Saving for the Future While Paying Off Student Loans
Living at home while completing a college degree is a smart decision. It keeps you from having to pay for rent, utilities and entertainment tools like cable television. If you live at home while you attend college, you could also fall into the trap of thinking that you have more money than you actually do. Fall into the trap and before you know it, you’re leasing or buying your own car and racking up credit card expenses years before you land your first “real” job.
You’d also be hampering your ability to save for the future. For example, you wouldn’t have enough disposable income to save for your retirement, an event that comes faster than you think. If Social Security isn’t around when you get ready to retire, you could find yourself working well into your 70s to pay your basic living expenses, likely not what you went to college for.
Despite your best intentions, it’s easy to fall into this trap if you do what many students have done for years, which is taking out several different loans to cover the cost of college tuition. Each loan you take out adds more interests to your debt.
To save yourself the headache of having to pay thousands of dollars in student loan interests, you could work your way through college, foregoing student loans altogether. You could also consolidate your student loans. For example, through CBS loan consolidation, you could owe more than one percentage point less in interest than you’d pay on a federal student loan.
CBS loan consolidation varies depending on what the national interest rates are. However, if the interest rate on a federal student loan is 7.4%, you may only have to pay 5.99% of interests on a CBS loan consolidation plan. The maximum amount you can consolidate under the plan is $220,000. The minimum you can bring under one plan, through a program like the Harvard Business School student loan consolidation is $10,000.
However, taking advantage of a CBS loan consolidation or another consolidation program is not enough. You have to develop a written or a mental budget to keep track of your net income and how much you spend. Skip this step and don’t be surprised to look at your retirement plan and see you’ve only saved a few thousand dollars.
As Forbes shares, “The thing about retirement savings is that there’s no substitute for starting early — and it can be incredibly difficult to make up for a lost time.” In addition to consolidating your student loans, get clear about lenders you owe money to and when you have to pay expenses. By simply setting up half your payments during the first part of the month and the other half during the second part of the month, you might find it easier to pay your bills on time and get disciplined about depositing a set percentage into your retirement savings.
Also, set aside a certain portion of your net income to pay priority bills. Make sure you make your retirement savings a priority, not just the repayment of your student loans. It’s these priorities you should keep in mind when you go shopping for products and services (i.e. apartments, landscaping) you’ll have to pay back on repayment plansFuture, Loans, Paying off student loans, Saving for the future, Student