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2 Factors That Will Keep Your College Debt From Ruining Your Life

graduate chained to student debtCollege debt will never be a prerequisite to getting a college degree. All it really takes are good planning skills from parents and great financial habits from the student. While a lot of students are not financially well off to be able to get assistance from their parents, that does not mean they can let student loans ruin their lives.

You do not need to hear some really bad news about student loan debt to decide that you need to make a smart choice about it. You owe it to your future self to make a wise choice about your finances period. Regardless if you are still in school or you have rich parents, you need to learn how to manage your money so you can go out into the world and make yourself wealthy through your own efforts.

College loans will be more costly this year

Getting a higher education without college debt seem like a tough thing to do – but it is not impossible. There are a lot of students who have gone through this phase in their life without having to borrow a single cent.

But if you think that is impossible for you to do because you do not have enough time to save up for your tuition fee, that is alright. You can borrow money to pay for your college education, but make sure that you will do it correctly. More than ever, the situation now requires each and every student who will borrow money to be wise when it comes to taking out student loans.

According to an article published in Forbes.com the interest rate for school year 2014-2015 will be higher than last year. It is expected to rise by 0.8%. It may seem like a small percentage but the bigger the loan, the bigger interest amount you will be forced to pay off. The article said that the Stafford Loan that is an aid reserved for undergraduates will go up from 3.86% to 4.66%. The rate for the Direct unsubsidized loans for graduate students will rise from 5.41% to 6.21%. Direct PLUS loans for both parents and graduate students will increase from 6.41% to 7.21%.

All of these data will really make life a lot harder for students who need a loan to go through college. But even if you are trying to wrap your head around this financial difficulty, you might be comforted to know that all is not lost. With some effort, discipline and self control, you can focus on two factors that will help keep college debt from ruining your future.

Your degree determines if you can afford your student loan payments

The first factor involves the degree that you choose to study. If you need to borrow money to get a particular degree, you must ensure that it will lead you to a career that can afford to pay it off. It does not matter if you study medicine, education or political science, you need to repay student loans.

Let us lay them out for you and connect how this is important in relation to your student loans.

  • Your degree will tell you the career path that you can take. The best way to choose a college degree is to determine what type of career you can work on for the next few decades of your life. Do you picture yourself being a teacher, a doctor, a lawyer or a businessman? Or do you see yourself being an inventor or a scientist? You want to look at the career you want to have before you choose the appropriate degree that will allow you to qualify for that career.
  • Your career will determine how much you will earn. Thanks to the Internet, you can easily see how much professionals are earning these days. If you want to be a doctor, you can check out the average earning potential. You can narrow it down to specialty and even location.
  • The expected earnings of your intended career should define if you can afford to pay off your college debt. Finally, once you know that national average, you should be able to make a smart decision as to whether you can afford the student loan payments that you are trying to apply for.

It is as simple as this: if you have chosen to be a teacher by profession, why would you put yourself through $100,000 debt when the average salary of a teacher is only $30,000 to $40,000 annually? At least, this is true when you are just starting your career. It does not make sense to pay so much when your salary is not expected to be at par with what you have to pay off.

Huffingtonpost.com revealed that 51% of Americans who have college debt through the Education Department (Direct Loans) have difficulties with their payments. A lot of those who are not making payments have said that the cause of that is financial hardship. Do not be a part of this statistic by making a wise choice about your degree in the first place. If your chosen career can only pay yourself this much income, then know the limit of student loans you can borrow. That will keep your debt from eating more than half of your monthly salary and making your life a living hell.

Your college expenses will set the pace for your financial future

The second factor that you need to look into is your college expenses. How you spend your money while you are studying will set you up for a life of debt or financial success.

According to CollegeBoard.org, the undergraduate budget for SY 2013-2014 are as follows:

  • Public 2-year Commuter: $15,933 ($3,264 tuition fees; $7,466 room and board; $1,270 books and supplies; $1,708 transportation; and, $2,225 other expenses)
  • Public 4-year In-State On-Campus: $22,826 ($8,893 tuition and fees; $9,498 room and board; $1,207 books and supplies; $1,123 transportation; and, $2,105 other expenses)
  • Public 4-year Out-of-State On-Campus: $36,136 ($22,203 tuition and fees; $9,498 room and board; $1,207 books and supplies; $1,123 transportation; and, $2,105 other expenses)
  • Private Nonprofit 4-year On-Campus: $44,750 ($30,094 tuition and fees; $10,823 room and board; $1,253 books and supplies; $990 transportation; and, $1,590 other expenses)

It may be safe to expect that these will the expenses that students of SY 2014-2015 will go through. The thing is, you do not have to borrow all the money needed to completely finance your way out of college. It is understandable if some students will find it hard to fully demolish student loan debt. But that does not mean you cannot lessen it.

