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4 Steps to Decide If Refinancing Your Student Loans Is for You

4 Steps to Decide If Refinancing Your Student Loans Is for YouThis post may contain affiliate links. Check out my Disclosure Policy for more information.

I have been in the process of refinancing my private student loans recently and had a ton of people reach out to me with questions about the whole process. One of the biggest ones was, “How do I know if it’s the right move for me?”

That really can only be figured out by you. After all, personal finance is personal.

However, there are some steps you can take to make this decision a little easier for you.

Do you have Federal or Private loans?

This is super important and in my opinion will immediately make your decision for you. If you only have federal loans, I would immediately say, don’t refinance. The reason I say this is because federal loans come with a lot of protections for you in the event something happens. They offer many programs for deferment, forgiveness, and are generally more willing to work with you in the event of job loss, disability, etc.

On the other hand, private loans typically offer no perks like it, most companies you can’t even die to escape them. That sounds dramatic, but I’m being serious. In the tragic event that you die with private student loans, someone is still going to be responsible to pay those things off. If you have any private loans, refinancing might be a good option for you.

Are you just starting out on your journey to pay off your student loans?

If you are, then I would suggest holding off on refinancing. The reason being that once you refinance you will most likely consolidate many small loans into one large loan. I strongly believe in using the debt avalanche method to save money, but there is major research in the debt snowball method to keep motivation high. If you refinance right away, you won’t experience any pay offs right away because you will be tackling a huge loan amount potentially.

If you have been slaying your debt for awhile and are feeling motivated to get this debt out of your life, refinancing might be for you.

Can you afford your monthly payment?

If you can afford your monthly payment, I would say refinancing may be for you. If you are someone that is struggling to afford your payment, then I would say you should not refinance. This might sound crazy, I know. But, refinancing shouldn’t be used to save you money on your monthly payment, if it will extend the life of your loan. You will only be throwing away more money in interest to these companies. Instead, you need to track your expenses, budget, and maybe even increase your income. I’m happy to help you with all of this 🙂

Do you have loans with an interest rate over 7%?

If you do, then I would say refinancing might be for you. By refinancing, you can potentially get a better interest rate. This will save you money in the long run, as long as you pay close attention to the loan details, we’ll get to that later.

Once you have answered these questions, and feel like it is worth it to look into refinancing, then you need to keep a few things in mind. Refinancing isn’t always beneficial and can actually cost you more money in the long run, if you aren’t careful.

Just because your rate is lower, doesn’t mean you are automatically saving money. A lot of companies will provide you with a lower rate and a lower monthly payment, but extend the life of your loan. This most likely will not help you save any money in the long run.

When you are looking into refinancing your student loans, it’s important to look at all the moving parts, interest rate, monthly payment, and life of the loan.

For example, I refinanced my loans with Earnest and it has been nothing but wonderful compared to my old loan provider. When I refinanced, I went with a lower rate (4.97%), lowered the life of my loan (15 years to 5 years), and increased my monthly payment ($770 to $865). This is saving me money in interest because I now have a lower rate, and less time I’ll have the loan.

Refinancing can be tricky, but it can be a great tool to use to save you money in interest. If you have any questions about refinancing don’t hesitate to contact me! I am happy to help you navigate the process. Have you refinanced your student loans? How did it help your financial freedom journey?

Saving Money

College on the Company Dime

Education on the Company Dime

This is a guest post written by Melody from Her Designed Life. Check her out for all kinds of resources related to personal finance!

What do backpacks, pencils, and lunch bags all have in common? Their location in school!

For many people going back to school can be costly. In the United States, the national college debt is over 1.5 trillion according to Forbes magazine. After I graduated with my crushing college debt of $65k with a degree equivalent to basket weaving, I decided that I needed to cut costs, live frugal, and pay off my student loans. You can check out how I paid off my debt here.

Why I’m Going to Graduate School

As a young professional I often get asked why I have decided to go to graduate school.

Many of my friends ask why I want to add extra homework onto my day after a hard day at the office. To be honest, I don’t like extra work, but I do like extra pay.

Let’s take a look at the figures.

