For many of you, the only way to pay for college is to take out loans. I can relate, as I have thousands of dollars in debt tied to my name from college.
While my mother nagged me constantly after I graduated about saving up to pay back my loans, it didn’t really hit me that I would need to start paying everything back so soon. Plus, I tend to tune out my mother when she nags me about these things. As much as I hate to admit it, she was right! The six months passed by quickly and snuck up on me, catching me completely off guard.
It’s a little different when you have your mother nagging you about something — I wish I would have had someone my age telling me just how much of a chunk would need to start coming out of my already minuscule paychecks.
This is your wake-up call. Save up $20 per paycheck every single time before your six months are up. When you get that first bill in the mail, it will seem a lot less scary and you won’t have to sacrifice as much down the road when you’re still trying to figure out your finances on a “real world” budget. If you are lucky enough to still be living at home, make sure to pocket some money in anticipation of paying back your loans. If you don’t have one already, open up a savings account so you can move money into there. Once you move it into your savings account, act as though the money doesn’t exist and that you cannot spend it.
According to this article out of the Los Angeles Times, more and more people aren’t paying their loans at an “alarming rate.” One of the statistics stated in the article is particularly frightening: “5.4 million of 37 million borrowers with student loan balances had at least one past-due student loan account.” If you’re a banker, this would be kind of scary to know and I can see why it would be frustrating that people aren’t paying you back. But as a lowly entry-level employee, it’s completely understandable why some people just can’t afford to pay.
Between rent, electric, water, gas, groceries and other necessities, it’s hard to make room to make yet another payment on something you can’t afford … but you have to. The more time you let that money sit around unpaid, the more interest will accumulate on your loans and you’ll end up owing way more than you expected.
That’s why you need to start making a finance plan now. I know the last thing you want to think about as soon as you graduate is how you’re going to pay off your school loans, but you will thank me in the long run when you’re not scrambling around to make ends meet. That is something I wish I would have known and had I known it, I would not be in such a financial rut that I am now.