How Recent Grads Can Lower Their Debt While Job Searching

How Recent Grads Can Lower Their Debt While Job SearchingHow Recent Grads Can Lower Their Debt While Job Searching

Armed with ambition, an education and a diploma, young graduates step outside of campus eager to start their first position in the real world. Along with the responsibility of landing a job, comes the need to handle bills ranging from rent to student loan payments — it all adds up and suddenly the debt seems impossible to pay off.

As of May 2013, the number of people at least 90 days late on student loan payments rose to 11.7 percent, according to a study by the New York Federal Reserve. Students continue taking out loans without a clear plan for handling their debt.

Here are five steps which can guide you in your journey of lowering post-graduation debt:

    1. Stop Adding to Your Debt Total

Your first step toward lowering debt is damage control. Put a limit on your debt. It will be impossible to lower debt if you continue spending money that you have not yet earned. This requires you to pay bills instead of ignoring them, discontinue the use of credit cards and refrain from taking out more loans and spending leftover loan money.

    1. Pay Attention to the Debt You Already Have

Once you stop adding to your debt, you can begin to work toward paying off your debt. To begin tackling your debts, gather information on everything you owe. Write down the amount owed on upcoming bills, credit card payments and loans. Find out the type of loan, lender, total amount due, monthly payments, interest rate and grace period. Storing all of this in one notebook can be a helpful way to keep the information together and track progress.

    1. Use Loan Grace Period to Build a Cash Safety Net

Student loans often include a temporary period where payments are not required. For federal loans, this lasts from six to eight months after students either graduate or drop to below part-time attendance. You can use this period before payments are due to put aside savings every month and build a cash safety net. This will force you to get in the habit of spending less each month and give you a cushion to prevent future debt when emergencies occur or bills pile up.

    1. Communicate with Lenders

Stay in contact with lenders to make sure that you receive all notifications of bills and return paperwork in a timely fashion. You can accomplish this by making sure lenders have the correct email and home address. If ever you cannot make a payment on time, inform your lender and see if they will accept a partial payment, rather than ignoring bills and letting late fees pile up.

                  5. Debt Reduction through Automatic Payments

A final way to decrease your debt is through setting up automatic payments where funds are taken directly from your account. This will ensure you do not forget to make payments and save you a percentage of the interest you would normally be paying. For federal loans, the savings is typically 0.25 percent and for private loans from 0.25 to 0.50 percent.

Putting a stop to debt growth and starting to tip the scale in the other direction is a task that will require intentional choices and discipline. Begin your journey today.

Alanna Ritchie is a content writer for, where she writes about personal finance and little smart ways to spend (and save) money. Alanna has an English degree from Rollins College. Join the conversation on our Facebook page.

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