When you come out of college with a shiny new degree in hand, you will be eager to launch a new career. However, you will also have a mountain of student loan debt to deal with, and entry-level salaries will not help you make aggressive student loan payments. Paying off student loans is not the only thing you will have to do with your salary. You must spend money on daily living expenses and save for a house and retirement.
How can you navigate student loan repayment with your salary? This is where you need to spend time on careful planning. Read this article, and we will share some useful tips with you.
Take Stock of Your Loans
Before creating a repayment strategy, you must understand exactly what you’re working with. Log into your student loan accounts and access your most recent statements. Compile the following information:
- • Total current student loan balance
- • Breakdown of loan amounts by lender
- • Interest rates on each loan
- • Minimum monthly payments
- • Current loan statuses (in deferment or grace period)
This snapshot will allow you to create a detailed budget and repayment timeline. You may also uncover opportunities to refinance or consolidate loans at lower interest rates.
Create a Monthly Budget
With your income and expenses mapped out, look for areas where you can cut back to pay off debt. Limit dining out, develop a grocery budget, split costs with roommates, or downgrade your housing or transportation. Every dollar counts when working towards financial goals.
If you qualify for income-driven repayment plans, these can help match your monthly payments to your salary. You may pay more interest over time but have more flexibility while establishing your career.
Boost Your Income
In addition to minimizing expenses, find ways to increase your income even as you launch your career. Take on freelance work or a side gig in addition to your full-time job. Monetize a hobby, rent out extra space, or take surveys in your spare time.
You may also consider taking a second job for a set period, like bartending or waiting tables a couple of nights a week. Come up with a timeline, e.g., doing this for six months or a year to pay off the highest-interest loan.
Having an end goal will make the extra work more purposeful. Just be careful about overextending yourself. Make sure any side income endeavors don’t threaten your full-time job.
Negotiate Your Salary
Know your worth when entering or changing jobs. Research typical pay and negotiate to get the highest salary possible. Even an extra $5-10k can make a big difference in how quickly you can pay down debt.
Ask about benefits that can impact your bottom line, like public transit stipends, 401k matching, professional development funding, and remote work options that allow you to live somewhere with a lower cost of living.
Earn Promotions and Develop New Skills
Climbing the ranks within your organization can lead to much higher earning potential. Position yourself for advancement by producing excellent work, taking on additional responsibilities, and seeking mentorship from leaders who can help open doors.
Volunteer for strategic projects and working groups, make your aspirations known and ask for regular feedback on your performance. Obtain additional certifications and training that make you more valuable. Promotions and job changes should steadily boost income over time.
Automate Finances
With many financial goals and priorities to juggle, put your payments on autopilot. Automate transfers to different savings and investment accounts. Set up minimum student loan payments to process each month.
Technology can help you manage all of the shifting pieces so you can focus on big-picture strategic decisions and career advancement. Monitoring your money periodically also allows you to make adjustments and ensure you stay on track.
Revisit Your Budget
As your income and expenses evolve, reassess your budget. What worked fresh out of college may not make sense after a few years in your career. You may be able to redirect some of your raises directly to student loans or increase retirement contributions once the basics are covered.
Refinancing and consolidation options often become available too, as your credit score and income rise. Revisit loan terms frequently to take advantage of better rates.
Remain Laser Focused
Paying off student loans while building a career requires sustained focus over many years. Avoid feeling overwhelmed by the big-picture numbers. Stick to your detailed budget and keep chipping away month by month.
Celebrate small wins like paying off a single loan and find community through blogs or social media groups focused on debt payoff. Most importantly, keep your eye on the long-term vision of financial freedom. The efforts you put in now allow for greater flexibility and more career options later on.
Get the Most out of Employer Repayment Programs
Most companies, as well as government agencies, now offer student loan repayment assistance. When evaluating employee benefits, you need to check if you are able to get them. This is something you need to consider when hunting for job opportunities.
These student loan repayment assistance programs will offer direct payments to your student loans. As a result, you can pay off the principal amount faster. The amount you can get as help would vary. However, it usually ranges from $100 to $500 per month or up to $10k annually.
To get the most out of this opportunity, you need to search for employers where you can grow your leadership skills. Tech companies, nonprofits, and large companies offer such benefits to attract top employees. Hence, you need to keep it in the back of your mind when looking for a job.
Final Words
Stay motivated and trust that each promotion, each loan payment, and each diligently executed step on your financial plan will compound. Before you know it, you’ll have built both a successful career and achieve freedom from student loan debt.
