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Managing Debt and Student Loans

Page history last edited by Holly Swyers 3 years, 5 months ago

What is the best way to manage debt, including strategies for paying off student loans?

 

Debt as a Priority

The best way to handle debt is to plan for it. Joyce Fitzgerald suggests to make debt its own category in your financial planning because everyone will face debt in their life. Think about how you are going to consistently minimize the amount of debt you have. According to Isaac Davies, debt should be prioritized above every other expense, except for home costs. You need to try to at least try to pay the full credit card balance off every month. Because credit card interest rates tend to be high, if you need a larger amount of money, you would be better to get a loan from a bank at a lower interest rate with a shorter term repayment plan. Bonnie Bellow recommends paying the minimum balance of a bill consistently because it is better than not paying the bill at all. 

 

Pay Your Loans on Time

Minimizing debt is key! Pay off your loans as soon as you can, even if it’s $20 at a time, according to Melissa Lewis. Pay off the higher ones first, and be on time so you don’t fall behind so that doesn’t negatively affect your credit score. The sooner it’s paid off, the better your credit score will be. Chris Cain says that you should pay off as much as you can to keep interest rates from working against you. Perhaps the best way to stay on top of things is to set up an automatic pay plan for certain bills to avoid late fees. 

 

Be Financially Aware

Sebastian Percy suggests many ways to stay financially educated. Make sure to stay on top of your financial situation and figure out how much you really owe in loans. Know the difference between subsidized and unsubsidized loans, and whether they are private or not. Look at the quantity of debt that you owe and your income and figure out what you can personally afford to pay. Decide whether you want to pay the original amount or consolidate to lower monthly payments with a higher interest rate. Look for opportunities or jobs to do to see if you can have your student loans forgiven. Know your resources as well: if you need help managing debt, you can contact a debt agency who can help you with credit card debt.

 

Budget with other expenses

Barry O'Brien asserts that you need to check your monthly budget and then rank those expenses by importance depending on your situation: Rent, food, credit card and loan payments. Then comes the extra expenses that you want, like cable, going out, trips, clothes, etc. Budget and put as much money as you can aside toward paying off your loans. It's also not a bad idea to also save up and keep some spare money around if you need it. If you can, Chris Cain advises that you have a solid emergency fund that can last you six months to a year.

 

This page was developed from interviews with: 

Melissa Lewis, Barry O'Brien, Chris Cain, Bonnie Bellow, Sebastian Percy, Joyce Fitzgerald, Isaac Davies

 

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