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10 Ways to Reduce College Debt

10 Ways to Reduce College Debt

More than two-thirds of college graduates have student loan debt, and the average amount is a staggering $30,100. When you add interest to this, it can take people decades to pay off their debt. Fortunately, whether you are in your freshman year or have already graduated, there are some things that you can do to reduce your total student loan debt. In fact, with a little ingenuity, you may even be able to avoid taking out loans at all. Utilizing the following tips may not cover all of your expenses, but it will definitely give you a good head start.

1. Volunteer to Work off Student Loans

Are you a college graduate and having a difficult time paying your loans? You can get some financial relief while doing something good for the world. There are programs that enable you to set a funding goal, which you then pay off by donating an appropriate amount of time to a charity. This volunteer opportunity is currently only open to college graduates, but it couldn’t hurt to start making plans to utilize it before you finish earning your degree.

2. Seek Out Unusual Scholarships

Scholarships are always a great way to reduce your expenses, but the most well-known options are also highly competitive and may seem out of reach. Fortunately, there are numerous smaller scholarships available that you may be eligible for. A prime example is the $3,000 Tobi Cares Scholarship for women. There are also a wide variety of small scholarships you can apply for based on your race, abilities or even your medical history. Ultimately, the sky is the limit when it comes to the funding that’s available, but you will need to be willing to put in a lot of work tracking these options down and applying for them.

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3. Consider Off-Campus Housing

There are many misconceptions about the cost of off-campus living, but the reality is that it is typically a better option. However, you will need to have roommates, and you will also need to do a solid comparison of expenses to make sure you get the best possible deal. Some very expensive major cities are actually more cost-prohibitive than living on campus, so make sure you take that into account. In the long run, your best bet is to choose housing close by to avoid parking fees and other additional expenses. If this is available cheaper off-campus, then go for it. If not, living on campus makes the most sense.

4. Go to School Part-Time

It’s understandable to want to graduate as quickly as possible. There are several advantages to taking your time, though. A major perk of going to school part-time is that you can also work to help pay for your tuition. Even if you are still going to need to take out loans, you’ll also have more time until you are required to start paying them back. Remember: student loans do not become collectible until after you graduate. Choosing a longer path to graduation may be exactly what you need to avoid a mountain of post-school debt.

5. Buy and Sell Used Textbooks

Do you have an extra $1,200 to shell out per year for textbooks? This is what most students pay annually, and the price continues to rise. After a four year undergraduate degree, you could spend almost $5,000 on your textbooks alone. The good news is that you can drastically cut this fee by buying your textbooks used and selling them after you’re finished with each applicable class. If you prefer, you could even rent a textbook instead or look for a less expensive Kindle version. No matter which route you choose, you should be able to save at least 50 percent on your textbooks.

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6. Avoid Restaurants

Eating out may be a common experience for college students, but you don’t have to fall into this lifestyle. Not only is it much more expensive than buying your own groceries but it can also lead to the so-called freshman 15. If you are living on campus, be sure to eat as many meals as possible from the cafeteria. After all, you’ve already paid for this food with your lodging expenses, so why let that go to waste by effectively paying twice for a meal? Those who live off-campus can save a lot of money by cooking their own meals. In fact, it’s estimated that eating out three nights a week costs $3,900 per year more than making food at home.

7. Steer Clear of Credit Cards

It is way too easy to utilize the convenience of a credit card instead of actually being accountable for every single purchase you make. Sadly, this ease of use often leads to additional debt. Instead of making it even harder for you to pay your bills, operate on a cash only basis. This will make you much more aware of what you’re spending, and it will also make it impossible to overspend on frivolous items.

8. Cut the Cable Cord

Entertainment can be an essential part of unwinding, and it is necessary for college students to destress whenever possible. However, paying for cable or regularly going out to the movies is not a good idea. The average American spends $123 a month for cable, but you can drastically reduce this expense by opting out of cable in favor of Netflix or Hulu. There are also services such as Slingshot TV that enable you to select the cable channels that are most important to you. It’s also possible to remain entertained for free by taking advantage of your local public library. Most libraries have DVDs and video games that they rent for free to members.

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9. Ride a Bike

The expense of an automobile can be very high. After all, you not only have to pay for the car but you also need to take care of insurance, gasoline, oil changes, and other types of maintenance. Not to mention parking fees and a long list of other hidden costs. By not taking a car to college, you can simplify your life and save a lot of money. Riding a bicycle is one of the easiest alternatives, and it has the added bonus of being eco-friendly. If necessary, you can also still save lots of money while using public transportation.

