What College Grads Need to Know About Money

College graduation is a big milestone to feel good about. And as you head out into the world, you’ll be learning new things, facing new challenges, and making big financial decisions. One of the most helpful skills to have as you get older, is being able to manage your money. And luckily, you don’t need a class to learn financial management – you can get familiar with these skills through educational resources like ours! Keep reading for our top money management tips for recent college grads.

Learn how to budget

Budgeting is one of the most important financial skills you can learn. Maintaining a budget can help you be smart about your spending and plan for your financial future. We recommend using the 50/30/20 strategy as a rough guide for how you should spend your money. This means you should aim to spend 50% of your budget on essentials, 20% on savings and investments, and 30% on other remaining expenses.

Calculate your expenses (rent, student loans, utilities, food, transportation, etc.) and variable costs (dining out, vacations, shopping), and make sure your expenses do not exceed your income.

Start saving money

No matter what your financial goals are, opening a savings account is always a good idea. You can start by dedicating a certain amount of your paycheck toward your savings. While it’s recommended to keep 20% of your income for savings and debt repayment, you’ll need to evaluate what works within your budget and when you’ll need the funds. Even if you’re starting small, you’ll be surprised how quickly the account can grow!

Want to open a savings account?* We’re here for you! Contact us or stop by your local branch to speak with a representative today.

Plan for retirement

It may seem too early to start planning for your retirement, but it will make a big difference to start saving right out of college. For example, a 22-year-old who starts investing is going to have nearly twice the amount of money saved by 67 than someone who starts at 32. Most employers offer a retirement plan match program like a 401(k) or 403 (b) that is typically deducted straight from your paycheck. If your employer offers matching contributions like this, make sure to take advantage – since it’s essentially free future savings.

Pay off student loans

According to Forbes, there’s currently $1.75 trillion in total student loan debt with an average of $28,950 owed per borrower. And while graduating and starting your career may be exciting, paying back student loans can be daunting – to say the least. When it comes to paying off your student loans, you should take the time to look at your budget and determine how much you can afford to pay toward your debt payments. It’s recommended to start paying off the debt with the highest interest rates first, and then focusing on the debt with lesser amounts or lower rates like federal student loans. There are sure to be plenty of repayment options to choose from based on your current income and budget.

Don’t forget about your credit score

Having a decent credit score is going to be very important throughout your life. A credit score essentially is a rating that financial institutions use to determine how likely you are to pay off your debt. Whether you’re renting an apartment, opening a new credit card, or buying a car – your credit score will play a factor in what you’ll be able to obtain.

A credit score is determined by:

  • Your payment history
  • Your amounts owed
  • The length of your credit history
  • New credit
  • The variety of credit products you have

As a new college graduate, understanding financial management can feel overwhelming – but you’re not alone. Our financial experts can give you advice based on your situation. Contact us to get started, or stop into your local branch to speak with a representative today!

*A $5 deposit in a base savings account is required for credit union membership before opening any other account/loan. All personal memberships are part of the Rewards First program and a $5 per month non-participation fee is charged to the base savings account for memberships not meeting the minimum requirements of the program. Click here to view full Rewards First program details. Some restrictions apply, contact the Credit Union for more information.

 

 

 

5 Creative Ways to Pay Off Student Loans Faster

Student loans can be a real thorn in one’s side, but there are reasonable and attainable ways to pay them off.

With a little bit of hard work and imagination, you can certainly start your journey toward financial independence. The faster you address and pay down your debt, the sooner you can apply for a mortgage and other loans you might need.

We’ve created a list of five clever ways to pay off your student loans faster. Let’s make it happen!

1.  Join a Ridesharing Company

Driving for companies like Lyft or Uber can be a great gig for young professionals or students.

This is a top side hustle pick because you can essentially do it anytime, anywhere and on your own schedule. You can choose your work hours, earn instant money, and bag special bonuses.