According to the US Bureau of Labor and Statistics, the cost of weekly pay increases with each level of educational degree you complete.

Income and Education

For example, the median weekly earnings for those with a bachelor’s degree estimate at $1,137.

Let’s say that of the 52 weeks there are in a year. Hypothetically, let’s say that a worker works 48 weeks due to vacations, holidays, sick days, or personal reasons.

The annual average amount that a person could potentially bring in pre-tax without any other deductions would be $54,576. Obviously, this is just an estimate of median salary and deductions and cost of living are the real determiners of your pay.

Now, let’s compare that to the average median earnings someone might receive with a Master’s degree. The median weekly earnings for those with a Master’s degree are $1,341.

Multiply this number by 48 weeks, this equates to about $64,368.

Income and Education

That’s about a 10,000 difference in pay for only one year!  

Is Graduate School Right for Me

Before you even begin applying to graduate school, you must count the cost.

Calculate the cost of your expected income based off of a future degree or certification on one of the following websites: for general salary and experience estimates visit payscale.com and for graduate studies use this calculator. If you see that the end result of your projected income is small or only slightly more than what you currently make, re-assess the financial and career benefits of receiving your additional education.

Check out if the industry is growing fast or has high median income on the US Occupation Outlook Handbook. Most likely, if your position seems to have a high percentage of growth or an increasing median income, the investment in your education may be worth the amount of time and money spent on your program throughout your career.

Compare the tuition fees with the projected income increase. If you find that the median salary for those with your graduate level degree have a high unemployment rate or very little in income increases compared to your tuition fees, you may need to re-evaluate the type of education or professional field you are working towards.

You can create a  simple formula like this to help you determine graduate level coursework.

Your current salary

– Total Cost of the program (Total cost – scholarships, grants, and tuition reimbursement)

+ Expected  Annual Income Raise ( Expected Salary – Current Salary )

= Total Estimated Annual Salary post graduate or certification

Example:

$50,000

  • ($15,000 – $10,500) = $5,500
  • ($85,000 – $50,000) = $35,000

= $79,500 ( Total Estimated Annual Salary post graduate or certification )

* based on pre-tax and deductions

How to Qualify for Company Paid Education

Not all employers are equal, especially when it comes to paying for your graduate studies.

Here are 3 ways to get your company to pay for your ongoing education.

  1. Research your company’s policy on education assistance before you apply or accept a position. This is extremely important not only for traditional education, but also for ongoing certifications, seminars, etc. A company culture that approves of paying for education shows that they value their employees and their competency.
  2. Communicate your intentions for returning to school with your employer. If you are just starting or have been in a position with your employer for awhile, communicate to your manager your education aspirations and career goals, if they align with your current field.
  3. Prove the ROI. ROI stands for return on investment. Explain in detail to your manager or decision maker in your company the return on investment that paying for your education would have on the company. Perhaps there is a very large project that you could apply the theories, templates, or guides from your experience to an upcoming or long-term project.

Now that you’ve proved the ROI with your employer and confirmed with your HR specialist or manager that you qualify for tuition reimbursement, walk through the steps of obtaining entrance to the graduate, doctoral, professional certification, or college admissions. You can then finalize walking through the tuition reimbursement procedure.

In my current position, my company has offered me $5,250 annually in tuition reimbursements. My projected costs for the entire program are about $15k.

My projected income increase with a master’s degree starts at $15k annually.

Add on about 2-3 years of additional experience and my expected income will be much higher.

In conclusion, going to graduate school is a time and money investment. However it’s a great way to not only increase your knowledge, but increase your salary and career opportunities.

Melody Johnson runs the website herdesignedlife.org to help women achieve financial independence by paying off debt, planning for life events, and reaching their financial goals. She is a Certified Financial Educator by the National Financial Educator’s Council in the Metro Detroit area.

Be sure to check out Melody on her social pages.

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Mini Series Part 4: How to Tackle Your Student Loans

This post may contain affiliate links. Check out my Disclosure Policy for more information.

