It’s that time of year again! Longer days, warmer weather, gorgeous sunshine. Many of us are dedicating our weekends to cleaning our homes from top to bottom with the windows wide open. However, spring cleaning shouldn’t only be limited to organizing closets and sweeping out garages – it’s a great time to take a look at straightening up your finances, including those student loans.
Where does all the clutter come from?
Unexpected expenses, new responsibilities and the ever-increasing cost of living. Things tend to pile up until all of sudden we realize we’re in a deeper financial disaster than we thought; leaving us feeling disorganized and out of control. Clutter, even if it’s not technically tangible, can be overwhelming. The weight on your mind and on your shoulders can even feel paralyzing…as if you’re unable to do anything about your situation.
Student loan debt constitutes the second-largest type of consumer debt in America. There is more student loan debt than there is credit card debt or automobile debt. Only mortgages are higher.
Source: OurFuture.org
The first step is the hardest.
When there’s disorder surrounding you in any capacity it’s difficult to know where to begin. Anything you start with will seem insignificant compared to the larger picture. Undertaking your messy financial dilemma is rarely easy, but it’s always worth it.
So before you dive into WHAT you’re going to do, take a look at where you are presently…
Confront Your Finances
Being honest about your financial situation can be tough. The instinct is to look away, but you need to look those bills straight in the eye. Open any unopened mail that you’ve been stashing away hoping it will disappear. Answer the phone calls. Listen to the voicemails. Take a look at the email alerts. Although it’s easier to sweep the mounting bills and late notices under the rug, toss them in a closet or shove them under the bed – all of which were my cleaning methods as a kid – you know the debt is still looming.
Out of sight is definitely not out of mind when it comes to finances. It is a burden on your conscious and can consume your thoughts. You know it’s there, growing and compounding, and the only cure for it is action from you.
No Shame or Blame
You cannot begin to improve your situation if you’re filled with regret or assigning blame for the financial disarray. That is completely unproductive and self-destructive. Forgive yourself (and/or your spouse) for any of the financial choices you’ve made in the past. Leave the past where it belongs and allow yourself a fresh start. You are free to move forward only when you remove the emotional shackles of shame.
Dust Off Your Monthly Budget
Have any line-items changed? What can you do without? Okay. Now look again. What can you sacrifice even though you’d really rather not? There’s always more fat to trim. Be ruthless. Where there’s a will, there’s a way and every little bit helps. Whatever you’re able to squeeze out of your budget, you can apply to your debt.
There are two ways to approach this:
1) pay off the highest interest rate debt first since it will cost you the most in the long run.
2) pay off the smallest debt first and snowball those payments into the next smallest debt. This method gives you a sense of accomplishment and momentum early on which will help keep you motivated to stay on track.
If you don’t have a formal budget for tracking income and expenses use this template to create one.
Now that your budget is cleaned up, dig deeper into your debt…
Discover Your Options
Many debtors are willing to work with consumers to make debt more manageable. Refinancing and requesting lower interest rates are two ways to trim payments on large loans and credit cards. Be polite and persistent and you’d be surprised how much progress you can make.
Student loans are different than other debt and can create a lot of anxiety for the borrower. However, there are many options that are unique to student loans. You may qualify for consolidation, refinancing or loan forgiveness. USSLC can be a helpful partner in determining your options and taking one of the largest sources of debt stress off your plate. USSLC will walk you through the process of how to apply for these alternative solutions to your student loan debt. Get help here.
Now that your budget is refreshed and you’ve pruned your payments it’s time to plan for moving forward.
Setting Goals and Staying Organized
There is a wealth of online tools and apps to help you track your spending, organize all aspects of your finances and monitor your goals:
- Budgeting: FinancialWellness.com
- Personal finance tracking: Mint.com and HelloWallet.com
- Free help with student loans: US Student Loan Center
- Habits tracker: Strides
Any of these resources can help you to keep yourself accountable and on target to reach your goals. They will keep you on top of your game and help you resist falling back into old habits.
You’re officially on your way to a better financial future. Doesn’t it feel good to have a fresh start?
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