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7 Tips For Taking Out Student Loans Right

7 Tips For Taking Out Student Loans Right

One of the hot debates in recent years has been over the true value of a college degree. It still remains the most viable way to have a good career with decent compensation, but the rising cost of college tuition has put the cost–benefit question to the forefront.

Students these days are leaving college with a mountain of debt. Student debt is now estimated at over one trillion dollars. Graduates are also heading into a tough job market to boot. Paying back student loans can be easier with some forward thinking. Here are seven tips to keep your student debt manageable:

1. Keep Debt No More Than Your First Job’s Salary

A good rule of thumb when you take out student loans is to have the total amount of debt not exceed your first year’s salary when you get into the workforce. When you decide what to major in you can develop a good idea of what a starting salary will be. Whatever you rack up in college debt should not exceed this.

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Students will eventually be working in the real world. Things like rent, car payments, food and utilities will need to be figured out as part of monthly budgets. College debt will be part of that budget. Having a debt payment you can afford will be essential in your future.

2. Choose Federal Loans Over Private Loans

Federal student loans traditionally have better rates than private ones. The loans are subsidized by the federal  government. Private loans are provided by banks, credit unions and lending institutions. Federal loans have advantages that can help with repayment.

Federal loans allow a grace period of repayment after you graduate. Private loans may not offer this. Federal loans also offer deferments if you are faced with situations that affect your ability to pay. Options like these are at the discretion of individual private lenders.

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3. Choose a Career in Public Service

Some positions in public service have incentives that assist in making student loans easier to deal with. Occupations like teachers, fire fighters, and law enforcement can be subject to these options. One example is the Public Service Loan Forgiveness Program, made effective October 1, 2007. If you make 120 full, on-time, monthly payments to your student loan while working full time in the public service, the balance of your loan will not need to be paid.

4. Go to Community College

Many local community colleges are able to provide quality education at a lower price than private schools. This is another thing to think about when taking out student loans. If you plan on getting a four-year degree, think about going to community college for the first two years. Look at the criteria of transferring to a four-year school before enrolling.

5. Plan Your Course Load

One thing to plan for when taking out student loans is your course load. What will be your status, full time or part time? If part time, you may not be eligible for full or even only partial financial aid. If you work and go to college part time, you may be responsible for more out-of-pocket education costs than a full-time student.

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Know what courses you will be taking and when. Many majors have a course sequence where select courses are only offered in the spring or fall semesters. Make sure your course load is on track with anticipated completion dates so there are no outstanding courses you need to take to finish your program.

6. Cut Costs

For young students starting out, graduating and going into the world of work may seem far off. It’s something they may not give much thought to with college requirements taking up their present mindset. Thinking about student loans that have to be paid after completion of college doesn’t seem like a priority.

College costs are an obligation that must be repaid. It’s only after graduation that the true realization of this may hit. To minimize the size of your debt and the possible shock associated with it, cut costs during your academic career. If you are able to minimize the need for student loans it will serve you well in the future.

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7. Find Work That Works

One of the ways students have found to lessen the need for taking out large student loans is to find work. This can range from regular paid jobs to work-study programs with the school. Money made can help with expenses and even go toward tuition.

Working can be great but find something that works with your schooling. Get something that has flexible hours around class to help with scheduling for class and life. Find employers that have access to cost-effective transport.

College is still arguably the best option for securing and maintaining a successful career. But taking out student loans the smart way can help in the years ahead.

Featured photo credit: Simon Cunningham via lendingmemo.com

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Published on November 20, 2018

The Best Ways to Save Money Even Impulsive Spenders Can Get Behind

The Best Ways to Save Money Even Impulsive Spenders Can Get Behind

The truth is, there are many “money saving guides” online, but most don’t cover the root issue for not saving.

Once I’d discovered a few key factors that allowed me to save 10k in one year, I realized why most articles couldn’t help me. The problem is that even with the right strategies you can still fail to save money. You need to have the right systems in place and the right mindset.

In this guide, I’ll cover the best ways to save money — practical yet powerful steps you can take to start saving more. It won’t be easy but with hard work, I’m confident you’ll be able to save more money–even if you’re an impulsive spender.

Why Your Past Prevents You from Saving Money

Are you constantly thinking about your financial mistakes?

If so, these thoughts are holding you back from saving.

I get it, you wish you could go back in time to avoid your financial downfalls. But dwelling over your past will only rob you from your future. Instead, reflect on your mistakes and ask yourself what lessons you can learn from them.

It wasn’t easy for me to accept that I had accumulated thousands of dollars in credit card debt. Once I did, I started heading in the right direction. Embrace your past failures and use them as an opportunity to set new financial goals.

For example, after accepting that you’re thousands of dollars in debt create a plan to be debt free in a year or two. This way when you’ll be at peace even when you get negative thoughts about your finances. Now you can focus more time on saving and less on your past financial mistakes.