Check out this chart to learn how much you can earn per hour by driving around your area. Besides, working a few hours on a weekend can help you cut through your debt.

2.  Collect Spare Change

Try apps like Qoins to collect spare change digitally. It works the same way your typical piggy bank does — saving small amounts for a bigger expense. By the end of each month, the app forwards the accumulated sum to a lender.

Don’t underestimate the power of spare change. A Moneytips article shares that Qoins users have collectively paid off over $2 million worth of debt.

3.  Get a Roommate

If you find yourself struggling to make housing payments, it may be time to find a roommate. Apart from the emotional benefits of living with someone, it can save you some money that you can use for your student loan. It’s time to say goodbye to hefty rent, furnishing, and utility expenses.

4.  Use Coupons

A pro hack in cutting back on grocery bills is to use coupons on items you would normally buy anyway. Get a hold of a Sunday newspaper to discover exciting food discounts. You can stock up on goods you usually use with various promotions. Read more about couponing to learn how you can save hundreds per month.

5.  Include Additional Payments in Your Budget

American personal finance personality Dave Ramsey once said, “A budget is telling your money where to go instead of wondering where it went.”

If you don’t have a budget, now is the perfect time to start one. Instead of spending extra on fancy meals, name brand clothes, and memberships you don’t need – focus on making additional student loan payments.

To pay off your student loan faster, try to make an additional principal payment monthly. Doing so will not only cut the length of your debt, but it will also impact the interest you pay.

In Conclusion

By trying some of the above ideas – you can definitely start to chip away at your student loans and continue to pay them off sooner. If you set reasonable goals for yourself and put your mind to it – you can be student loan free!

Sources:

Debt.com

https://www.debt.com/news/creative-ways-pay-off-student-loans/

Life Hack

https://www.lifehack.org/articles/money/10-creative-ways-pay-off-your-student-loan-debt.html

4 Financial Tips for College Students

Many U.S. colleges and universities are already back in session, as we approach the Labor Day holiday. If you’re back in school or just beginning college as a freshman, you already know you have a lot more freedom – but there’s also more responsibility. The financial decisions you make now, can often determine whether you can live comfortably in your financial future. Having some guidelines at this stage in your life can help cut down on unnecessary spending, and can also help you save more for your future.

Here are some tips to consider as you are making your own financial decisions:

1. Save for an Emergency Fund – Always have extra finances set aside in case you encounter a sudden emergency. This will help you to avoid debt and can save you from a sudden financial restriction. A good rule of thumb is to save around 10% of the money you get. One easy way to do this is to have another bank account for your emergency funds. That way, your normal expenses will come from your main account and your emergency savings will be kept separate so as to not be tempted to use it.

2. Take Care of Your Credit – Being in college will likely be the first time you will encounter a credit card. Even if you manage to get a card with a high limit, you should never maximize your limit. A good rule here is to keep your credit usage at around 30%. If you end up owing too much, you could incur high-interest charges that can send you into a debt problem.

Another strategy you could follow is to only use the card if you have money to pay for the purchase right away. Save that money for when the payment is due. That way, you don’t overspend and can work toward building a good credit score. Having a high credit score can help you land better loan rates in the future.

3. Start Investing & Saving for Retirement – Starting to invest and save for your future retirement early can make a difference when it comes to your future income. You may consider working on an IRA (Individual Retirement Account), or investing in the stock market – especially once you start working. Whatever your decision, be sure that you are making your money work for you. It is also a good idea to meet with a financial advisor to help you manage any investment or retirement accounts you may have, once you do start your first full-time job.

4. Budget Your Food Expenses – Food can take up most of your budget if you’re not careful. From fast food to splurging on snacks, this can empty your wallet fast. By setting a budget for your food, you’ll think about ways to make the most out of it. You’ll begin looking for cheaper yet more filling options. Another way to approach this is to plan your groceries ahead of time. By knowing exactly what you’re going to buy, you can control the amount you spend on food. Even a bit of research online can give you access to inexpensive yet satisfying meals.