Here are some tips that you can use to lower your college debt.

  • Get a part time job. You can probably pay for your daily expenses through the money that you will earn. Or, you can build up your emergency fund so you do not have to be financially short when an emergency strikes.
  • Budget your money. Learning how to budget is very important because it allows you to identify your finances and decide where it should go to. You can prioritize your expenses and make sure that your money is not wasted an only spent on the important purchases.
  • Study hard. Another way to lower your expenses is to just study hard. You may be able to qualify for a scholarship the next year so make sure your grades are up.

Here is a video from ABC News about how you can increase your source of cash and lower your expenses while you are in college.

If you need help with student loans, National Debt Relief offers a consultation service that will help you select the right debt relief program to make your payments easier. The company can help you find the right program based on your financial situation, employment conditions and college debt. National Debt Relief will even help with the documentation. There is a one-time service fee involved that will be deposited in an escrow account. When you are happy with the service and the paperworks, only then will the payment be released.

College Finances: Where To Get Money When You Need It

frustrated womanThere are a couple of debt problems that you will face in college but that does not mean you should let yourself be a part of the statistics. Students usually end up with two type of debts: student loans and credit cards. The first is used mostly for school related expenses while the other is for the daily expenses that the student will encounter. The former is necessary but the latter is usually curbed by students to keep debt levels low.

But no matter how much you plan or prepare for it, you will always find something that will deviate from your budget. These unexpected expenses are usually the reason why some students are forced to use their credit cards. The “emergency” expenses can sometimes pile up to become a significant debt that can spiral out of control. Students must take extra care when it comes to their college finances because it will set the pace for their financial life in the coming years.

Smart ways to earn money in college

Since the unexpected expenses cannot be avoided, you need to be prepared for it. While calling mom or dad will get you out of a tight spot, the fact that they are far away will mean you will not be able to get help immediately. Most will quickly resort to credit cards to pay for purchases.

However, if you want to keep your credit spending low, there are smart ways for you to boost your college finances so you can save the cash for these emergency needs. When it comes to earning more, we obviously mean getting a job.

There are various benefits to earn while in college and you will not only get more money to spend, you will also learn various habits that will prove to be useful when you  graduate. The job experience will be noticed by your future employers and carrying that responsibility will bring you bigger opportunities. College students and even new graduates can look for jobs through websites like CollegeRecruiter.com or CoolWorks.com. Try to browse for job openings that are not particular about work history and can partial to your flexible work schedule.

Here are other suggestions that will help you earn more for your college finances.

  • Join behavioral study projects and similar surveys/experiments. There are professors and students on campus who are probably looking for groups that they can study and you can volunteer if you qualify. This usually varies between schools and projects but you can earn a decent amount for these one time projects. Look at the community boards in your campus for these opportunities.

  • Focus groups. Corporations and even local businesses sometimes need the opinion of focus groups and you can see if you can join these. All you have to do is to get in touch with companies and register to be a part of their focus group. You get to try their new products or provide your honest opinion about certain campaigns that they want to release.

  • Use your skills. If you have a particular skill like playing a musical instrument or being academically advanced, you can use this to tutor others.

  • Sell your possessions. Even someone as young as students sometimes accumulate a lot of junk. If you have things that you are not using, sell them off. Or you can trade. That will lower the need for you  to spend.

These are only some of the things that you can do to help raise the funds for your emergency stash of cash.

Sources of money that you should never rely on while in school

While there are options that we highly recommend, there are also those that we strongly advise against. If you need fast cash, never opt for any of these options because you will only make things worse.

  • Payday loans. If you are using payday loans to just get by, then you are putting yourself through a debt cycle that you will find difficult to get out of. The high interest rates of these short term loans will never bring you any good. It will only bury you in debt and the high interest will be robbing a huge amount of money from your college finances.

  • Cash advance. Getting a cash advance on your credit card is also a bad idea because of the high interest rate that you will have to pay off. If regular purchases have a high rate, credit card cash advances will have higher rates than that.

