Now that we are into the end of the first Quarter of 2024, many of you may be reviewing your financial plan. More than likely, this includes revieing your dreaded student or consumer loans. Everyone has some form of debt so don’t feel like you are alone! The important thing is that you are mindful of it, and that part of your financial plan includes a path to pay them down, and eventually to pay them off.
If you have a path and are making progress- Congratulations and keep up the good work! If you don’t, I have a few tips below that will help you get started on a plan to manage your current loans and create a path to getting them under control. Here are some things to consider:
1.Understand Your Loans: Make sure you know the types of loans you have, their interest rates, repayment terms, and any grace periods or deferment options available to you. This will help you get organized and prioritize which loans to pay off first.
2.Create a Budget: Take a close look at your income and expenses to create a budget. I know it can be difficult to do, but it does not have to be super strict- allow flexibility. It is like dipping your toe in the ocean- you are entering slowly as to not shock your body with the cold water, but you want to move forward and make progress. By allocating a specific amount each month toward your student loans or consumer loans will ensure you’re making progress on paying them off.
3. Pay More Than the Minimum: If you can afford it, try to pay more than the minimum payment each month. And a budget may be helpful in doing just that- as you can see where you perhaps can reduce spending on things that you may not fully need or enjoy.
– Have Extra money this month from not going to that dinner his week?
– Met your target sales goals at work and received a bonus?
Use those funds toward the minimum payment. Many people do not realize the great benefit of taking this extra cash and applying it to the minimum payment amount. This will not only help you pay off your loans faster but will reduce the amount of interest you’ll pay over time- saving you money.
Also, don’t be afraid of calling your loan providers and ask about Refinancing Options: If you have good credit and a stable income, you may be able to refinance your student and consumer loans to get a lower interest rate. Many times, if you sign up for their Autopay option, they can reduce the interest rate. This could potentially save you money over the life of the loan.
Organization is very important as well to not only keep track of your loans and payments, but to know if there are any changes to your loans. For instance, many times loans will can be packaged and sold by the issuer – so you want to ensure you have communication with your loan service provider to be aware of any changes. You don’t want to suddenly be surprised if the loan date, amount or payment information changes!
I know looking at your student loans or any other loan you may have can be scary- seeing at 10, 20 or even 30-year term can be overwhelming and send you running for the hills. It is important to remember that if you’re struggling to make your payments, don’t hesitate to reach out to ask for help.
Your loan service provider may be able to offer you options such as income-driven repayment plans or deferment/forbearance to help you through difficult times. Paying off student loans or any loan for that matter takes time and patience. It is much more important to have a plan that will help you successfully manage your debt and work toward reaching financial freedom. So don’t be afraid to dip that toe into the Ocean. Once you take the plunge you will be better for it!
Yours in Financial Health…
Tara Taylor Financial
