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8 Clever Ways to Save Money on Student Loans

8 Clever Ways to Save Money on Student Loans

Student loans have been weighing heavy on higher education students over the past decade – particularly those who can’t find adequate employment to justify the costs of college.

Politician, Mark Pocan gave one of the best quotes to sum up student loan frustration, stating, “By making college unaffordable and student loans unbearable, we risk deterring our best and brightest from pursuing higher education and securing a good-paying job.”

A study by The Institute for College Access & Success reported that between 2004 and 2014, student loan debt rose by a massive 56% on average – a leap from $18,550 to $28,950. Thus it has become critical for students to understand what they owe, who they owe, and most importantly, how they can owe less.

1. Automatic Payments

One of the easiest ways to immediately save is to sign up for automatic payments to be withdrawn straight from your bank account. Many companies now offer reduced interest rates simple for signing up for a convenient and secure payment method. The reduction rate is typically only a fraction of a percent, but it still keeps some extra cash in your pocket.

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2. Refinance

Refinancing loans is a popular method for reducing sky-high interest rates. High interest rates are particularly discouraging, making it seem as if you’ll never pay off your debt along with the rapidly accruing interest. Luckily, refinancing is a fairly simple process for those with a good credit score and a steady income. Those who are not in the best circumstances may apply for refinancing with a cosigner to increase their chances of acceptance.

3. Loan Forgiveness

While loan forgiveness is only applicable in certain circumstances, it is certainly worth looking into whether those circumstances apply to you or not. You may have access to loan forgiveness, for example, if you have worked in the public service field for several years. Teachers and other professionals can apply for public service loan forgiveness.

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4. Consolidation

Consolidation is one of the most common forms of loan management, but surprisingly, not everyone takes advantage of it. This method is beneficial for a few basic reasons. It allows you to combine payments so that you only have one monthly deadline to remember and one combined interest rate instead of several. In many cases, this will also lead to lower monthly payments. If you’ve yet to consolidate student loans, this is one way to streamline payments and avoid unnecessary late fees in the long run.

5. Program Assistance

Spend a day researching established student loan programs that help graduates in certain professions pay off their loans. A few examples include the Nursing Education Loan Repayment Program, programs for the Army, Air Force, National Guard, and Navy, and Teach for America. If you do qualify based on your profession, there is usually a few basic rules that must be followed, like committing to a position for 5 years or working in a particular location. Weigh the pros and cons of these offers to decide if any are right for you.

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6. Automatic Savings

One way to trick yourself into paying student loans off faster – and thus owing less in the long run – is to set up automatic deposits from your paycheck to your savings account. Whether it’s $10 or $200, this method allows you to save effortlessly and immediately deducts the money before you have a change to spend it.

7. Remember Taxes

Each year, student loan companies will send out tax forms showing the amount of interest you paid in the prior year. Don’t ignore or forget about these forms, as they can provide some decent tax deductions (up to $2500). Grad students are often eligible for tax credits, which can save you even more than tax deductions.

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8. Pay Faster

Last but not least this is an option for those who are not over-burdened financially. Just because your loan company asks for a set amount of money each month doesn’t mean you can’t or shouldn’t pay more. Throwing in extra payments here and there or doubling your payments altogether helps to reduce the principle quickly. Use a repayment calculator to determine how much you can save in what amount of time. By tightening your budget in a few minor ways, you may find that you can abolish debt in half the estimated time.

Featured photo credit: eflon via flickr.com

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Last Updated on June 6, 2019

The Average Retirement Savings and How to Save Wisely

The Average Retirement Savings and How to Save Wisely

Are you on track for retirement?

If not, don’t worry, I’m not sure either. I save each month and hope for the best.

Fortunately, I’m at an age where most people don’t save so I’m ahead of the curve.

But, what if you aren’t in your 20s? What if you’re near retirement and are looking to gauge where you stand?

If so, keep reading. Here’s how to prepare for retirement and save wisely during the process.

What Does the Average American Have Saved for Retirement?

Saving for retirement is tricky.

Tell someone straight out of college to save $10k a year for retirement and it’ll be next to impossible.

Make the same request to someone decades older and they’d be more likely to be able to save this amount. But, a 20-year old college student can be “financially ahead” of someone saving more than them. Why?

Age matters in your financial journey. The younger you are, the more time you have to save and put compound interest to work. As you get older and have more saving power, you’d have less time to put compound interest to work.

Here are the average savings Americans hold by age bracket:

20’s – $16,000

During this stage, most people are paying loans and moving up the corporate ladder. Your best bet during this stage is to focus on eliminating debt and increasing your income. Don’t focus only on getting a high-paying job neither.

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Instead, focus on learning via Podcasts, reading books, and taking specialized courses. Doing this will make you more valuable and give you more career options.

30’s – $45,000

At this stage, you’ve hopefully escaped your entry-level salary and work at a career you enjoy. Your earning power has increased but you now have more obligations. For example, marriage, kids, and a mortgage.

Set a plan to pay off all your debt and focus on eliminating unnecessary expenses. Leverage financial tools like Personal Capital to ensure you’re on track for retirement.