10. Head to Europe for Free College

If you could eliminate tuition altogether, you could definitely stay out of debt, right? Well, pack your bags and head to Europe! There are 44 schools in 8 European countries that allow Americans to get a free college education. You will have to take care of your housing, food, textbooks and testing fees, but you won’t get stuck with tuition costs. This can save you tens of thousands of dollars each year.

There are countless other ways that you can reduce your expenses, including stretching your wardrobe budget by taking advantage of sales and closeout prices. Although you may not enjoy scrimping and saving right now, being responsible while you’re in college and during the first few years after graduation can help you save a ton of money on student loan interest fees.

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Featured photo credit: 0TheFool via pixabay.com

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Published on May 7, 2019

How to Invest for Retirement (The Smart and Stress-Free Way)

How to Invest for Retirement (The Smart and Stress-Free Way)

When it comes to stocks, I bet you feel like you have no idea what you’re doing.

Everyone who’s not a financial expert has been there. I’ve been there. But, time is passing and you need to be crystal clear with how you’re investing for your retirement.

Otherwise, it’s back to work until you can afford not to. So, how can you invest for retirement when you’re not a financial expert?

You take the time to learn the fundamentals well. If you do, you can grow your wealth and retire happy. The best part is that you don’t need to be a financial expert to make smart investment decisions.

Here’s how to invest for retirement the smart and stress-free way:

1. Know Clearly Why You Invest

Odds are you already know why should invest for retirement.

But, maybe you know the wrong reasons. It’s time you get clear on why you’d like to retire. Here are some questions to help you get started:

  • Will you spend more time with your family?
  • What does retirement mean to you?
  • Are you looking to launch that business you’ve been holding off for years?

Everyone wants to retire but not for the same reasons. Once you’re clear for why retirement is important for you, you’ll focus on making it happen.

Investing in the stock market allows you to take advantage of compound interest.[1] All this means is that your money earns money on top of its interest. A reason why investment in the stock market is one of the best ways to plan for retirement.

2. Figure out When to Invest

“The best time to plant a tree was 20 years ago. The second best time is now.”– Chinese Proverb

It’s true if you’d had started investing when you were 10 years old, you’d have a lot more money than you do today.

The reality is that most people don’t start investing until it’s too late. So, if you’re currently waiting for the perfect time to start an investment, it would be today. Open your calendar and block out 2 to 3 hours to choose how you’ll invest for retirement.

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A quick way to get a snapshot of where you stand is to use Personal Capital. Input all your personal information and spend some time setting your retirement goals. Once completed, you’ll know where you stand with your retirement.

Having a savings account for retirement isn’t planning for retirement. Why? Your money loses value when you factor in US inflation.[2]

3. Evaluate Your Risk Tolerance to Create the Perfect Portfolio

Investing your money well depends on your emotions.

Why?

Because when the market drops most people panic and withdraw their money. On average, the US stock market yields an annual 6% to 7% ROI (return on your investment.) But, this won’t happen if you’re worried about short-term loses.

Before you invest your next dollar, know your risk tolerance.[3] Your risk tolerance determines the number of risky and safe investments you’d have.

Regardless of your investing style, you need to view investing for retirement as a long term game. Know that some years you’ll lose money but recoup this in the long-term.

Avoid watching market-related new. Also, create a double authentication to log in your investment account. This way you’re less likely to withdraw your money.

4. Open a Reliable Retirement Account

Depending on your circumstance, you may need to open a new brokerage account. This is the account is where you’ll invest your money.

If you’re currently working for a company, odds are that they offer a 410K investing account. If so, here’s where you’ll invest most of your money. The only problem with this is that you’re limited to the stock options that are available.

You do have the option to open a separate IRA (individual retirement account.) Here are some of the best brokers:

  1. Vanguard
  2. TD Ameritrade
  3. Charles Schwab

5. Challenge Yourself to Invest Consistently

Committing to invest for retirement is hard, but continuing to do so is harder.

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Once you’ve started investment for your retirement, you run at risk from stopping. Often you’ll want to contribute less, so you’d have more money in your pocket.

That’s why it’s important that you create a budget that allows you to invest each month. If you’re working for a company, you can set a percentage for the amount you’d like to contribute each month. Most people by default contribute 1% but aim to contribute 10% to 15%.

