The average college student graduates with some form of student loan debt. As statistics show, most students carry around a student loan balance of $30,000 that they need to repay.
During and right after your grace period are the perfect times to evaluate your loans and your financial situation to determine how you’ll make student loan payments each month.
You can choose from a variety of payment plans and options before you get started as well. When you owe a lot of debt, some people may tell you to drastically cut your expenses so you can focus on your debt or move back in with family so you won’t have to worry about the financial burden of paying for housing.
While moving back in with your parents is a great option to jumpstart your student loan repayment process as it could save you thousands of dollars, not everyone has that option as some graduates are older or have simply left the nest for good.
Here are a few ways to budget for student loan payments when you are committed to living on your own.
Budget the Easy Way By Paying Yourself First
This is one of the easiest ways to make sure you pay on your student loan debt on-time and regularly each month. Instead of fearing that you won’t have enough money left at the end of the month to contribute to your loan payment, try to pay yourself first instead.
When you get paid, make at least the minimum payment on your student loans, then transfer a set amount to a savings account. After that, take care of all your other bills. You can use what’s left on discretionary spending last.
You may have to cut some unnecessary expenses or adopt some frugal hobbies with this method, but it will give you peace-of-mind when it comes to developing a realistic budget and paying off debt.
Lower Your Housing Expenses
If you rent an apartment and can’t or prefer not to move back in with your parents in order to put money toward your student loans, you can still cut your living expenses. The trick is knowing how to keep your living expenses moderate and simple.
A spacious condo downtown will clearly cost you more than a smaller basic apartment on the outskirts of town or in a small suburb. Living in luxury is not a must -- and it’s a goal you can work toward over time as your income goes up and you pay down your debt. For now, repaying your loans should be a financial priority.
There are a lot of hidden costs involved with renting an apartment or house and owning a property, too. Be aware of these when choosing a living space, and look to eliminate what you can.
Some landlords provide extra amenities for tenants like a pool, computer lab, fitness center, concierge service, and so on. While these amenities might be nice, the extra cost you have to pay for them will be reflected in your rent amount.
You can lower your housing expenses by choosing to rent in an area that has a lower cost of living and leasing housing that doesn’t have extra maintenance and storage fees or benefits attached.
And don’t forget -- you can make living on your own a little easier by finding a roommate (or roommates) to split expenses with. You may not be flying solo, but it’s a good compromise to have your own roof instead of staying under your parents’ and be able to repay your loans.
Consider a Side Gig
If adding student loan payments into the mix gives you a budget deficit, try finding extra ways to earn money on the side to increase your income. Depending on how much your student loan payments are, you may only need to bring in a couple hundred dollars per month.
You can do this by babysitting, walking dogs, cleaning houses, running errands, consulting businesses or individuals, or freelancing your skills. Don’t forget the fact that you will have to pay taxes on the extra income you earn so talk to a financial advisor or accountant who can offer insight on that aspect.
Commit to Making Payments
Budgeting for student loan payments when you have other financial responsibilities like your housing, bills, or even a family can require a lot of focus and determination along with a clear plan. The key is to prioritize the debt and commit to making payments each and every month so you can eliminate it.
About the Author: Chonce is a freelance writer who's passionate about helping others get out of debt and work toward financial stability. You can connect with her on her blog, MyDebtEpiphany.com.