it towards your highest interest student loan. At this point you should be paying 3 to 4x the required amount and on the fast track to full repayment. Once this one is paid off, move over to next student loan with the highest interest rate and repeat.
That's all it takes and you can do it. Now conquer those student loans!Taking the logical approach and paying off your loans with money you make and stop spending as much is best. But if you have multiple debts, consider looking at Debt Goal, which helps you develop a plan and stick to it to pay off your debt, whether it be credit cards or student loans.
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