In this four part mini series you will find all the tips to tackle your student loans regardless of where you are in the process. Student loans affect almost everyone now, which is a very sad reality. From the time a person graduates high school, it’s usually an issue in their life. So, I’m starting this mini series with tips for before you go to college and ending it with tips for after you graduate and have entered repayment.

Mini Series Part 1: Before You Go to College

Mini Series Part 2: While You’re in School

Mini Series Part 3: Before You Graduate

Student Loans Part 4

You’ve crossed the stage, you’ve started in your very first job, and you live in your very first apartment. Everything is falling into place, like it is supposed to after graduation. Now you need to start getting serious about where all of this new money is going that you now have and how you’re going to go about your student loans based on the work you put in for them before you graduated.

  1. Finalize that budget that you drafted before you graduated.

Before you graduated you drafted a budget based on what you thought your income would be and your expenses. Well, now it is time to finalize it. You should know by now how much you will be making monthly, how much your expenses will be, and how much your student loan minimum will be each month. Once you know for sure where your money is going each month, then you can see where you can cut things out. For example, I realized I was spending about $250 each month on eating out when I first tracked my spending. That was a huge reality check for me. This is going to take some time and don’t think you’re going to have your budget set right away. Take the time to make it work for you and don’t rush the process.

2. Save a small emergency fund.

This needs to be a personal choice for you and what you are comfortable with having in case something comes up. I personally have about a month of expenses in a savings account I don’t touch, unless an emergency comes up that I need to use it for. An emergency would be something you can’t plan for, like your car dying. It’s not meant for regular budgeted items, like clothes or food. If you want to go shopping or eat out, put it in your budget!

3. Create a payoff plan for your student loans.

Creating a payoff plan for your student loans is super important to getting them gone ASAP. Without a plan, you won’t know what to prioritize or what you need to do. I personally use undebt.it to plan my debt payoff. It’s wonderful, and allows you to pick what strategy you want to use. It even tells you how each plan will change your debt free date. The things you will need to do this is to have your individual account details (amount, interest rate, minimum, etc.), and know how much extra you can put towards your debt realistically based on your budget.

4. Adjust as life changes.

The most important part of a budget is to constantly adjust it as your life and priorities change. Your budget should change as your life changes. This allows you to be in control of your money versus your money being in control of you. In the beginning, it definitely feels like your money controls you because you’re probably sending a lot of money to your lenders. I know for me, most of my income went to my debt minimums when I first graduated and it was hard. But, I knew as I paid off more, the control would come back to me.

As you continue post grad, it will get easier as you get more comfortable with the process. No matter your circumstances after graduation, there are options to make things easier for you financially. There is never a one size fits all when it comes to finances and ultimately you need to make your decisions personal. With that being said, if you have any questions about getting your budget together or creating a plan to pay off debt, feel free to email me with any and all questions! How did you tackle your student loans after graduation?

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Mini Series Part 3: How to Tackle Your Student Loans

In this four part mini series you will find all the tips to tackle your student loans regardless of where you are in the process. Student loans affect almost everyone now, which is a very sad reality. From the time a person graduates high school, it’s usually an issue in their life. So, I’m starting this mini series with tips for before you go to college and ending it with tips for after you graduate and have entered repayment.

Mini Series Part 1: Before You Go to College

Mini Series Part 2: While You’re in School

Mini Series Part 4: After You Graduate

Tackle Student Loans Part 3

Graduation is right around the corner and you can’t wait to finally get out on your own and live the post-grad life. You have a job already lined up and just need to pass your last finals before crossing the stage. But you have student loans that you’ve accumulated over the years and need to get those in order before graduation. I know, most of them have grace periods and you have time to figure it out. However, there are benefits to making sure your ducks are all in a row before leaving campus.

1. Find out about loan forgiveness programs
There are a few loan forgiveness programs out there for federal loans, especially if you are a teacher or public worker. Like I said, federal loans are the way to go. Take out as much in federal loans before you go to private loans because they have so many options for you, even forgiveness.

2. Talk to a financial aid advisor
This might sound strange, why would you talk to a financial aid advisor when you’re done with school. You probably never want to think about financial aid ever again! However, the advisors at your school can help with a lot of other things. I set up a meeting with my advisor before my masters graduation to discuss paying back my federal and private loans and to go over my TEACH grant requirements. She even was able to give me some advice on refinancing my student loans, something that I wasn’t quite sure about.