  • Get rich quick programs. There are so many of this online and you have to be very careful about it when you come across these. If they are too good to be true, then they probably are. Be cautious of these and do not, under any circumstances, give out vital information about yourself. If you really want to get rich, you have to work hard for it.

  • Gambling. Surprisingly, some students resort to this when they are in need of big money. This is never a good idea and you will just lose the little amount of cash that you have. You may win a couple of times but it is usually not worth what you will end up losing in the long run.

You have to realize that the quick cash are usually the ones that are most destructive. You do not want to make your college finances rely on these unreliable sources of income.

Financial Tips For New Graduates

graduation cap on top of moneyThe 2013 graduates have marched and have probably stopped celebrating by now. Although there are several uncertainties about their job prospects and all the overall economic stability of the country, one has to remain hopeful about what lies ahead. Although we are influenced by the general state of the US economy, you have to understand that your success, as a graduate, will depend on how you will shape your finances as you move hereon.

When you finish your studies, that usually marks the end of you being your parent’s financial responsibility. You are expected to start supporting yourself financially and move out of your parent’s wing. While you may have learned how to manage your money back in college, that was just the practice stage. Now, you have to face the real world armed with what you have learned and developed in school.

Financial habits that you need to develop after school

There are many financial tips that will tell you what habits should have been developed while you were in school. As you live on campus and away from your parents, you should have had the financial capabilities to see to it that your money is properly managed. But even if your parents were generous enough to give you unlimited monetary supply as you studied, you still need to develop these habits. It is not too late to start practicing proper financial management even as you begin looking for a job.

So what are the habits that you need to develop now? There are many of them but we have selected 3 of the most important financial tips that we believe will lead to the development of other smaller habits.

Budgeting. This is a crucial plan that will help you live within your means – which is an integral part of financial management. Your budget will give you a general overview of your finances – what money comes in and what goes out. You will take note of the financial activities that happen in your life and you will begin controlling that. Your budget plan will make all of this possible because in this plan, you will take note of your income and where it all goes. If you are creating your budget for the first time, you will have to list what you are currently spending on. Once you have a month’s worth of expense data, you can look them over to prioritize what you should be spending on. Take note of those that are not important and you can cut back on. You have to make sure that whatever expenses you have will be within what you can afford to spend. If you are having trouble with a budget template, you can download the free budget planner worksheet on this site.

Save. It is very important that you start saving as early as possible. This is not just for retirement. There are several life events that you have to spend on and it pays to just buy most of them in cash. Here are some of the things that you could start saving up for in order of priority (at least, this is our suggestion):

  • Emergency fund

  • Car

  • Home

  • Marriage

  • Retirement

It is ideal that you concentrate on your emergency fund first and once you have it you can put in even small amounts of money into all the other savings. Or you can do two at a time. You retirement is highly encouraged to be a staple in your savings contribution. You can save up for a car first before you start saving for a home. It all depends on your priorities – the important thing is to aim paying in cash for things that you think you will need in the future.

Smart spending. Lastly, you need to learn how to spend your money wisely. Gone are the days when your parents supported your every expense. Now, it is all up to you. Most college graduates are overwhelmed by the things that they have to spend on. This is not really about being thrifty or too cheap. You want to get the most value out of your money and that entails some serious thinking and consideration before you purchase. Learn how to make a list before going to the grocery and refrain from relying too much on your credit card. These are only a few of the things that you should implement to practice smart spending.

How to deal with your college-incurred debt

Once you step out of college there are two types of debt that you need to deal with.

  • Student loans. You have to realize that 6 months after you graduate, you have to begin paying your student loans with interest. It is important that you come up with a payment plan to help you deal with it. You can visit StudentAid.ed.gov to get information about how you can find debt relief from this credit obligation.

  • Credit cards. Most parents gave their children credit cards to help finance their immediate needs in college. More often than not, graduates find themselves with a significant amount of credit card debt to their name. Try to eliminate these high interest rate debt before the other high interest student loan starts to kick in. Otherwise, both debts could pull you under.

You debt may be a daunting task to overcome but you can conquer it by being organized and disciplined about it. Here are the steps that you can follow to deal with your debt.

  • Know how much you owe.

  • Find out any financial aid that you can avail like any forgiveness program that you may qualify for.

  • Create a payment plan and make sure it coincides with your budget.

  • Make steady payments towards your debts.

  • Know the debt relief options that can help with your high interest credit card debt.

  • Limit your spending to maximize your debt payments.

  • Grow your savings so you don’t have to compromise your debt payments when an emergency strikes.

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