I’ve been repaying my student loans for about 6 months now, and so far, it’s been going smoothly. Well, as smoothly as repaying a mountain of debt can go, I suppose.
Although there have been times when things were tight, I’ve successfully managed to make my payments on time every month. That’s not because I have a huge disposable income, or because I hit the lottery recently.
The only reason that I’m able to stay on top of my debt is because I plan ahead. If you just entered repayment, you’ll want to adopt this habit as well. Here’s how to do it.
1. Focus On Your Payments
I mentioned before that I was a using a rigorous budget to keep track of all my expenses in NYC. The primary reason that my budget even exists is because I have big student loan payments every month. As such, I designed my budgeting spreadsheet to pay extra special attention to that loan amount.
Using fancy formulas, I can tell how much spending “cushion” I have for the month before my payment rolls around. Every time I spend money, this cushion decreases. If it stays in the green, I’m good. If it dips into the red, though, I know that I’m going to be in trouble that month.
I watch this number like a hawk—and control my habits if I think it’s decreasing too quickly. When it gets low, I stop going out on the weekends, cook instead of ordering takeout, and absolutely do not make any impulse clothing purchases.
2. Remember The Pitfalls Of Delinquency
This planning is the only thing that keeps me out of delinquency. As long as I’m observant and vigilant, everything gets paid on time, and I live a relatively happy, low-stress lifestyle.
I mentioned before that I don’t want to view my debt as a shackle on my life. And although it might seem like watching one number all month long is counterproductive to that goal, it’s actually the opposite.
It’s when you miss payments, have collectors calling you like crazy, and face the other consequences of delinquency and default that student loans turn into a shackle. The reality of our (talking to all of you fellow borrowers out there) situation is that these loans are an unfortunate part of our lives. Not planning to handle them, or trying to sweep them under a rug, will just end disastrously. They need to be accounted for on every budget and float around in the back of your mind (definitely not on the top!) every time you make a major purchase.
3. Build That Budget!
If you have loans and no budget, the best thing you can do for yourself right now is start making one (this can help!). It doesn’t have to be fancy or as complex as something a data analyst uses. It doesn’t even need to have formulas if you don’t know how to use them.
The important thing is that it must visually shows you where your money is going every month and how much you can afford to spend without missing loan payments. I promise: if you take the time to plan, you won’t be as disappointed when the bill comes around every month.
How do you stay on top of your payments? Let us know in the comments.
(Photo: Robert S. Donovan)