There are so many things about money I wish I would have known when I was in college. At 20 years old, I was newly married and starting my third year at community college. While my college experience wasn’t “traditional” in the sense, we did have to be resourceful with the money we had and learn how to save money.
1. Avoid debt if possible
Student loan debt is no joke and it feels like it is going to take forever to pay off. When I graduated college, I accepted a teaching job right away and went on an income repayment plan to start repaying my student loans. I started off paying about $275 a month on my loans, which ended up going mostly towards interest. My total balance on my loans wasn’t going to go down unless I started paying more on them each month, which was tricky on a new teacher salary. To avoid taking out student loans, start looking for scholarships and grants when you are still in high school if possible.
2. Apply for scholarships
Scholarships are basically free money to use towards your degree. You can apply for scholarships through websites like Scholarships.com. Also check you colleges website to see if they have a list. Sometimes scholarships from local donors are listed or scholarships for certain programs are available.
3. If loans are unavoidable, only take the minimum amount needed
With things in upheaval around the world, now more than ever you should be preparing and looking ahead to the future. Your goals may be changing, but your drive should remain the same. Check out some of the best way to reach your financial goals!
Define your financial goals
Where do you want to be with your finances? Are you working towards becoming debt-free? Do you want to go on a paid for vacation? Do you want to build your savings?
When setting a goal, make sure it is realistic and specific. Instead of saying I want to pay off debt, be specific and say “I want to pay off my car loan ($8,000) by the end of the year. This will help you break it down to see how much a month you will have to pay on your car to pay it off. For example, you will have to put about $690 on your car each month (depending on your interest rate) to have it completely paid off by the end of the year.
Its best to focus on one goal at a time to prevent stretching your finances too thin and burning out.
Create a budget
This is the plan for how you will reach your goals. Make a list of all of your expenses and compare it to your income. After all of your bills and expenses are paid, how much income do you have left to put towards your goal? If you are over-budget
The debt avalanche and the debt snowball are both approaches to pay off debt with the goal of being consumer debt-free. In this post, I want to share with you what each method is to help you decide which approach you want to take to pay off your debt.
What is the Debt Avalanche Method?
The debt avalanche method is simply paying off your loans starting with the highest interest rate first. Any extra money you are applying to debt would go towards the loan with the highest interest rate, while making minimum payments on the rest of your loans. As you pay off one loan, you focus your extra payments on the next highest interest rate, and so on.
Since you are paying off the loans with the highest interest rate first, you will be paying less interest overall. If you work at the same momentum, is likely that you will pay off debt quicker than the snowball method. The downside is if your loan balances are large, it is easy to loose motivation.
Since starting our journey to becoming debt-free, we have been looking for ways to cut our budget and save money. Groceries is an area I knew we could cut down on, but I want to make sure we aren’t sacrificing quality for a cheaper price tag. Here are 10 tips to save money at the grocery store that do not involve couponing.
1. Meal Plan
Meal planning takes the guess work out of “what’s for dinner.” My husband and I like to sit down once a week and create a list of dinner’s for the week. By creating a plan for the week you know exactly what needs to be purchased from the grocery store.
2. Create a list
Going grocery shopping without a list is a sure way to overspend. As you are meal planning, write down the things you need and when your at the grocery store, stick to your list!
My husband and I started our debt-free journey about 2 years ago right after we had our son. We have the goal of paying off all of our debt and setting up a better future for our family. We were able to take Dave Ramsey’s Financial Peace through our church. These are 8 things we learned about money by taking the course.
Save a $1000 emergency fund. Unexpected expenses will come up, do you have cash to cover the next emergency that pops up?
Pay off debt using the snowball method. List out your debts and start paying extra on the smallest debt, while only paying the minimum on the others. The goal is that you will pay off those smaller debts fast, then you can “snowball” the extra money to go towards the next smallest debt. By the time you get to your larger debts, you should have a nice sized snowball to knock those loans out.
Live within your means and forget “keeping up with the Joneses.” The Joneses are the neighbors who have the nicest lawn and the newest cars and gadgets. The truth is, they are also broke. Keeping up with the Joneses will not fulfill you and will only cause setbacks with your debt-free journey.
Have slush funds for the things you are saving for. A slush fund is a separate savings account for specific things. For example, we have a slush fund for the car insurance we pay every six months. Each month, I set $120 in our slush fund so that when our car insurance is due, we will have enough to pay it in full.
After all debt (except mortgage) is paid, build a 3-6 month emergency fund. This would be your “fully funded” emergency fund to cover large unexpected expenses or to cover job loss.
Contribute 15% of your pay to retirement once debt is paid off. Dave recommends temporarily stopping contributions to you retirement while you are paying off debt to focus all extra income to pay off debt quicker. The thought is that the quicker you can pay debt off, the sooner you can start contributing more to your retirement.
Have a budget meeting each month. If you are married your budget meeting should be with your spouse to list out all of the income and expenses for the month. Think about any extra expenses you will need to cover such as birthdays, school functions, etc. “Give each dollar a name” so you know exactly where your money is going.