Be the judge for how much you can afford to contribute after covering important expenses. To stay motivated, use Personal Capital to view your net worth.

A benefit to contributing money to your retirement account is not taxed. For example, if you earn $100 and invest 10%, you’d contribute $10, then get taxed on the remaining $90. As of 2019, the most you’re able to contribute towards your 401K is 19K but this can change.

6. Consider Where to Invest Your Money

The most common way to invest your money is in stocks, but it’s not the only way. Here are other ways to invest:

Robo Advisors

Robo-advisors[4] are fancy algorithms that’ll choose the best investments for you. Sites like Wealthfront make it easy for first-time investors to invest their money. You’d input information about yourself and set your risk tolerance.

Then, set your monthly contribution amount and your robo-advisor would do the rest. Robo-advisors charge a fee to manage your money, but less than regular advisors.

Bonds

Think of bonds as “IOUs” to whomever you buy them from.

Essentially, you’re lending money and charging interest. Like stocks, not all bonds are equal. Some will be riskier than others depending on their rating.

Here are the different types of bond categories:[5]

  1. Treasury bonds
  2. Government bonds
  3. Corporate bonds
  4. Foreign bonds
  5. Mortgage-backed bonds
  6. Municipal bonds

Mutual Funds

Picture a group of people dumping all their money in a jar that’s managed by a professional. This is how mutual funds work. The fund manager manages the money looking to earn capital gains (interest.)

One of the best types of mutual funds is index funds. Since these funds don’t try to beat the market and instead follow it, they need less research. Because of this they often charge the lowest fees and yield the best long-term results.

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Real Estate

Yes, buying a home is an investment when done correctly.

Imagine buying a home and using it as a rental property. After repairing it, you receive a monthly surplus check of $100 to $200.

This may not sound like a lot, but repeat this process enough times and you’d earn a large amount of passive income. That’s why real estate is one of the best investments to not only retire but become wealthy.

But, it requires a lot of money to start and you should expect losing money along the way as you learn the process.

Savings Accounts

Your money can still grow in a savings account. Nowadays most online banks offer a 2% annual return. Although the average inflation is higher your money will be available when you need it.

7. Master Disincline to Dodge Short Success

Investing for retirement is a long-term strategy. That’s why you need to master delayed gratification. All this means is delaying short-term pleasure for something bigger in the future. Research shows that those who have delayed gratification are more successful.[6]

So how can you master delayed gratification?

By building your discipline.

Think back to what retirement means to you. A clear purpose will help you avoid withdrawing your money during a market downturn. It’ll help you contribute more towards retirement when you’d want to waste it instead.

Your journey towards retirement will be long, so reward yourself along the way. Choose a reward that’s relevant and meaningful, so that you reinforce positive behavior. For example, after contributing more towards retirement, treat yourself to dinner.

8. Aggressively Invest on This One Investment

I’ve mentioned several types of investments but haven’t covered the most important one.

It sounds cliche but here’s why you’re your best investment towards retirement. The more you know, the more money you’ll be able to make. The more good habits you adopt, the more secure your retirement will be.

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More importantly, investing in yourself is an investment that no one can take away. There’s no market downturn nor tragic circumstance that’ll wipe your knowledge and experience.

But, how can you invest yourself?

Reading books, blogs, and anything that’ll help you learn new topics daily. Listen to podcasts and audiobooks on your commute to/from work.

Save money to buy courses and hire coaches. I used to believe hiring coaches was a waste of money when I could learn the subject alone.

But, coaches see your blind spots and hold you accountable. Hiring the right coach will help you achieve your goals faster than you would’ve alone.

Retire Happy with Excess Money

The key to a secure financial future doesn’t only belong to financial experts.

It’s possible for you and I. What if you were able to retire earlier than most people and weren’t a financial planner? What if you were able to focus on what you enjoy doing the most while your money was working hard for you?

I know this sounds impossible now, but the truth is you’re capable of taking charge of your retirement. I’m not a financial expert but I’ve learned how to invest my money by reading books and learning from others.

Investing your money is scary. So start small and invest a small amount of your money with a robo-advisor. Feel your money drop and rise for a month or two. Then, invest more and keep this up until you’re aggressively saving for retirement.

One day, you’ll wake up with a net worth you’re proud of – confident about your retirement. You now know a few strategies you can use to invest in your retirement. Will you take action to retire happy?

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Featured photo credit: Matthew Bennett via unsplash.com

Reference

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