Taking student loans seems to be the only way to make your higher education dreams come true. It’s easy when it’s time to take the loans but paying back the loans can test your organizational skills to the max. Not only does each type of loan have a different deadline but each one has a whole different set of rules and of course, interest rates. How do you stay on top of all your student loan payments? These tips will help you.
Know Your Student Loans & Create A Planner
The absolute first thing you need to do to stay on top of your loan payments is to learn everything there is to know about each of your loans and create a spreadsheet.
Your spreadsheet should include columns for entering exact details for:
- The principle amount of the loan
- The rate of interest you will need to pay
- The term of the loan
- The date on which you need to start repaying the loan
- The amount you will need to pay back on that date
- The penalty for late payment
Take time to read through those tedious terms and conditions, highlight the important points and record them in your spreadsheet against that loan. Remember ignorance of the law is no defense. If you go against any of the terms and conditions, saying you did not know will not do you any good. If you’ve accepted a loan, it is expected that you will read the terms and conditions, so do it.
Mark Out Those Loans With The Highest Rates Of Interest
It is always advisable to know which of your student loans attract the highest interest rates. Mark them out so they are easily noticeable or put them at the top of your list. If you have extra funds at any time, these are the loans you should pay back first.
When making early payments, always remember to put the payment towards the principle, not the interest. Putting the extra money towards the principle will lower your overall payments, while putting the money towards paying the interest does not give you any significant benefits. Lenders automatically put any early payments towards the interest so you need to be very clear about stating what the early payment should go towards.
Set Payment Reminders
So now you know how much you have to pay every month and when you need to make that payment but it’s all on a spreadsheet along with a whole lot of other details. This is not going to ensure that you remember all of those the dates. What you need is something that serves as a timely reminder.
The best way to do this is by setting a reminder on your smart phone or your computer. Setting a reminder a few days before the due date may be a better idea than setting a reminder on that day itself. Also, make sure you set it for a time that you know you will be free so that when the reminder goes off you can make the payment right away. If you set it at a time when you are likely to be traveling or busy at work, you are more likely to forget about it by the time you get home and have the time to attend to the formalities, resulting in a late payment and an expensive fine.
Set Up Automated Payments
If you have enough money coming in every month and do not have to worry about having enough balance in your bank, the best thing to do is set up automated payments.
With automated payments, the necessary amount is transferred from your bank account to the lender’s account automatically on the due date. You don’t have to worry about making any mistakes and there is no risk of forgetting. Setting this up is easy. You just need to speak to the bank and give them instructions.
Knowing that your loans payments are taken care off will take a load off your mind, leaving you free to attend to more enjoyable things instead. Otherwise, just having to keep track of different dates every month can be unbelievably stressful.
Pay Off All Loans At The Beginning Of The Month
If you find it difficult to keep track of your loan payments even with digital reminders and you are uncomfortable at the thought of automated payments, you could consider setting aside an hour or so at the beginning of every month to attend to all loan payments. Do this a day after you receive your paycheck. This takes care of all loan payments for the month so you have nothing to worry or stress over when it comes to your student loans.
Create Your Budget
Creating a budget is critical when you are trying to stay on top of your student loan payments. Chances are, when you just start working, you will be in a top salary bracket, which means your salary will not be sufficient to cover your loans and leave much left over for luxuries. You will have to compromise and learn to make do with less till you get a pay hike.
When creating your budget, first add up all your student loan payments for the month and deduct this total from your monthly earnings. What’s left over after deducting your total loan payment is what you have to work with for all other expenses for the month.
From this, keep aside what you need towards rent, groceries, utilities, and transportation. These are your basic requirements. If there is anything left over after this, that money can be either put towards building your emergency funds or making an early payment on your loan with the highest interest rate.
Consider Consolidation Or Refinancing
Sometimes, no matter how organized you try to do, staying on top of your student loan payments can continue to be overwhelming. Instead of feeling snowed under, it may be time to consider consolidation or refinancing. Before you decide on either of these options, speak to your lender and understand the pros and cons of each and decide whether it works for you.
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