STUDENT LOANS This does not apply to everyone. But for most of you? SURPRISE! Your grace period is up, get ready to cough up some cash for this one.
Give me a loan and then leave me alone.
After graduation, you typically have a six month grace period before you have to pay back your loans. Boy do those six months FLY. Word to the wise, if you can start making payments beforehand, do it. This saves you money, as it is not subjected to interest. It’s good to note what kind of loans you have: subsidized vs unsubsidized. With subsidized loans, there is no interest hitting your loan balance during the six month grace period. However, with unsubsidized loans, your loans are still hit with interest during the six month grace period AND capitalized on (AKA, that $35K loan you left school with is now $38K [after the six months period]. The $3K difference? – Yes it’s because of interest but now it’s treated like it’s part of the principal [and not just interest] and is now being hit with more interest! Blasphemy! … and confusing I know).
Interest rates may be low based on your loan arrangement but on $50,000 worth of loans, there’s a lot of interest to be paid. Trust me, I’m talking from first hand experience (dollar bills flying out my pocket by the second). When I make my monthly payments and see more than half going to interest, I’m almost always ready to toss my laptop out the window. Then I remember I’m using my work laptop and I can’t be doing that. Damn.
So make sure you check your options here. Depending on the loan provider you can pay your loans in 10 or 20 years. Pick the choice that works for you. These loans can also be leveled out or graduated (meaning pay less now and gradually the amount owed monthly will increase). But don’t worry, if you are ever between jobs you can ask for a payment deferral as well.
For those who can manage to decrease their expenses (i.e. live at home), take the opportunity to pay your loans down quicker. I know a few cats who are debt free after two years of being out of school. Must be nice.
Maybe Sallie Mae does have a heart? Nah. We went to school broke and came out broker. We’ve been played.
It’s better to say “I’m broke” than “I’m poor”. Being broke is a temporary state. Being poor is a mindset.
Silver lining. You won’t always be broke.
Keep reading and find out on how you can start saving so being “broke” is temporary.