40’s – $63,000

This is the stage where you’re at the prime of your career. Top financial institutions recommend you have at least 2 to 4 times your salary saved up. If you’re falling behind, start maxing out your 401K and Roth IRA accounts.

50’s – $115,000

During your fifties, you’re close to retirement but still, have time to save. You may be helping your kids pay college tuition and other expenses. Since you’re at the peak of your earning power, max out all your retirement accounts.

60’s – $172,000

By this point, you should have about eight times your salary saved up. If not, you’ll depend primarily on social security benefits averaging $1400 per month. Max out all your retirement options as much as possible before retiring.

Ways to Save Money on a Tight Budget

The sad reality is that most Americans aren’t saving enough for retirement.

Even high-earning power isn’t enough to secure one’s financial future. You need to have the discipline to save for retirement while time is in your favor. Don’t wait for you to have a high salary to save, start with having a small budget.

First, get a clear picture of where you stand. Write down a list of “needs” and “wants.” For example, Netflix and Amazon Prime are “wants” and a “cell-phone” is a need.

Use tools like Personal Capital to analyze your spending patterns. Personal Capital allows you to add all your financial data in one place–making it a powerful option to gauge where you stand.

Once you know all your expenses, organize them from highest to lowest expense. When you can’t cut more expenses, call your service providers to negotiate a lower price. If you’re not good at negotiating, use services like Trimm to lower your monthly expenses.

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How to Save Money Each Month

By this point, you know the average amount of money you should have saved for retirement based on your age.

But, breaking this down into monthly goals can be challenging. Here are some rule of thumbs to follow:

Aim to contribute 10%–15% of your salary each paycheck. Review your progress each week.

Why so often? The reality is that life gets in our way and you will have many financial setbacks. Your goal isn’t to be perfect but to get back on track instead.

Reviewing your finances weekly lets you know where you stand with your retirement. This doesn’t have to be a long process either. All it takes is login in Personal Capital to view your net worth and check how much you have saved for retirement.

Turn saving into a game and aim to save more each month. It will get challenging but you’ll get creative and find more ways to save.

Top Money Saving Challenge Tips

To prepare for your financial future and not be another statistic you need to be different.

How?

By adopting new habits that’ll help you become a saving machine. Here are some ways you can save more:

Automatically Contribute Towards Retirement

If you’re working for a company, you can automatically contribute towards your 401k. If you’re not currently contributing more than 10%, make this your goal. Contribute 1% more today and automatically increase this amount a year from now.

Odds are that you’re not going to be negatively affected by contributing 1% more. Many times we spend our money on things we don’t need. Contributing more towards retirement is a great way to secure your financial future.

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Use the Right Tools to Know Where You Stand

Once you’re contributing more towards your retirement accounts, gauge your progress. Make use of finance tracking apps to help you view the big picture of your retirement.

When I’d first signed up for the app Personal Capital, I didn’t know I had a negative net worth. Despite saving thousands of dollars, my debt brought my net worth to the negative. Knowing this motivated me to save more and spend less.

Now, I have a positive net worth. But, it was because I was able to view the big picture using the app. Find out what your net worth is using a finance tracking app and you may surprise yourself.

Bring in Experts to View Your Blind Spots

If you have too little or too much money saved, you should consider hiring financial experts.

Why?

You may need someone to hold you accountable to help you reach your financial goals. Or, you may need help managing your money as effective as possible.

Regardless of the reason, getting help may help improve your financial situation.

Before you hire an expert, find out which areas you need help the most. For example, if you’re constantly overspending, find a debt counselor. If you’re struggling with choosing the best investment options, hire a financial advisor.

Speed up Your Retirement Contribution

After learning how to manage your money well, the next best thing is to earn a higher income.

You’re capped at how much you can save but not much you can earn. Even if your employer isn’t giving you a promotion, you can still take charge of your financial future. How?

By starting a side-business.

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This will be something you’d work on after you’ve finished your day job. Once you start earning income from your side-business, you’ll be financially better off.

The best part is the more work you put into your side-business,[1] the more potential it has to earn more money.

So start a side-business in an area you’re familiar with. For example, if you enjoy writing, do freelance writing for small e-commerce businesses.

Once you’re earning a higher income, you can contribute more towards your retirement. Don’t wait for the right opportunity to secure your financial future, create one.

Reach Financial Freedom with Confidence

What if you were able to retire tomorrow with no problem, all because you’d have enough money saved up and little to no debt left to pay off? How would you feel?

My guess is that you’d feel happy and relieved.

Most Americans are falling behind their retirement goals for many reasons. They’re not prepared, they carry bad money-habits and are thinking short-term.

For you to retire successfully, you need to work backward and adopt better habits. Contribute more towards your 401K and focus on growing your income.

If you do, you’ll save money and pay debt faster.

Don’t beat yourself up if you’re behind your retirement goals. Take the first step today towards a brighter financial future. Isn’t retirement worth the hard work and sacrifice to be at peace?

Featured photo credit: Huy Phan via unsplash.com

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