Don’t Fear Mistakes

Part of learning how to be better with money is making a few mistakes along the way. Don’t put yourself down if you made a mistake with the money you spent. Simply take note of the mistake, and try to prevent it from happening again. As long as you keep improving and developing good financial habits, you’ll be setting yourself up for your future financial success.

Article Sources:

https://www.debt.org/students/financial-tips-college-students/

https://www.meratas.com/blog/how-to-manage-money-as-a-college-student

https://www.moneyunder30.com/financial-tips-for-new-college-students

Student Loan Payment Changes During COVID-19

With unemployment levels rising and many employers cutting work hours, large numbers of college grads are now struggling to meet their student loan payments. Thankfully, the federal government has passed legislation to help ease this burden. However, many borrowers are confused about the terms and conditions of these changes. Here’s all you need to know about changes to student loan debt due to the coronavirus pandemic.

All federal student loan payments are automatically suspended for six months.

As part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) signed into law on March 27, 2020 – all federal student loan payments are suspended, interest-free. If borrowers continue making payments, the full amount will be applied to the principal of the loan. The suspension applies to all federal student loans owned by the Department of Education, some Federal Family Education Loans (FFEL), as well as some Perkins Loans. Students do not have to take any action or pay any fees for the suspension to take effect.

Additionally, during the suspension period, the CARES Act does not allow student loan servicers to report non-payments as missed payments to the credit bureaus. Therefore, the suspension should not have a negative effect on borrowers’ credit scores.

If you’re not sure whether your student loan is federally owned, you can look it up on the Federal Student Aid (FSA) website. Be sure to have your FSA ID handy so you can sign in and look up your loan. You can also call your loan servicer directly as well.

Contact information for federal student loan servicers:

CornerStone: 1-800-663-1662

FedLoan Servicing (PHEAA): 1-800-699-2908

Granite State (GSMR): 1-888-556-0022

Great Lakes Educational Loan Services, Inc.: 1-800-236-4300

HESC/Edfinancial: 1-855-337-6884

MOHELA: 1-888-866-4352

Navient: 1-800-722-1300

Nelnet: 1-888-486-4722

OSLA Servicing: 1-866-264-9762

ECSI: 1-866-313-3793

Suspended payments count toward Public Service Loan Forgiveness and Loan Rehabilitation. 

Public Service Loan Forgiveness (PSLF) is a federal program allowing borrowers to have their student loans forgiven, tax-free – with the stipulation that they work in the public sector and make 120 qualifying monthly payments. A disruption of these 120 payments would typically disqualify a borrower from the program. According to the CARES Act, suspended payments will be treated as regular payments toward PSLF. This ensures that borrowers who have been working toward these programs will not lose the progress they’ve made toward loan forgiveness.

The same rule applies to individuals participating in Student Loan Rehabilitation, during which borrowers who have defaulted on student loans – must make 9 out of 10 consecutive monthly payments in order to bring their loans out of default. The U.S. Department of Education will consider the six-month suspension on payments as if regular payments were being made toward rehabilitation.

Some states and private lenders are offering student loan aid for struggling borrowers.

If your student loan is not federally owned and you are struggling to make your payments, there may still be options available – such as loan deferment or forbearance. If you are in need of such assistance, contact your lender directly to discuss your options.

Consider an income-driven repayment plan.

If you have an FFEL that is ineligible for suspension, you may be able to lower your monthly payments by enrolling in an income-based repayment plan. This would adjust your monthly student loan payment amount according to your discretionary income. If your salary was cut as a result of COVID-19, or you are currently unemployed – these plans can provide relief by making your monthly payments more manageable.

Still have questions about your student loan payments during this time? It’s always a good idea to reach out to your lender and find out what options are available to you.

