4 Strategies To Use When You’re Broke And Can’t Pay Your Student Loans

4 Strategies To Use When You're Broke And Can't Pay Your Student Loans

You’ve recently graduated from college and you have over $60,000 in student loans to pay back.

Over the past year, you’ve job-hunted like crazy, but you haven’t even been able to find work in your field.

Eventually you settled for a job which pays you around $20,000 a year—but you’ve already spent more than a year unemployed.

You’re broke, and it doesn’t look like that is going to change anytime soon. What do you do?

If you find yourself in a situation like this, you are hardly on your own. The average student loan debt has increased year over year for more than a decade.

The average 2015 graduate owes back more than $35,000. The total student loan debt in the US is more than $1.2 trillion.

How can you pay back your student loans and get back to living your life? It certainly won’t happen overnight, but here are a few suggestions.

1. First, start keeping a budget.

First, start keeping a budget

It is seriously amazing how many people do not do this. For that reason, it bears some emphasis.

Tally up your receipts every month and figure out where every penny is going. Compare that against how much money is incoming and figure out where you stand.

2. Look for creative ways to cut costs.

Look for creative ways to cut costs

Even if you are already living economically, there may be ways you can be even more thrifty.

Consider downsizing your home or renting out a room to make up for some of your mortgage or rent costs. Apply for food stamps if you think you may qualify.

Cook for a week whenever you can (soups, stews, and casseroles are great for saving money). Negotiate to a lower payment rate on your phone bill if you can.

Ditch your cable subscription. Trade in your expensive car for a cheaper one.

Look for a better deal on your insurance (bundling insurance for your home and car is a great way to lower costs).

3. See if you qualify for loan forgiveness, forbearance, or deferment.

See if you qualify for loan forgiveness, forbearance, or deferment

Deferment is better since interest will not accrue.

You may also qualify for an income-driven repayment plan. This puts a cap on your monthly payments so you are never parting with more than 10-20% of your discretionary income.

In some cases that may mean that you temporarily are relieved of the burden of paying on your loans altogether.

4. Refinance your student loans.

Refinance your student loans

While some lucky graduates may qualify for a government program to forgive or defer a loan, most will not.

One thing you can do however is apply for a program to refinance your loan at a lower interest rate.  This could save you thousands of dollars over time.  You can refinance your student loan with SoFi.

It can be daunting to wonder how you will ever pay back your student loans while you are struggling just to survive.

But there are options, and if you do your research and make some clever adjustments to your life, you may be able to start getting back on track!

6 Tips for Budgeting After You Graduate From Music School

Getting into music school is a huge accomplishment; graduating and embarking on your professional life afterwards is an even bigger achievement.  But it is not without its cost.  Music school tends to be quite expensive to attend.  Take Berklee for example, which has its 2016-2017 degree costs totaling to $63,118 per year.  Once you graduate, you will be neck-deep in debt.

Just to add to your woes, musicians do not make a lot of money on average.  The BLS reports the median pay in 2015 to be just $24.20 per hour.  Many musicians work part-time, and the field is growing slowly.  This is why many graduate musicians do not even end up working in their chosen field.

So how can you effectively budget your money after graduation so that you can save up toward retirement? It will not be an easy journey, but there is a lot you can do, even at a low income. Here are a few helpful tips and tricks to make the most of a limited income while paying off massive student loans!

1. Start accounting regularly.

1.Start accounting regularly

The first and most important thing you can do to make sure that you are optimizing your budget is to actually start keeping a budget! Most people never track their expenses, and if they do, they do not have a system for it.

Come up with a systematic way to keep track of how money flows and out of your grasp. You need to figure out 1-if you are in the red or the black, and 2-how you can increase your profitability each month. Once you know where your money is going, you can start cutting unnecessary expenses.

2. Build an emergency fund.

2. Build an emergency fund

You may feel tempted to start trying to pay your debts off right away when you graduate. This is not actually the best approach though. In fact, before you worry about any other consideration, you need to start stockpiling an emergency fund. How large or small this should be is up to you, but around $1,000 is a good amount.

Make a vow not to touch that money for any reason except dire circumstances, and only if the expense will make a lasting improvement in your circumstances (do not throw it down a black hole). If you do find yourself in a situation where you have to draw on emergency funds to throw down a drain, it is time to make a change (i.e. downsize to a smaller apartment).

3. Pay off as much toward your loans as you can right away.

3. Pay off as much toward your loans as you can right away

Once you have your emergency fund set up, start paying off as much as possible on your loans as quickly as you can. This will ultimately save you a lot of money in the form of interest.

4. See if you qualify for any aid.

4. See if you qualify for any aid

As a musician, you may be living near or below the poverty threshold. If so, you may want to check into state aid programs which you might qualify for. For example, you may very well be able to get food stamps to help you out, even if you cannot get unemployment compensation.

5. Consider a day job.

5. Consider a day job

Trying to make a living as a musician is very difficult, whether you are trying to become a rock star or a concert pianist. You may have to accept employment in another field while you are trying to get your foot in the door and land that coveted chair in the orchestra hall.

Balancing a day job on top of your music career can be challenging, but it can pay off in more way than one. First of all, you will probably make more money this way. Secondly, you will have more security. If something goes wrong with your music career, you have the day job to fall back on.

Finally, having a day job can add to your emotional well-being. Struggling all the time to make it with something like music where the odds can easily be stacked against you can really take a toll in terms of stress and anxiety. Your day job gives you a psychological buffer.

6. Try a robo-advisor.

6. Try a robo-advisor

Finally, make sure you have the tools to make the most of your income after graduating from music school!  One of the smartest moves you can make is to start using a robo-advisor.  A robo-advisor can provide you with customized advice for managing your finances at a much lower cost than you would pay a human advisor.  Compare Betterment vs. Wealthfront, two of the top robo-advisors.

It isn’t easy to make a living as a musician.  Between crippling student loan debts and a low income, you can really suffer trying to save for retirement.  But with these tips and tricks on your side, you have a great chance to succeed!