If you’re a college student, there’s a good chance you’re in debt.
You’re not alone. Almost 45 million Americans have student loans to the collective tune of about $1.7 trillion, according to Ashley Harrington, director of federal advocacy and senior counsel at the Center for Responsible Lending.
But just because you have student loans doesn’t mean you have to be in debt for the rest of your life, nor does it mean that you have to default on your loans. What student loan debt does mean is that you’ll want to budget carefully to ensure you can make your loan payments after graduation.
The best way to guarantee you’ll have the money to make those student loan payments later is to eliminate as much other current debt as you can. You can do that now, using these four essential tips.
1. Create a budget
Making and sticking to a budget is the best way to make sure you don’t spend more money than you take in. You don’t need an app or complicated accounting system to get started on your budget. You don’t even need an Excel spreadsheet. All you need is a blank document or piece of paper.
Divide your paper in half. Label the left column “Expenses” and label the right column “Income.” On the left side, record every recurring monthly expense you have. You can go back to look at your past bills for rent, electricity, water, internet, etc., to ensure you get exact figures.
Remember to include in the left column your food, gas, clothing, personal items, and entertainment expenses too. Don’t estimate what they are – chances are you’ll guess too low. Instead, go back and look at your credit or debit statements for the past month to get a baseline.
If you don’t have that information available, record every bit of money you spend during one week. Assuming you aren’t making a major purchase that week, you can probably multiply that figure by four and get a pretty realistic monthly total.
Add up the numbers on the left to get your grand total for expenses. Then total your monthly income in the right-hand column.
The difference between your income and expenses may be a positive figure, in which case you should be putting that additional money into a savings account.
If the number is negative, however, you’ll need to re-budget. Write that number – the amount you’re short each month – someplace on your paper and circle it. That’s the number you need to subtract from your expenses.
You’ve just created a zero-based budget, a simple form of budgeting in which you allocate money to each expense until you have zero dollars left. Any expenses left over have to be cut (or you have to bring in more money).
More >> If you want to dive even deeper, here’s a budget template made just for college students
2. Cut your spending
Let’s say you did your zero-based budget and figured out you need to cut 10% of your expenses each month to break even. If you can cut more, that’s even better because then you have money for savings.
Go back to your budget and look at your left-hand column. You’re going to figure out which expenses you can decrease or even eliminate.
Here are some places to get started:
Cancel all subscriptions you don’t use or need
Subscriptions are recurring monthly fees, usually for entertainment and other nonessential items. If you have streaming TV services, get rid of all of them (or as many as you need to balance your budget).
If you belong to a gym and you never use it – or if you can exercise outside or at school for free – drop your gym membership as soon as you can.
To make finding and canceling subscriptions easier, use a service like Truebill. You may have recurring expenses you’ve completely forgotten about.
Make your meals at home
Eating out and ordering in adds up fast. Do a one-month trial where you eat all your meals at home (or you bring food from home to work and school). This month-long trial should give you a sense of how much money you can save. It should also help you realize what kind of dining experience you miss the most.
You may discover that coffee from home is just as good as Starbucks. You may realize that fast food never fulfilled your cravings anyway, or was making you pack on unwanted weight.
Conversely, you may understand how much you appreciate a good meal from your favorite local restaurant. That’s fine! You can add that back into your budget, assuming you have the money. One meal a month (or even a week) might be doable if you cut other things.
Find free entertainment
Entertainment costs add up too. Save money by finding free things to do. Check your school newspaper or online calendar to get a list of what’s happening around campus and in your area. You might be surprised what you can do for no or very little money – student discounts can help defer some costs, and if you choose your night right, you can pay less for movie and concert tickets.
Even if you’ve already graduated, you might still have free access to events at your alma mater. You can also check your local libraries, museums, and community organizations to find events that are free or heavily discounted.
3. Get a roommate
One of the best ways to reduce expenses is to get a roommate. If your housing and utility costs are sucking too much out of your budget and you’re simply unable to bring in more money, a roommate can be the perfect solution. Not only can a roommate cover half your rent, but they can also split internet fees, streaming services, and utilities.
4. Cut up your credit cards
If you’re in serious credit card debt, but you still can’t stop spending, cut up your credit cards. You might feel unmoored without them at first, but living without the specter of debt is one of the kindest things you can do for yourself.
Don’t close your accounts though. Credit cards are linked to your credit score, and they’re also necessary in the event you need access to emergency funds. Once you pay off your credit card debt in full, you can even start using them again as long as you pay the entire balance off each month.
Refinance and/or consolidate your student loans
Once you have your budget under control, it’s time to work on your student loans. If you have loans from a bank or other private organization, contact them immediately to inquire about refinancing. You may be eligible for a lower interest rate.
If you have multiple federally-funded Direct Loans, inquire about consolidating them. You might end up with a reduced interest rate and lower monthly payment. Fill out the Direct Loan Consolidation Loan Application online to see if you are eligible for loan consolidation.