Balancing student loan debt with monthly expenses makes saving up for major purchases tricky. Here are a few tips that can help accelerate saving up for buying a home, car, or other big-ticket items without drowning in debt.
Tips to Balancing Student Loan Debt & Saving Up
Optimize your budget
Implementing a budget is a critical financial management step. This is true whether you’re saving up for something big or just trying to give yourself a little breathing room. If you’ve already established a budget, go over it thoroughly. Examine which non-essential expenses account for the most spending. Cutting a little bit from a few different expenses creates noticeable savings each month.
Choose the right repayment plan
There are a number of different options for repaying federal student loans. The standard plan spreads payments out evenly for 10 years. But there are alternate options that may enable easier saving. An extended plan spreads payments out over 25 years. So monthly payments would decrease allowing you to put more money aside now for a large purchase.
There are also graduated repayment plans where payments are smaller in the beginning and increase every 2 years. This option still lets you pay off the loan in 10 years, but allows for saving in the beginning. Finally, there are income based plans where the payments are determined by your income. These plans usually leave plenty of room in your budget for putting aside savings.
Cut entertainment costs
This one is tough because it requires you to forego things that are enjoyable. But it’s really a necessary and easy way to generate savings if you have a major purchase in mind. Entertainment costs can include anything from movies or concerts to eating out or going to the gym. Getting rid of your cable TV subscription and reducing your cellphone plan are great ways to save each month.
However, to really cut spending drastically you have to limit spending on food and drinks. Restaurants and bars mark up the cost of meals and cocktails more than almost anything else consumers buy. You’re really paying for the experience and the service. Making your meals at home and entertaining yourself with free alternatives will get you into that new house a lot sooner.
Earn money on the side
Another great way to accelerate saving efforts is to turn your free time into cash. A second job will add to your savings faster than any other option available. But it can be physically and emotionally draining even if it’s just part-time. Alternatively, if you have a craft or a hobby that can generate marketable goods, trying selling them on Craigslist, Etsy, or maybe at your local farmers market. Babysitting is another great way to add a little extra to your savings each week.
If you’re saving up for a major purchase and balancing student loan debt, you have to make sacrifices in terms of lifestyle and free time. Luckily, with a goal in mind like buying a house or car, there’s a true incentive that serves as a light at the end of the tunnel.
If you are struggling with your student loan debt relief speak with a certified counselor at American Consumer Credit Counseling today at 800-769-3571.
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