Article Source: CUcontent.com

How to Handle the Cost of Higher Education: 2 Major Questions

 

On average, millennials who physically attend college will leave their school $29,800 in the hole. That’s a $16,000 jump compared to the previous generation, who averaged $13,000 of student loan debt after graduating in 2004. While this number is troubling, it’s just the tip of the iceberg. With seemingly no sign that this trend will reverse any time soon, a couple of questions become clear.

  • Is college worth it?
    • Yes, it is. Despite rising costs, the social stigma of a college degree alone is worth the price once you enter the job market (depending on the line of work you are looking to go into). College also provides a number of unique educational, social, and professional experiences that help develop professional prospects and define personal goals. While the cost is great, a college degree can be akin to gold (in value and weight) after graduation.
    • No, it is not. The tradeoff simply isn’t the same as it used to be. Gone are the days when you could pay for an entire semester with paychecks from a part-time job. Even if a degree is a hot commodity in your job market, it is probably not worth nearly $20,000 in debt right out of the gate. Building a resume through real life experience can set you up ahead of your peers while idyllically leaving you entirely out of debt.
  • Is it possible to further my education without signing up for a lifetime of debt?
    • Knowledge is expensive, but it’s also an investment in yourself. We respect the courage it takes to embark on that journey and are always ready to help make it happen. As a First Financial member, we can help you shoulder the burden of financing education related expenses and supplies with a personal loan.*
    • If attending college isn’t in the cards for you or if you’re just putting it on the back burner for a little while, there are still cost-effective options out there for you. Many students are considering forgoing the traditional higher education experience altogether. The verdict is in and the latest trends show that enrollment in online classes is on the rise from traditional pursuits, like university master’s programs to new platforms, like MasterClass. Combine that with the undeniable practicality of technical schools – and it’s easy to see that there have never been more opportunities for alternative learners to chart their own paths and spend less money doing it.

The Takeaway

Getting a college degree is paramount in a number of professional fields. This is a fact that will remain true for the foreseeable future. In some cases, it is absolutely necessary to take on those costs. Luckily for you, when this is the case, you have a dedicated team of financial experts at your disposal to help you make the numbers work for your budget. If you’re ever feeling overwhelmed about financing the cost of higher education, talk to one of our experts before you make your next move. From the campus to the keyboard, we are here to help you make it happen!

*APR = Annual Percentage Rate. Actual rate will vary based on creditworthiness and loan term. Subject to credit approval. A First Financial Federal Credit Union membership is required to obtain a Personal Loan, and is open to anyone who lives, works, worships, volunteers or attends school in Monmouth or Ocean Counties. A $5 deposit in a base savings account is required for credit union membership prior to opening any other account/loan. Federally insured by NCUA.

4 Crucial Money Tips for Your First Job

Recently graduated college? Before you come face to face with the real world and your first job, be sure you review the following important money tips.

1. Keep your debt limited.

When you’re starting out in your first job, you will quickly find yourself probably making about five times what you were making from your part-time college gig. That account balance can look quite enticing. Try your best to not let debt grow. Tackling debt can take years, and you don’t want to add to it.

2. Start a savings account/emergency fund.

When you’re young, you tend to push things off because you think you’ll have plenty of time. When it comes to saving, the earlier you begin, the more you’ll appreciate it later. If you save $100 a month, during the first 5 years after college, you will have created a $6,000 fund that could come in handy when you need to make lemonade out of the lemons that life will inevitably throw at you from time to time.

3. Stick to a budget.

This may be one of the harder tips to stick with, especially when you have more money than you’ve ever had in your life. Buying every meal from your favorite restaurants is tempting, and the sooner you curb that habit the better. By budgeting, you can see how you’re really spending your money. Try not to look at it as restricting your spending, but rather a guide to help you spend confidently.

4. Don’t forget about retirement.

Retirement seems like it’s 40 years away (and maybe it is), but it’ll sneak up on you. Putting your money in an IRA early is one of the best decisions you can make. There’s a little thing called compound interest that wants to be your best friend. Read about it and you’ll be happier than a kid in a candy store.

Article Source: John Pettit for CUInsight.com