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Student Loans: Pay and Pay Attention
A first, post-graduation, career is often accompanied by many exciting changes and equally overwhelming challenges. Receiving a full-time, “grown-up” paycheck is one of the best welcomings into the working world that a young professional can get. No more unpaid internships, no more volunteering, no more minimum-wage, entry-level jobs, no more loans from the bank of mom and dad, and no more living off of student loans. While receiving that first paycheck is exhilarating – remember to keep a level head about budgeting to pay off your student debt. Debt is something that can follow you long after your young professional status wears off.
Some sectors of the hospitality industry are less lucrative than others, especially in the beginning, so it’s important to gain a realistic perspective about the personal finance components of post-college life. Student loans are a significant piece of the pie. For those that just graduated this spring, the end of the six month grace period is fastly approaching and it is important to understand the details of your debt.
Below are some basics to help you navigate through the sometimes complicated world of student loans and payment plans:
Know Your Debt Details
The first aspect of truly understanding the details of your student loans is knowing where to find the information. You can view all information about federal loans at www.nslds.ed.gov and www.myedaccount.com and if you took out any private loans, you will have to locate the original paperwork that was signed or contact your school for the records. This will give you access to information about your balance, payment deadlines, options for consolidating loan payments, lowering payment amounts, deferring payments, and actually making payments. You should also understand how long it will take to pay off your debt,. CNN Money has a simple Student Loan Calculator that will allow you to not only see how many years it will take to repay your loans; it will also calculate the dollar amount of interest that will be paid. Understanding the bigger, long-term picture of your loans will help you budget for your payments.
Make a Budget
I can’t stress enough how important it is to know exactly how much your take-home income is and create a budget for yourself based on that and your fixed required expenses. Keep Suze Orman in the back of your mind when determining your required expenses; such as rent, insurance payments, and loan payments (excluding things like cable, magazine subscriptions, and Netflix). After that, add in other non-fixed required expenses, like food and transportation costs, in order to get a reasonable understanding of exactly how much money could be dedicated to a savings plan, loan repayment, and even a 401k plan if your employer provides it. I recommend using www.mint.com to not only create a budget, but to keep tabs on all of your accounts through one medium. They even have a mobile app! A book that I found really helpful was "Get a Financial Life: Personal Finance in Your Twenties and Thirties" by Beth Kobliner. There is a section dedicated to student loans as well as explanations and advice about other important financial decisions that our generation will have to face, such as 401k’s, IRAs, and insurance plans. Another good book that mainly focuses on creating a budget is "Your Money: The Missing Manual" by J.D. Roth.
Know the Consequences
The final piece of the puzzle (and one of the best motivators) to truly take ownership of your finances is to understand the consequences of not paying attention. According to the National Student Load Data System, “Borrowers who default on their student loans are reported to credit bureaus, so your credit rating and future borrowing ability will be negatively impacted. In addition, legal action can be taken to require payment through garnishment of wages and withholding of tax refunds.” Basically, this means that student loans are not something to be ignored. As mentioned in the first section, it’s important to understand your payment amount, reduction, and deferment options in order to avoid a situation that could affect you for the rest of your life. It’s never too early to start paying attention to your credit score.
I would love to hear more financial tips or reading suggestions from others hotel-industry millenials that are working towards, or have achieved financial independence.
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http://www.take-home-paycalculator.com
A calculator which will automatically work out your take home pay calculator how much you have left each, week,month or year. A simple calculator to show your net pay.
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