One of the most persistent pieces of messaging associated with student loan payments is that you need to sacrifice enjoyable aspects of life to focus on paying down or paying off debt. Borrowers often hear blanket advice like “stop buying coffee” or “you’re spending too much money dining out.” This can feel less helpful and more like we should be ashamed of our lifestyle choices.
As a person who paid off her student loan debt of $55k and did it without giving up lattes, I know it is entirely possible to repay student loans without giving up the little treats that keep us motivated. Here’s what you need to know about balancing your lifestyle with student loan payments.
Know What Your Student Loan Payment Is or Will Be
Joe DePaulo, co-founder and CEO of College Ave Student Loans, said in a recent College Ave survey, 74% of current college students did not know what their monthly student loan payment would be when they graduated.
As students everywhere celebrate their college graduations, it’s critical that graduates know the amount of their monthly student loan payment in advance. Borrowers who know how much their monthly student loan payment is will be able to start creating a budget and planning for other expenses.
Consider Refinancing Student Debt
Borrowers who need more flexibility in their budgets may look into refinancing their student loans. For qualified borrowers, refinancing may be able to lower your monthly payment, save on the total cost of the loan and in some cases, even offer both benefits.
However, DePaulo said to be careful before refinancing federal student loans. Those who decide to refinance a federal student loan will lose certain benefits such as those offered under the CARES Act, income-based repayment options or loan forgiveness.
Build a Budget With a ‘Fun’ Account
Most people know that a budget is the cornerstone of effective money management. This tool can help you keep track of how much money you have coming in, how much is going out and exactly where it’s going on a monthly basis.
Caroline Tanis — CDFA and financial advisor for Women’s Wealth Boutique and strategist at Tanis Financial Group — recommends that anyone with student loan debt focuses on building a budget that accounts for both your loan payments and what you love doing most.
Take a moment to write down the activities or things you enjoy doing with your money, such as using it for travel, eating out or shopping. Then, put a small amount of money in a “fun” account. Doing so, Tanis said, will help you emotionally balance making student loan payments.
Early in her career, Lisa Fischer, chief lending and growth officer at Mission Lane, was able to rebound from six figures of debt. Fischer, who has a first-hand understanding of the burden of financial liabilities like student loans, said being in debt doesn’t mean you cannot enjoy your life. You just need to be mindful.
The first step is to track your expenses. Write everything down, which Fischer said can help you distinguish between luxuries and necessities. This helps you figure out where you can cut back and where you may have some more financial wiggle room. Pick the best method for tracking expenses, which may range from using apps, planners or an Excel spreadsheet. Find whatever works best for you and best allows you to visualize all of your income and expenses.
Writing everything down creates a picture of your spending and Fischer said there is power in this kind of awareness and understanding. Once you have this picture, you can start setting goals for yourself on how much debt you can pay off in a certain time period.
“After I did this, I started surpassing milestones faster than the timeline I had laid out for myself while still being able to maintain meaningful activities in my life,” said Fischer.
Fast forward to the present. While Fischer has since tackled her debt, she continues to use a spreadsheet to track her expenses on a monthly basis. This helps her stay organized, manage her spending and continue to be mindful of financial responsibilities along with balancing her own lifestyle.
Ask for Help
Balancing your lifestyle with student loan payments can be tricky. You might experience certain situations along the way, such as trying to figure out whether the snowball or avalanche method is the best approach for repaying debt, and may be uncertain of what to do next.
Rather than spin your wheels or ignore these issues, seek help from professionals. Reach out to a financial advisor, certified student loan professional (CSLP) or a credit counselor who works at an accredited non-profit credit counseling agency and may offer no- or low-cost consultations. These individuals will be able to help answer your questions, gain an understanding of your financial situation, and assist you in finding the solution that makes the most sense for repaying your student debt.
More From GOBankingRates