3. Find out when repayment begins
This is crucial and something I did not do, which I regret. For federal loans, they most likely have a six month grace period. You should be able to find this out when you complete your exit counseling before graduation. Private loans are trickier, which is where I messed up. I didn’t need to complete exit counseling for my private loans and didn’t know when they entered repayment. My private loans had no grace period, so shortly after graduation my first student loan bill arrived. What a wonderful way to say congratulations, huh? I was in shock when I found out, especially when I owed $1,400 in a month on an income of about $1,100/month during grad school. I was running all over campus and calling the loan company constantly to explain that I was beginning grad school. After about 2 weeks of stress, I finally got my private loans deferred due to being a full time student. Don’t make my mistake, call to find out when your repayment begins so that you’re prepared.

4. Draft a budget

Start putting together a draft of a budget for when you graduate and start working. You probably won’t know your exact take home, but you can make an estimate based on your salary and definitely be sure to low ball your take home. This way when you actually make your budget, you’ll have more money than expected. List out all of the expenses you know you will have and see if you can realistically afford everything. This was the time when I completely changed my post grad plans. I realized my income wouldn’t support me moving out and my minimum student loan payment, so I made plans to move back to my parent’s house.

It’s not usually something you want to think about before you graduate college, but it’s important to have some things figured out. This will save you a lot of stress after graduation and allow you to set yourself up for a hopefully easier student loan payoff. How do you plan to prepare for your student loans before you graduate?

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Mini Series Part 2: How to Tackle Your Student Loans

This post may contain affiliate links. Check out my Disclosure Policy for more information.

In this four part mini series you will find all the tips to tackle your student loans regardless of where you are in the process. Student loans affect almost everyone now, which is a very sad reality. From the time a person graduates high school, it’s usually an issue in their life. So, I’m starting this mini series with tips for before you go to college and ending it with tips for after you graduate and have entered repayment.

Mini Series Part 1: Before You Go to College

Mini Series Part 3: Before You Graduate

Mini Series Part 4: After You Graduate

How to Tackle Your Student Loans 2

When I was in undergrad I didn’t even think about my student loans. I pretended they didn’t exist and didn’t think about just how much I was digging myself into debt. It was a horrible mistake and I regret it immensely. I let my parents handle my loan stuff and just worked hard at school, not thinking about how I was able to go to such an incredible university. So, take some advice from me and don’t do what I did while you’re in school.

1. Get a job, or jobs!
I had SO much down time in college, especially my freshman year when I didn’t work. I averaged 15-18 credits every semester while also doing hours at local elementary schools averaging 30 hours each week. I usually had time for a job. When I was in a semester that required hours at a school, I was able to work on the weekends, but it was definitely a lot harder than when I wasn’t doing those hours. My last semester senior year I was able to take 15 credits while working anywhere from 20-30 hours each week, and I was able to enjoy my last semester of undergrad. It’s possible, you just need to manage your time. In the long run, it greatly helps with your loans and I wish I started paying mine off while I was in undergrad, instead of grad school.

2. Make payments in school toward the principal
I started making loan payments when I was in grad school and I wish I had started in undergrad. I didn’t make any crazy payments, I was only making about $1,100 each month, but I could usually put a couple hundred towards my loans. Any little bit you can put towards your loans really helps. The little amounts really add up after some time. If you can make payments towards your loan, make sure you are putting it towards the principal. This makes your debt accumulate less interest in the long run, allowing you to save more money. Of course, if you can make payments towards the principal and the interest, do it.

3. Check your loans
I never checked my loans ever in undergrad. I ignored them, like I said earlier. I had no idea how much interest was accumulating, until I checked them when I was in grad school and I became serious about my debt. Seeing how much interest was accumulating was enough motivation for me to get serious about paying off my debt. I realized I was just losing more and more money by not paying attention to them. It’s hard to really understand how much interest is accumulating, but there are ways to easily see it. I use undebt.it to help me plan my loan repayment. Once you put in all of your loans it shows you how much interest is accumulating each day. This was shocking for me! I couldn’t believe how much interest was being added each day to my debt, this is what really motivated me to get serious about paying off my student loans.