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How to Effortlessly Track Your Spending

Stop manually tracking your spending.

Leverage powerful analytic tools such as Personal Capital and these money management apps to do the work for you. This tool has worked for me and has kept me motivated to why I’m saving in the first place. Once you login to your Personal Capital dashboard, you’re able to view your net worth.

When I’d first signed up with Personal Capital, I had a negative net worth, but this motivated me to save more. With this tool, you can also view your spending patterns, expenses, and how much money you’re saving.

Use your net worth as your north star to saving more. Whenever you experience financial setbacks, view how far you’ve come along. Saving money is only half the battle, being consistent is the other half.

The Truth on Why You Keep Failing

Saving money isn’t sexy. If it was, wouldn’t everyone be doing it?

Some people are natural savers, but most are impulsive spenders. Instead of denying that you’re an impulsive spender, embrace it.

Don’t try to save 60 to 70% of your income if this means you’ll live a miserable life. Saving money isn’t a race but a marathon. You’re saving for retirement and for large purchases.

If you’re currently having a hard time saving, start spending more money on nice things. This may sound counterintuitive but hear me out. Wouldn’t it be better to save $200 each month for 12 months instead of $500 for 3 months?

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Most people run into trouble because they create budgets that set them up for failure. This system won’t work for those who are frugal, but chances are they don’t need help saving. This system is for those who can’t save money and need to be rewarded for their hard work.

Only because you’re buying nice things doesn’t mean that you’ll save less. Here are some rules you should have in place:

  1. Save more than 50% of your available money (after expenses)
  2. Only buy nice things after saving
  3. Automate your savings with automatic bank transfers

These are the same rules that helped me save thousands each year while buying the latest iPhone. Focus only on items that are important to you. Remember, you can afford anything but not everything.

How to Foolproof Yourself out of Debt

Personal finance is a game. On one end, you’re earning money; and on the to other, you’re saving. But what ends up counting in the end isn’t how much you earn but how much you save. Research shows that about 60% of Americans spend more than they save.[1]

So how can you separate yourself from the 60%?

By not accumulating more debt. This way you’ll have more money to save and avoid having more financial obligations. A great way to stop accumulating debt is using cash to pay for all your transactions.

This will be challenging, depending on how reliant you are with your credit card, but it’s worth the effort. Not only will you stop accruing debt, but you’ll also be more conscious with what you buy.

For example, you’ll think twice about purchasing a new $200 headphone despite having the cash to buy them. According to a poll conducted by The CreditCards.com, 5 out of 6 Americans are impulsive spenders.[2]

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Telling yourself that you’ll have the discipline to not buy things won’t cut it. This is equal to having junk food in your fridge while trying to eat healthy–it’s only a matter of time before you slip. By using cash to make your purchases, you’ll spend less and save more.

A Proven Formula to Skyrocket Your Savings

Having proven systems in place to help you save more is important, but they’re not the best way to save money.

You can search for dozens of ways to save money, but there’ll always be a limit. Instead of spending the majority of your effort saving, look for ways to increase your income. The truth is that once you have the right systems in place, saving is easy.

What’s challenging is earning more money. There are many routes you can take to achieve this. For example, you can work long and hard at your current job to earn a raise. But there’s one problem–you’re depending on someone else to give you a raise.

Your company will have to have the budget, and you’ll have to know how to toot your own horn to get this raise. This isn’t to say that earning a raise is impossible, but things are better when you’re in control right? That’s why building a side-hustle is the best way to increase your income.

Think of your side-hustle as a part-time job doing something you enjoy. You can sell items on eBay for a profit, or design websites for small businesses. Building a side-hustle will be on the hardest things you’ll do, be too stubborn to quit.

During the early stages, you won’t be making money and that’s okay. Since you already have a source of income, you won’t be dependent on your side-hustle to pay for your expenses. Depending on how much time you invest in your side-hustle, it can one day replace your current income.

Whatever route you take, focus more on earning and save as much as possible. You have more control than you give yourself credit for.

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Transform Yourself into a Saving Money Machine

Saving money isn’t complicated but it’s one of the hardest things you’ll do.

By learning from your mistakes and rewarding yourself after saving you’ll save more. What would you do with an extra $200 or $500 each month? To some, this is life-changing money that can improve the quality of their lives.

The truth is saving money is an art. Save too much and you’ll quit, but save too little and you’ll pay for the consequences in the future. Saving money takes effort and having the right systems in place.

Imagine if you’d started saving an extra $100 this next month? Or, saved $20K in one year? Although it’s hard to imagine, this can be your reality if you follow the principles covered in this guide.

Take a moment to brainstorm which goals you’d be able to reach if you had extra money each month. Use these goals as motivation to help you stay on track on your journey to saving more. If I was able to save thousands of dollars with little guidance, imagine what you’ll be able to do.

What are you waiting for? Go and start saving money, the sky is your limit.

Featured photo credit: rawpixel via unsplash.com

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