Tips On How To Avoid Student Loan Debt

Most of the students will have the habit of "spending to impress" just to look cool in front of their friends and without proper management, they could end up having huge debt at the end of the day. We can't deny that it will be nearly impossible to live without having any debt.

For instance, when you are going to buy a car for transportation to college. you will most likely pay it in installments rather than paying a lump sum as not all of us are born with a silver spoon. Not just that, but students also tend to use their credit cards for other expensive purchases like designer handbags or even buying smartphones.

If you don't handle your loan properly, this will affect your financial status and yet even worse being bankrupt. So here are some tips on how to avoid all these problems and have fewer debts in the future.

1. Financial Planning

Before you even decide to make any sort of loan, it is wise for you to handle your finances properly. You should always make a budget on how much money you currently have and your liabilities. By doing this, you will know for sure if you are able to pay back those debts.

Besides, there are many apps out there in which you can track your spending each day. According to Investopedia, there are 5 top budgeting apps that can definitely help you save some cash.

• Mint (Best Money Management App)
• You Need A Budget (Best Debt App)
• Wally (Best Tracking Expenses App)
• Acorns (Best App For Easy Saving)
• Tycoon (Best App For Freelancers)

If you have huge commitments in life, then it is recommended that you try to stay away from debt. You don't want to wake up each morning regretting all the things that you have bought as they will be of no use in the end.

2.  Emergency Savings

If you are used to saving money in your piggy bank then you will also be used to doing this all the time.  If you love to save money then you are highly likely a frugal type of person and you would not apply for a loan unless you have to. 

When the time comes and you just lost your job, you can at least survive with the emergency savings that you have been saving. 

Be sure that it is only for emergency cases though.

3. Needs Vs Wants

Both of them almost sound similar but they are both two different things. When we are talking about wants, for instance, you want to buy an iPhone which costs up to $1000 when you can simply get a cheaper smartphone. This is considered a wants.

Whereas needs are the necessities that you require in your daily life like food, water, gas for your car, and other essentials that you need in order to survive.

You should be able to differentiate between what you want and your needs so that you yourself won't get caught up with huge debts in your pocket.

4. Avoid Credit Payments

Try to not get comfortable with using your credit card all the time since you will not know how much you might have just spent. It's best to use your debit card instead so you can keep track of the amount of money that has been used in a month. 

Only use your credit card in desperate times when you think it is worth it to use it. For instance, using your credit card on patrols where you can get points and rebates.

5. Making Money by Borrowing Money

This is a common mistake that some people do and the moment that they realize that they can't pay it back, it is already too late. It is not going to help you with your loan but just adds it more.

ADVERT

You never want to bite off more than you can chew.

6. Ensure That The Loan is a Good-Type of Loan

You should make sure that you have a purpose to actually make a loan. If you are going to make a loan so that you will have a brighter future like education, house and etc., then it is considered a good type of loan. You can use knowledge to help you make money in the future.

Not just that, but a good loan is also one that has low-interest rates as well as a payment period that is more flexible. Thus, be careful with credit card usage since they have a very high-interest rate.

7. Dress to Impress

Most people forget to cut their coats according to their cloth and it is slowly turning them into a pauper as time goes by. It is never a good idea to buy designer jeans, Louis Vuitton bags, Rolls Royce, and many more luxurious items. 

This behavior will make you go bankrupt someday and of course, that's the last thing that you want to happen.

It is ok to be frugal and thrifty because the person who is going to suffer is going to be you if you don't save money for the future. You will soon realize that it was worth the pain to endure for the success of tomorrow.

What did you do to save money and avoid huge debt as a student?

Source: DirectLending

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