3 Steps to Prepare For Paying Back Your Loan
1.) Brace Yourself
Congrats on graduating from college! Savor every minute of celebrating this accomplishment, and don’t put away the wine after the parties are over. You’ll need a glass (or two) as reality sets in, and you come face to face with your tab for the last four years. You may have been blissfully unaware like I was, that while you were sitting in class you were also racking up debt. Now the time has come to pay it back. The bad news is you can’t avoid it like your homework. The good news is, if you take my advice you’ll be prepared to pay off your loan in no time. I know it’s scary, but take a big gulp and continue reading.
2.) Set Up a Repayment Plan
Before or after graduation day, you’ll be receiving info on how much you owe and how to set up a repayment plan. For government held loans, you’ll have a few options. Don’t get too excited though because more options can mean longer debt. The default is the Standard 10-year plan. I highly suggested you stick with this one, if you don’t want to be in debt more than double the time you spent at your alma mater. In the end it’s up to you. Choose wisely and make sure you count the costs.
3.) Create Your Own Plan
When your loan is officially on a repayment plan, it’s time to craft your own plan. Doing the bare minimum will cost you more money and valuable time. In order to avoid this, look at your new income and decide how much you afford a month to put towards your loan. This will require you to make trade-offs like living with the ‘rents for a little longer or postponing the beach vacation you’ve been dreaming of. I can’t promise it will be fun now, but I can promise it will be worth it when you can take multiple vacations with the money you’ve saved yourself. After consulting your budget for areas where you can save, plan to throw those savings and any other unexpected cash influxes at your loan. In my book, I go into more detail on how I did this and how you can too!