4.Keep looking for scholarships
Every year you should be looking into scholarships and applying to them. Some schools offers scholarships only for sophomores or upperclassmen. These are perfect to apply to because a lot of people don’t know about them or don’t want to be bothered applying to them. I definitely regret not looking for scholarships while I was an undergrad.

I made the huge mistake of ignoring my debt until I was in grad school. If I could go back in time, I would definitely think about my debt and use these tips to make my burden a little less now. How were you able to tackle your student loans while you were in school?

Debt

Mini Series Part 1: How to Tackle Your Student Loans

In this four part mini series you will find all the tips to tackle your student loans regardless of where you are in the process. Student loans affect almost everyone now, which is a very sad reality. From the time a person graduates high school, it’s usually an issue in their life. So, I’m starting this mini series with tips for before you go to college and ending it with tips for after you graduate and have entered repayment.

Mini Series Part 2: While You’re in School

Mini Series Part 3: Before You Graduate

Mini Series Part 4: After You Graduate

Mini Series Part 1_ How to Tackle Your Student Loans
Before I went to college, I had no idea I would end up having roughly $200k in student loans 5 years and 2 degrees later. My parents always told me that I would need to take out some loans, but they were going to able to help me with school. Unfortunately, they couldn’t help me with school as much as I thought. I’m not saying I expected my degrees to be paid for by my parents, I never once expected them to give me a dime, until they told me they would. Here are a few things I wish I had known and done before I began my higher education and student loan journey.

1. Know your financial situation completely

This is the biggest one for me. I did not fully know my parents financial situation and didn’t ask for details about what it meant for them to help with school. Unfortunately, I did not get much financial aid because the FAFSA is filed based on your parents income and finances, not mine. This is why it is so important to understand how your education will be paid for. Don’t do what I did and not ask questions. Be specific with your parents about how this is getting paid for. This is a HUGE financial decision and since it’s all based on your parents finances (usually), it’s important to understand how it will be paid for.

2. Seek out advice on filling out the FAFSA

Usually your high school has someone to talk to about filling out the form, but it is best to talk to an expert on how to fill the form out. It’s a pretty straight forward form, but there’s some things they don’t need to know and other things they absolutely need to know. My best advice is to seek out an expert on what the form absolutely needs to have on it because it determines how much financial aid you are going to get. Unfortunately, my mom took responsibility for all of this for me, which at the time was wonderful for me, I didn’t need to deal with it. But once my sister and I received practically no financial aid, we talked to an expert. He quickly told us we provided a lot of unnecessary information, which made our financial situation look very different from what it actually was.

3. Choose your university wisely

If I could go back to when I was applying to colleges, and knew what I know now, I might not have picked the university I went to. It’s very hard to say that after the amazing program I went through. However, it was incredibly expensive and far from home. I could have gone to a closer university and commuted, saving me a lot of money. Of course, I went to a university that has the #1 program for teaching, so would I have landed a teaching job so quickly after graduation had I not done the program, that’s the tricky part. You will never know what will happen in the future, but my advice to you is to avoid having to go into a ton of debt, like I’m currently in.

4. Apply to every scholarship you can find

I made the mistake of not applying to a lot of scholarships because I thought I had no chance of getting it. What I have learned since then is that some scholarships aren’t given out because no one applied to them. That could have been money for my college education. I learned in grad school that you NEED to tell people your situation in order to get the help you need. In our society people don’t talk about their debt or financial situation, but that’s exactly what you need to do. Once I confided in the grad recruiter that I was drowning in debt, she called the right people and within a week I had an email saying I earned a scholarship. Of course, I had done a lot of work for my school in undergrad and my grad studies at that point, which definitely paid off.

5. Take out the maximum amount of federal loans you can before private

Federal and private loans are very different. Federal loans have some loan forgiveness programs, usually lower interest rates and offer a bunch of options for repayment. Private loans have no forgiveness options usually, limited or no payment options, and usually very high interest rates. Stick with federal loans if you can, you’ll be happy you did when repayment time comes along!

