1. Rehabilitate Defaulted Student LoansIf you’ve defaulted on your student loans or are facing a potential student loan default, you’re in good company. Student loans are confusing and, as a result, easy to lose track of -- no matter how tedious you are at keeping records, as described in the article. If you’ve defaulted (or are at risk of doing so) enroll in the federal student loan rehabilitation program. It’ll help you get back on track (and in better, if not good, standing. Rules of the program vary in each situation, so make sure you read the requirements of enrollment as they apply to your financial situation.
2. Make Increasing Your Income a PriorityThis sounds like common sense and you’re probably thinking: DUH. Of course I want to get paid more. but that’s not exactly what he means. The key here is to continue a frugal lifestyle regardless of a raise or implementing a frugal lifestyle so your money stretches further. It’s certainly tempting to want to spend more when you have more, but it’s not in your best interest. In other words, live like you’re a poor student now so you won’t have to later – or for the rest of your life. And we promise that once your debt is paid off, you can live as lavishly as you like.
3. Rebuild Your CreditIf you have a credit score that’s on the lower end of the spectrum, check out secured credit cards as an option. They’re easier to qualify for because they work differently from traditional credit cards. Secured credit cards have you submit a deposit up front which in turn secures your credit limit. Then, you’re able to borrow against that amount and pay it off monthly just as you would with any other credit card. When you make payments on time, it helps to build credit history that’s positive and, ultimately, helps boost your credit score. Josuweit also worked with a credit repair company. This can be a good investment, though it is expensive. Make sure to thoroughly research who you’re working with to ensure it’s a reputable company.
4. Refinance Student LoansOnce Josuweit was able to increase his credit score, he was then able to qualify for student loan refinancing. This allows you to adjust to a lower interest rate which equates to lower monthly payments and interest savings. Josuweit also mentioned that another benefit of refinancing his student loans was that it allowed him to shop around for a new (and improved) student loan service provider. Remember, though, when you refinance federal student loans you are giving up access to income-driven repayment plans, federal deferment and/or forbearance. It’s important to be aware of repercussions of all financial actions so that you’re able to determine the best route for your situation.
5. Adjust Your Cost of LivingFor Josuweit, this meant moving across the country. Moving from New York to Texas allowed him to save on income taxes and decrease his cost of living around 18 percent. Moving may not be the right solution for you but there are other steps you can take to decrease your cost of living. Living a more frugal lifestyle, like moving in with a roommate or two, moving to a smaller apartment, downgrading your car or, even, moving back in with your parents (if it’s an option) can help you pay down debt with money that you would have been spending elsewhere each month. Think about it: even small adjustments, like downgrading your cable package really adds up over time. Think about where you’re able to bend and use some good old fashioned discipline to follow through. Josuweit did and he’s no longer in debt – follow his lead and you can get out, too.
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