ESSENTIAL Student Loan Advice for New Grads

Ahhh yes. Student loans. The words that make millions and millions of wallets cringe and wither up like SpongeBob without water when he met Sandy for the first time… This is the student loan advice that is equivalent Spongebob getting that “WATER!” he desperately needed.

When politicians say we have a student loan crisis on our hands, that’s one we all know they aren’t lying about. Millions of us know just how hard it is to live a life we want while just scraping by every month thanks to our good ol’ student loan debt.

Student loans can be a difficult thing to talk about with friends, family, and coworkers because our situations are truly specific to our own journey: where we went to school, how long it took, our parent’s financial situation, how much (if any) our parents were willing to contribute, the college lifestyle we led, and so much more.

Student loan debt is truly designer and personalized, though much less fancy than a new Coach bag or a Louis Vuitton Carryall.

So, what do you do? How do you navigate new grad life with a hole thousands of dollars deep?

Disclaimer: I am not a financial advisor and this is not certified financial advice.

Know your payments

The first step to getting control of your student loans, is to make a list of each student loan you have. List out each balance, if it is federal or private, the monthly payment, and interest rate.

If you need help with this, I have created the perfect and FREE downloadable for you! It is printer friendly and is the perfect way to jump start an organized journey.

Accept your reality

Mentally, this is the hardest part of paying off student loans. You’ve got your list in front of you, and that number can be frightening. Take a deep breath, or several… okay yes so many several deep breaths!…

Whether you regret using loans to support your college lifestyle or loans were your tuition’s only answer, the deed has been done. The line has been signed. The debt is officially yours. It’s a hard pill to swallow, I know.

The pains of living with debt that statistically is likely larger than your new-grad salary and will be a roller coaster ride of emotions for years to come. Harsh? Maybe. But it’s got your name on it and the sooner you accept it, the better off your mental health will be.

Don’t Settle

Your loan term might be 5, 10, 15+ years. Gear up, and don’t settle on those terms. Your future-self and your future finances will thank you with hundreds of dollars in interest saved. Part of accepting your position also comes with stepping up to the plate to paying down that balance efficiently so that your college years aren’t even more expensive than they already are.

Paying off your loans early will save you hundreds, if not thousands of dollars in the long run. Keep your money by choosing to allocate a bit more to those payments now instead of later.

Choose your payoff method

There are three main ways to tackle student loan debt. These theories can apply to any other kind of debt as well. First is the avalanche method. Second, is the snowball method.

I have a very in depth post that breaks down everything you need to know about both methods, check out the best ways to pay off debt!

The snowball method is highly regarded by the famous financial expert, Dave Ramsey and I couldn’t agree more. I have chosen to do the snowball method to pay off my student loans and it is definitely the most psychologically rewarding way to go about paying down debt.

Quickly reduce your monthly student loan payments

If you’re like me, then you have multiple loans to pay on. Six months after graduation, I had 4 different student loan bills coming to me each month. The best way to reduce your student loan payments (obviously) is to reduce the student loans you have. However, you’ve already taken the loans out, so you must optimize and strategize how you reduce your balance.

This is where choosing your payoff method is important. Like I mentioned, I’ve chosen to use the snowball method and I like this method because by focusing on one loan to pay extra on, it quickly allowed me to knock off about $80 in my overall monthly student loan bill within a few months.

While it can be tempting to pocket that extra money, instead funnel that extra money into the next loan. This is how the snowball method works- by reducing your payments up front in order to pay larger amounts down the road as you go.

If you want to get out of debt faster and to avoid settling for the set payoff date, rolling that extra money into your loan payments (even if it is a portions) will be your best bet.

Psychological benefits to the snowball method

Unless you’re Raven Samone, stop looking so far into the future!

Gotta love That’s So Raven, but thinking too far ahead really got me into trouble in the beginning of my student loan journey. In my head, I felt like life couldn’t and wouldn’t start until after I got my student loans paid off in full. And that couldn’t have been farther from the truth.

Life is truly precious in that no one can predict when it will come to an end or come to a devastating crisis. Not to be overly morbid or a downer, and although becoming debt free should be your ultimate goal, spending every ounce of your paycheck to become debt free is not worth risking fulfilling opportunities that will positively come your way.

Learning how to budget will help you in many ways, but it will especially benefit you when you are trying to make a dent into what you owe. I have created a version of my budgeting techniques for you to have for FREE!

You can still live life, upgrade your car, move, get married, go on vacation, take yourself to Starbucks, and so much more while paying down your student debt, if you are budgeting properly. The same expression that’s used in the kitchen can be used in finance as well… “everything in moderation”.

So, if you need permission to go to Starbucks… THERE. You got it.

BUT, you really should be focusing on reducing your consumption of disposable good like Starbucks and eating out. Eating (and drinking) at home will save you hundreds of dollars each year… for some people it will save you hundreds each month or even each week!

Finances in moderation

Taking an all or nothing approach to paying off student debt can be (and likely will be) detrimental to your mental and financial well-being. Going all in on paying down your loans can be just as mentally damaging as only paying the minimum balance (or less) would be financially damaging.

Post-grad life might be the first real time you are learning to navigate the adult finance world. Throwing in thousands of dollars of debt makes that even harder. Paying down student loan debt feels like throwing money away.

Unlike a car payment where at least you have a physical car to help your mind understand where the money is going, the college experience has already been had. It will feel like the money just goes away for nothing.

Shifting my mindset to think of finances like a well-balanced meal helped me understand that money is much more than just income and expenses. Be aggressive in tackling your student loan debt.

But if you’re like me and have been driving the same car for 5 years- 3 of those summers without air conditioning and one winter without heat (not a good or safe idea living in Michigan)… make it possible to upgrade your car.

Please do not forget that your quality of life is worth something. Likely worth a lot more than the value you place on it. It can be done. But choose to manage your money in a way that will help you, not hurt you.

This post has been about how to tackle student loan debt. Want to see more content like this? Need more inspiration? You will LOVE these posts: