5 Ways to Prepare for Student Loan Debt
Student loan debt can be quite scary, especially if you’re fresh out of college and have your first full-time job. Although student loans are necessary for your education and to get your career off the ground, there are steps you can take right now to prepare yourself financially, as well as mentally, to handle all that student loan debt. These five tips will help you start preparing today so you’ll be in good shape once the payments start rolling in!
1) Consider Life After College
Before taking out a loan, consider what your life will be like after college. If you’re planning on living in a big city, your expenses may be higher than if you choose to live somewhere more rural. Figure out how much money you need per month based on where you plan on living and whether or not you have any additional financial obligations (like a car payment). Also, if you’re planning on going abroad or studying online, those loans will likely have different repayment terms.
2) Think About Your Life After College Before Choosing a School
When choosing a college, it’s easy to focus on finding an institution that has a good reputation or can offer you scholarships. However, it’s also important to think about how your life will change after you graduate from college. Will your job search require relocation? Is there a certain city or state where you want to eventually settle down? Will you need special certifications or training in order to be successful in your field?
3) Don’t Use Loans As A Band-Aid For Failing To Plan Financially
The first tip to prepare for student loan debt is simple: don’t use loans as a band-aid because you couldn’t properly plan financially. Many students find themselves taking out huge amounts of student loans just because they failed (or refused) to appropriately plan their finances in other areas. Put simply, if you haven’t managed your spending and savings before you get into school—you have no business taking on tens of thousands of dollars in debt.
4) Start An Emergency Fund
The first thing you should do before deciding how much money you need is to start an emergency fund. You can’t go into debt and save up enough cash at the same time, so if you have credit card or other debt, focus on paying that off first. Ideally, your emergency fund will have enough in it to cover at least three months of expenses; however, a few hundred dollars set aside as soon as possible is better than nothing.
5) Create A Budget And Stick To It
Creating a budget is one of those tedious tasks that seems like a waste of time—and if you don’t follow it, it can feel like a cruel joke. But creating a budget and sticking to it is one of your most important tools in keeping student loan debt under control. If you are struggling with how much student loan debt you should take on, start by creating a realistic budget and sticking to it.
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