As a student, you might be juggling school work, extracurricular activities and any number of jobs in order to finance all this extra activity.
If you’re not careful, you could easily find yourself in a position where your debt begins to spiral out of control.
Here are 7 ways to monitor your debt as a student and keep it from spiraling out of control.
1) Understand What You Owe
One of the most important steps in staying on top of your debt is understanding what you owe.
Start by looking at your credit report and gathering all the information you can about what you owe, such as interest rates, monthly payments, and total amount owed.
If your debt is too high for you to take care of alone, consider asking for help from family members or friends or getting a loan from a bank or credit union.
It may be difficult to make ends meet while trying to pay off debt, but it is much easier than being saddled with an unmanageable amount of student loans.
2) Check In Regularly
If you’ve just started school and are wondering how often you should be checking your student loan balance, the answer is simple: every month.
This will not only help you keep tabs on your spending habits, but it will also show you when it’s time to start thinking about paying off your loans.
Remember that interest on student loans starts accumulating right away, so it’s best not to wait until later in the year before getting a sense of what your financial situation looks like.
3) Set Up Payment Reminders
If you have student loans, it’s important to set up payment reminders so you stay on top of when your payments are due.
This also helps you avoid late fees and the potential for your loans to go into default.
For some loans, such as federal loans, you can sign up for automatic payments that will withdraw the appropriate amount from your checking account each month.
For other types of loans, like private ones, there may be requirements that make setting up automatic payments impossible.
You’ll need to set up an alert with your bank or lender that they send you a reminder by text or email when your loan is nearing its due date.
4) Stay disciplined
One of the most important things you can do is stay disciplined with your finances.
Use these tips to keep your debt in check:
–Create a budget and stick to it, even if it’s tight. If you’re not sure how much you should be spending, try looking at what others are spending on average.
Try to save money by making more and buying less. This way, you’ll have some extra funds in case of emergencies or unplanned expenses.
It also gives you peace of mind knowing that there’s no chance of getting into trouble with your finances.
As tempting as they may be, credit cards will just add to your debt load later down the road.
Remember that any cash advance or purchase needs to be paid off within three months, otherwise they will start accumulating interest.
Paying off loans early can also give you a nice bump to your savings account. Just don’t forget to adjust your monthly budget accordingly!
If you happen to get approved for an auto loan or student loan, be sure that the payments fit comfortably into your budget.
When considering which kind of loan might work for you, think about whether the amount of time before payoff is shorter for one type than another.
5) Have an Emergency Fund
It’s important that you have an emergency fund. This is money that is set aside for emergencies, such as when your car breaks down or you get sick.
It’s also good to keep some of this money in your checking account so it will be there if you need it for minor expenses like gas or groceries.
The amount of money in this fund varies from person to person, but experts say about $1,000-$2,000 is a good starting point.
You can start by setting up a monthly automatic transfer from your checking account into a savings account, which will make sure the money is available when you need it.
Once you’ve built up the savings, try and live on what’s left over each month.
A budget is an estimate of how much income and expenses you’ll have during the course of one year.
Having a budget can help you plan for unexpected costs and see where your money goes at the end of each month.
6) Consolidate Your Loans
Consolidating your student loans may not make sense if you have only one or two small loans, but it can be worth the effort if you have multiple larger loans with different interest rates and terms.
For example, suppose you have a private loan at 9% interest and a federal Stafford loan at 6%. You might consolidate the two so that all of your debt is under one fixed rate (6%).
This is also an important step in getting out of debt; since consolidation makes paying off your debts easier by lumping them together into one payment each month.
To find out more about how to do this, check out this helpful guide from our friends at NerdWallet on consolidating student loans.
7) Seek Professional Help
If you are in debt and do not know how to get out of it, then seek professional help. You should speak with an accountant or financial advisor who will be able to give you some advice on how to get your finances back on track.
If you can’t afford professional assistance, there are other options. Join the Consumer Financial Protection Bureau’s complaint portal to submit complaints about student loan servicers, lenders, and other issues that may be unresolved.
Another option is joining an organization like the National Foundation for Credit Counseling or American Institute of CPAs which have volunteer memberships available for those who cannot afford the fees but need assistance.