September 23rd, 2013

How To Stay On Top Of Your Student Loans

 

How To Stay On Top Of Your Student Loans

**Today’s guest post is contributed by Dana Fulton.**

 

For most people, student loans represent their first encounter with the world of credit and finance. They can open a world of opportunity to young people who might otherwise not be able to pay to continue their education. More than 60% of American students (that’s almost 12 million in total) will borrow money annually to help pay for college. It’s likely that this is where you’ll begin to build your credit score: a little number with huge consequences. It can be intimidating, but there’s really no reason to stress out. Staying in control of your student debt is easier than it sounds. When dealing with loans, you should:

Know the nitty-gritty details of your loans and your lenders

Ignorance is not bliss when it comes to dealing with educational loans. The first and most important step to staying on top of your loans is getting up close and personal with all the details. Not all student loans are created equal, and students may use a combination of different types of federal and private loans to make up their financial package. Each type of loan carries its own terms, and you should be familiar with the specifics of every loan you take out. Make sure that you know exactly how much you owe, what your interest rates are, and what minimum monthly payment you’ll be expected to make. Many loans come with grace periods, which are amounts of time after graduation you can wait before beginning repayment. Grace periods can vary greatly between loans, so it’s vital that you keep an eye on what will need to be paid when. Keep careful record of the contact information for all of your lenders (loans are often sold between institutions, so they are subject to change), and keep in touch with them. If you find yourself unable to make the monthly payments, they should be your first call. There are many options out there to deal with repayment issues, but if you don’t let them know what’s happening, they can’t help. It’s common to move around a lot during and after college, so be sure to update your lenders on any changes in address to avoid missing statements.

Be strategic about your repayment plan

Deciding when and what to pay can make a real difference when figuring out your student loan repayment plan. If you can manage it, pay off the highest-interest loans first, regardless of their grace periods. This is actually a great financial tip for all kinds of debt. Subsidized federal loans don’t accrue interest while you’re in school, but most other loans will. If you can budget to pay even just the accruing interest while you’re in school and through your grace period, you’ll make a real dent in the final figures. If you can make payments on the principal, this is even better. Many lenders will allow you to pay early without penalty, and chipping away at the main loan is the most effective way to get out of debt early. After school, if you’re struggling to make payments, deferment or forbearance are options, and certainly better than just missing payments or defaulting. But remember that both of these options may increase what you pay over the term of the loan, because interest continues to accrue each day. They should be considered a last resort, and you should fight hard to resume payments as quickly as you can.

Sign up for automatic debit

If you miss a payment on your student loan, you’re looking at late fees and adding to the amount of interest that accrues. You don’t want to add to the amount you have to pay, so you should do everything in your power to minimize the chances of paying late or skipping a payment altogether. Setting up an automatic payment may be a great first step. This may simplify things for you, and you might even be able to take advantage of other benefits. Some lenders offer special deals to borrowers who can consistently make their payments on time. By signing up for automatic payments, you may be able to qualify for reductions in your interest rate or principal, which can save you a lot of money in the long run.

The truth is, borrowing money for college is a fact of life for many people, and with a bit of education (see what we did there?) it’s totally possible to take the fear out of the equation and use your student loans to build a solid financial future for yourself.

Dana

Dana Fulton is a marketing consultant for Wells Fargo Education Financial Services, and received her Bachelor of Science from the Massachusetts Institute of Technology. Today she spends her spare time in the house she rebuilt with her husband, raising two small daughters that inspire her to do meaningful work and save as much as she can for their upcoming college years.

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September 16th, 2013

3 Financial Practices of Money Savvy People

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“If only I made more money” is usually how a sentence starts when someone is trying to figure out how others have mastered their finances. But if you asked money-savvy people what their secret to financial bliss is, they’ll have a simple answer. The answer is that financial independence is based on three simple practices. Without these sound financial practices in place, reaching financial bliss is a difficult and seemingly unattainable goal.

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September 9th, 2013

The Alternative Credit Spectrum

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Having a poor credit score can sometimes feel like being trapped in quicksand-- the harder you try to escape, the further high interest rates and punitive charges pull you back down. But everyone needs access to credit and if you do need funding, there are always alternatives. The terms may not be pretty or available to everyone, but below are some options that may improve your credit health, or help fund you until you can.

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September 2nd, 2013

How Much Should You Really Save in Your Emergency Fund?

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You’ve probably heard that your emergency fund should contain about three to six months’ worth of expenses. At least, that’s what most of the financial gurus say. But there’s a big difference between three months’ worth of expenses and six months’ worth of expenses. So which end of the spectrum do you fall on? Or should you actually save more or less?

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August 5th, 2013

Introducing Credit to Children… Is it Wise?

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Even if credit is a subject discussed in high school, it’s most effectively taught by hands-on experience when there’s no fear of doing permanent damage. A wise parent will take the initiative to teach their children about the value of money and the importance of credit while they’re still young. The goal is to express to children how valuable credit is to their future and to help them start building strong financial skills prior to leaving for college.

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July 29th, 2013

5 Habits for Financial Success

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The “YOLO” (You only live once!) mantra is all over pop culture. While the popular slogan may be a fun way to push yourself out of your comfort zone and experience new things, it’s no excuse to be irresponsible with your finances! Here are 5 simple habits you can start today to improve your finances and help you on the road to financial security.

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June 24th, 2013

Use These Little-Known Budgeting Tips to Help You Save Money

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Aside from the run-of-the-mill budgeting advice geared towards saving money – cutting unnecessary expenses, living below your means, etc. – there are a few lesser known tips that can help you rearrange your thoughts and actions so that you save more money. We’ll take a look at them below.

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June 12th, 2013

6 Reasons Savvy Homeowners Are Not Paying Off Their Mortgages Early

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For many years, homeowners have likely heard the same financial advice: Pay down a mortgage as quickly as possible. But these days, many financial advisers are singing a different tune, telling clients that in some cases it makes sense not to pay off their mortgages early. After all, mortgage rates are hovering near historic lows at around 3.8 percent, and homeowners can get a tax deduction for having a mortgage. Here are six reasons savvy homeowners choose not to pay off their mortgages early.

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May 29th, 2013

5 Ways to Save Money on a Move

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I am only twenty-six, and yet I have moved houses, apartments, dorms, and cities a total of seventeen times. Yes, seventeen. My mother used to chastise me for my “restless nature” because I never stayed in one place for long, but having to move around so much kept me ready for change. It also guaranteed I never accumulated too much, since I usually had to part with one or two of my favorite things each time I moved. Still, no matter how much “stuff” you do or don’t have, moving is an expensive endeavor. Here are just a few things I’ve learned about saving money while moving.

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April 18th, 2013

5 Ways To Earn More Money In the Collaborative Economy

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These days, everyone is trying to save a little extra money. And while it’s not a bad idea to pursue a few simple money saving ideas, what we sometimes forget is that we can also improve our finances (and our credit) by finding ways to make a little more money. Pinching pennies and giving up our lattes only goes so far. Instead, take a look at the collaborative economy, where it’s easier than ever to earn more with what you already have. A growing number of people are providing services and short-term access to goods directly to each other - and you can take advantage of this new economy as well.

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