If you've recently left college, you're trying to assimilate to life after college. Whether you're sending out résumés or settling into a new job, in the back of your mind you may be thinking about how soon you'll have to start repaying your student loans.
It's normal to feel that six months after you leave school is not enough time to prepare for your student loan payments. Here are some tips to create a solid plan to prepare for your student loan grace period and help you ease into repayment.
1. Organize Your Loans
Many young people have multiple student loans and keeping track of them can be confusing. Create a spreadsheet that details how much you owe on each, who the loan servicer is, how much interest you're being charged and how much your monthly payments will be.
Help ensure that you never miss a payment by creating reminders in your phone or signing up for automatic payments. As a reward for using auto debit payments, many loan servicers will provide a quarter percent discount on your loan(s).
2. Devote Time to Finding a Job
If you haven't already landed your first job, that's okay. The job market is competitive and it can be difficult to find something right away. The important thing is to keep trying and, possibly, to change your approach.
If your résumé hasn't been getting the attention it deserves, redesign it. It could pay to be creative. One recent graduate scored 10 interviews when he delivered his résumé in a box of donuts. While you don't have to resort to baked goods, freshening up your résumé or customizing it to the requirements of each job posting can help.
Another way to help your job hunt is to talk with people from your industry. LinkedIn is a great resource for making connections, getting in touch with recruiters and looking for potential jobs. You can also go to networking events and let people know you're looking for a job. Bring business cards so they can easily connect with you later. If you make a good impression and connection, they can help make you aware of opportunities.
Do you feel like you've delivered all the baked goods that the local coffee shop could make and shaken the hands of every person in your field within a 50-mile radius? You might want to expand your job search. If you are open to moving, you could look for positions in different cities or consider jobs that would allow you to use your degree in ways you haven't yet considered. Your college's career center or alumni network — great resources generally — might be able to help by telling you how other students and alumni are using their degrees. If your current city has a local career center, it could also be worth checking out for leads.
3. Add Your Loan to Your Budget Now
Making room in your budget now for your student loan payment will allow you to get used to living within your means. Set up an automatic transfer from your checking account into a savings account each month for an amount equivalent to what your loan repayment will be after your grace period is over. This way you make it a priority to set aside that money. Alternatively, you could use some of this cash to pay the interest on your student loans that accumulates during your grace period. This helps reduce the amount of interest that will capitalize (i.e., get added to your principal loan balance) once your loan enters repayment, which will save you money on the overall cost of your loan.
Even if you can't set aside the full amount yet, saving a little bit from each paycheck will help you get ready to make payments.
4. Create an Emergency Fund
The last thing that you need is to have to choose between fixing your car and repaying your student loans. Creating an emergency fund to fall back on can help when an unexpected expense arises like a car repair or medical bill. The money you are already putting aside from each paycheck is a good start. Once you begin making student loan payments, try to continue to put some of your paycheck into savings each month because even a little bit will add up over time. A good emergency fund has about three to six months of income saved.