Take the first step toward your future

A portion of the burden that accompanies the actual debt of student loans is the helpless feeling that can come with being overwhelmed by repayment issues, paperwork, new information. There can also be guilt over carrying such a load either by yourself or into a relationship. There is no need to belittle yourself or feel unhappy about choices you made in the past. It is time to embrace the future and to begin to move forward.

Today is the day you can begin to take charge of the rest of your financial life. Your student loans are an excellent place to start.

1. Take a hard look at what you actually owe. Get out your paperwork. Phone your loan provider or access their website. The information isn't difficult to come by. Usually statements are quite detailed and there are service agents who can answer any questions you may have.

2. Find out the number of loans you have; then for each of those loans, find the type of loan, the interest rate, the repayment amount, and the date due. You may also want to note the date the loan originated. Record your information so you'll have it on hand for later steps. A handy tip: use the monthly statement from your lender and add your notes to the information they provide.

3. Research the programs available which fit your particular situation. There are temporary fixes if you have a drop in income (forbearance, deferment) and there are long term programs which can help you obtain an affordable repayment schedule. New options become available each year, so check back from time to time.

4. Contact your lender to discuss available options. They are not the last word, so don't be discouraged if you don't hear good news. Continue to follow the research you performed in step three and attempt to change your loan status or find a program which fits your need.

5. Make your payments if at all possible as you work your way through the steps. Try to avoid default in order to help you qualify for assistance programs and to avoid negative effects on your credit.

6. Educate yourself before you consolidate. Know where you're heading with your financial plan; be sure you're going to get the best interest rate and start the consolidation at the appropriate time. You want the best deal for you, not for the lender.

Facing your debt need not be scary. Let it empower you. You are taking control. You will make the decisions. Next, setting a budget for yourself.

1. Create a list of debts.
Note who you owe, the total amount, payment amount, and interest rate.

2. Prioritize your debt list.
There are many schools of thought on how to do this. Paying off loans with the highest rate of interest is one of the better choices, but other circumstances may influence your decision. If you owe a small amount on one or two debts and can pay them off completely, this may be a better choice, especially if the boost in morale will help keep you going in the right direction. On the other hand, if you have debts to family members, you may want to focus your first payments there in order to build trust and keep harmony. Also, relatives may be struggling in these hard time and need the monies.

3. List your income from all sources.
Include any tips, money from odd jobs, expected tax returns, yearly stipends or gifts.

4. List your actual and expected expenses.
This is far easier if you have records to consult. If not, you may need to estimate in some areas. You're looking for the big picture, so don't get too hung up on any one entry. It may help to work from the larger costs (rent, car payment, utilities) down to the smaller ones (laundry, haircuts). List any regular payments you make to student loans, credit cards. Don't forget basics such as groceries, gas (and whatever you may be in the habit of grabbing at the convenience store), and entertainments. Be sure to include anything you should be paying but may be skipping, such as proper maintenance on an automobile, renter's insurance. If you have a pet or child to care for, include those expenses. Factor in what you spend on clothing and footwear.

5. Once you have your expenses listed, figure the cost per month and per year for what you spend (or should be spending).

6. Prioritize your spending.
Look for areas where you can cut back or trim items out of your budget completely. Shop secondhand. Trade favors with friends instead of paying for services (there may be tax consequences to barter).
For some, the toughest thing to hear is that they need to stop spending. There may be some drastic decisions ahead if you're really struggling. These options may be harsh to consider, but finding a new home for your pet, getting a roommate, trading your car in for a less expensive model (ideally one without a monthly payment), or getting a second (or third) job may be an action you can take now to save yourself over the mid to long term. If you aren't in that place yet, awareness of these potential choices may help focus your energy in the right direction.

7. Let the information you've gathered sink in.
Take a few days to review your lists and fully understand your circumstances. Don't try to deny or hide the truth of your level of debt from yourself. Be open and honest about it. It's the best way to start to work through it.