This article is reprinted by permission from NerdWallet. The return of federal student loan payments in October has the potential to derail your finances, especially if you’re already struggling with credit card payments. One in five student loan borrowers have risk factors that suggest they could struggle with student loan payments as they resume, according to a June blog post at the Consumer Financial Protection Bureau.
The impact won’t be as significant during the initial 12-month student loan on-ramp period from Oct. 1 to Sept 30, 2024. You won’t default on student loans or see credit scores plummet after missing payments during that time. But interest will continue to accrue, making the growing debt more difficult to manage. Use the next 12 months to make progress with consistent payments. You’ll save more money over time and pay down debt faster. Here are some strategies to consider as you’re getting started.1. Revamp your budget An updated budget clarifies how much money is available to pay down debts. Review your debit and credit card statements for opportunities to cut back or find cheaper alternatives. Start by writing down where your money is going, says Kristen Holt, CEO at GreenPath, a nonprofit credit counseling agency. Prioritize essentials like rent, utilities, transportation and others, she says. And, if possible, work toward building an emergency fund of at least $500 to prevent more debt. “Anything is better than nothing,” Holt says. “Even if you’re putting $10 a paycheck into a savings account, it takes a while, but it’s still going to be better than zero.”
Here’s everything you need to know to make and stick to a budget.