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Chances are when you went to college, student loans were one of the last things on your mind. No matter if you went to school to become a teacher, a graphic designer, or a lawyer, paying for your tuition with student loans has become more of a necessity than an option.
According to Forbes, the student debt problem is 1.3 trillion in counting.
When I first started my journey after college graduation, I made several student loan mistakes that cost me dearly.
Mistake # 1
- Taking out more loans than I needed.
I’ve done some really stupid things in my life and this has to one of the big ones.
During my senior year in college, I had a surplus of student loan aid which meant that the loans I had taken out were more than my actual tuition.
What I should have done was returned the $2,000 back, but instead, I spent it all!
Although student loan aid felt like “free money,” I didn’t realize that it would have a huge impact not only my financial health, but my mental, physical, and emotional well-being.
Mistake # 2
- Putting my loans on deferment.
Like many graduates, I graduated without a job lined up; which in turn made it difficult to make my monthly payments. So because deferring my loans was the easiest thing at the time, I placed them “on hold.”
Little did I know that during deferment my student loans were growing!
The interest was accruing and deferring made my student loans even worse.
*There are different types of student loans
Mistake # 3
- Paying only the minimum payment.
At first, I could barely make my minimum payment because I couldn’t find a job with my skillset that would pay me remotely what I needed to cover my monthly expenses.
After I went back to school to get more education in early childhood development, I worked two part-time jobs, and finally landed a full-time gig as a preschool teacher! I was walking on air that day and felt that I was actually doing something right.
Although that felt great, the truth is that paying the minimum payment will cost you more than you ever expected.
So it’s wise to pay more than the minimum balance each month if you can.
As an example, if you have a student loan at 6.8% for a balance of $10,000 you will spend an additional $3,809.66 in interest over a 10 year period!
The truth is that paying down debt is a mental and emotional commitment that you must make for you and your family to reach the financial goals you set.
For my husband and I are planning to adopt and that is a large financial endeavor.
Our second goal is rather aggressive, but it is to retire within 10 years by saving and working really, really hard.
After we did some serious self-reflection, we put a plan into place.
I learned the how the payments of student loans actually work!
Download my freebie version of the Student Loan Repayment Tracker here!