The next part of this mini series will explain some tips for when you’re in school. What are some tips you have for tackling student loans before you start school?

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6 Tips for 20-Somethings on a Debt Free Journey

6 Tips for 20-Somethings on a Debt Free Journey

This post may contain affiliate links. Check out my Disclosure Policy for more information.

It can be hard being in your 20-somethings and on a debt free journey. Basically every time you get on social media someone is jet setting somewhere new, everyone is trying Orangetheory and SoulCycle, and you’ll find everyone at brunch on Sunday. It’s tough, especially when you’re trying to dig yourself out of debt. But, don’t give up, you can enjoy your 20s and still be on a debt free journey. Here are some frugal tips to follow for all 20-somethings.

Tip #1: Acknowledge your Sacrifices

Always, always, always acknowledge the sacrifices you are making for your debt free journey, especially if you’re a 20-something. You’re doing a lot to get yourself out of debt, so acknowledge that! You’re getting your financial life together very early on, and that’s something to celebrate. Being on a debt free journey is all about sacrifices now for a better future, but that doesn’t mean you need to live under a rock and do nothing. Remind yourself of the things you are giving up to help yourself out of debt. For me, that’s reminding myself that I’m living with my parents instead of in an apartment in a fun city.

Tip #2: Budget for Fun

It’s important to budget for the fun things you enjoy in your life. You might think if you’re on a debt free journey then you can’t budget for any fun, absolutely not!! You’re going to drive yourself crazy and probably end up spending money you don’t have, if you don’t budget for fun things. The important thing about getting out of debt is not adding any new debt. If you don’t plan for fun, then you’re more likely to put it on a card and spend money you don’t have. If it’s in the budget, then it’s okay! Plan for fun money so you don’t drive yourself crazy on this journey.

Tip #3 Sinking Funds

If you haven’t heard of sinking funds, you need to get on the band wagon ASAP. Sinking funds have been a total game changer for me and have allowed me to still enjoy my twenties while paying off my massive debt. Sinking funds are when you have a set amount you are saving for something in the future so you have the cash when you need it. This is how I was able to go to Punta Cana, San Francisco, and Florida during my debt free journey. I knew I wanted to go on these trips, so I started saving for them months in advance. When it came time for the trip, I had the cash ready and it didn’t take away from my snowball.

Tip #4 Happy Hour

Happy hour has become my best friend on this journey. Happy hour allows you to still go out and enjoy time with friends, but at a much lower price. This goes back to tip number two, make sure you budget for these types of things, if they bring you joy. For me, I enjoy attending happy hour on Fridays with my coworkers. It’s a great time to unwind and have fun outside of work and I probably wouldn’t be as sane without all the laughs.

Tip #5 Cut Spending for Necessities

Unfortunately things like toilet paper, shampoo, soap, and groceries have to be bought and there really is no way to get rid of these expenses. But there are ways to get creative and cut spending in this area. For me, I have moved to a more vegetarian lifestyle to lower my grocery budget, used coupons, used loyalty cards, and switched to generic brands. These switches aren’t going to make me rich, but they have all lowered my spending each month, which means I have more money at the end of the month to go to debt. Look at what you buy each month and see if there are ways to make switches to save money. One of the biggest ones for me was switching to baby wipes from make up removing wipes.

Tip # 6 Plan your Debt Free Journey

Make sure to plan for your journey and have a set date you want to be debt free. This can be tricky, but once you sit down and create a plan for yourself, it will be easier to stay on track throughout the process. My recommendation is to use undebt.it to create a plan for yourself. They make it super easy to put in all of your debts and choose the plan that works best for you. This way you will be able to see when you’re going to be debt free and this will keep you motivated when you’re tempted to go off budget.

The important part of being on a debt free journey is to not go into new debt and focusing on creating a better financial future for yourself. This doesn’t mean that you have to completely miss out on your twenties while you get yourself together. Make sure to plan, budget and keep enjoying your twenties, and then you can really enjoy your thirties! 🙂 What tips do you have for 20-somethings on a debt free journey?