Here it goes – you may not believe it – but figuring out how to get out of student loan debt is easier than you previously thought. There are two simple tools you need to get you on the right track and we’re going to tell you what they are and show you how to use them hand in hand to help you get your financial act together. We wrote yesterday about how being in five figures of student loan debt can be an awful feeling – some people even crack under the stress. Today, we arm you so you can move forward and feel better about your circumstances.
Tool Number One! We don’t usually toot our horn too much around here, but our student loan management tool is essential to getting yourself out of debt. Here’s why. Information is power. It’s tempting to imitate an ostrich and shove your head into the sand so you don’t have to face the reality of your student loan debt. But anyone who says “ignorance is bliss” has never been pursued by a student loan collector…
So don’t hide. Use our management tool to get a complete picture of all of your student loans – both public and private – in one place so you can see exactly what you’re dealing with. You can also play around with different repayment plans to see what changes that can make in your monthly obligations, check out your prospective payoff dates, interest rates and all of the pertinent information you will need to integrate with Tool Number Two.
Tool Number Two! This is going to sound so, so obvious, but most people don’t use this. You need a budget. More than 40% of American households surveyed said they don’t have a budget to keep them on track, but that number is likely higher. Here’s the way to get started. First don’t do anything different, just keep track of what you spend your money on for a month. Get a receipt for every single thing you spend money on. If there’s no receipt offered, scribble the date, amount of purchase and reason on a scrap of paper. Toss it all in a box all month long.
Don’t look at it during the month – this will mar your experiment. Instead wait until the end of the month to open up your box. Open up an excel spreadsheet and sort your expenditures into categories. Be sure and include anything you purchased online, any auto debit deductions from your account, bills paid online, etc. Have your bank and credit card statements on hand as well and check off all items to be sure all of your scraps add up to all money spent. If you charged items, be sure to include those in your monthly expenditures as well even if you won’t be paying cash out of pocket for them this month!
Once you’re done, you’ll no doubt be surprised to find out where your money goes. Don’t get discouraged. This is all information you need. Once you know where your money is going, you can start paring back. Look for things that are easy to cut back on like Starbucks, eating out, movies at the theater, evenings at the bar and all that other stuff that eats away at your cash! Make a plan to cut back or eliminate these unnecessary expenses.
Next take a look at where you can slash other cost like cable, gas (consider a car pool) and clothing (shop at garage sales or consignment shops). For those who really want to try and change their lifestyles, consider the cost-savings of a permaculture lifestyle! With all of this in hand, draft yourself a budget. Read this article to see five different types of budgets to consider for every situation. Here’s an article with tips on how to drastically cut household expenses without losing your mind.
If you’re a die-hard smart phone junkie, check out this nimble little app to help you set up and stick to your budget. The important part is to set up a budget whether it’s on the computer or in a notebook or on an app. Stick to it so you can not only make your student loan payments, but try to fast track them for payoff so you can be done with debt for good!
P.S. One More Tool
Hopefully you’ll use the first two tools above better than the cat does with the screwdriver (see adorable video above). And here’s one last tool we’d like to offer to help with your debt: our blog (i.e. where you are right now). We add new material every day to try to keep you informed on what’s happening with student loan legislation, bankruptcy cases and college affordability.
But more importantly, we focus most of our articles on helping you figure out how to pay off your student loans and get out of debt. Please check out some of the recent blogs below on how to tackle your debt. You can also sign up here to view your student loans on Tuition.io (you don’t even have to supply your social security number) and sign up for email updates of our blog posts to help keep you on track!