Don’t Overlook Your Student Loan Payments Over the Holidays. Do This Instead
Currently, 8 million borrowers have their student loan payments on hold due to legal challenges led by the Biden administration Save valuable education costs Relief plan. But for millions of additional borrowers, that’s not the case. student loan payments into their Budget During the holidays.
Things can add up quickly this time of year—especially if family members expect you to give everyone memorable gifts. Stress can push you overspending And delay paying certain bills you know are coming after the holidays and beyond.
As a student loan expert, I never recommend letting unnecessary expenses put you in a bad financial situation for months or years. But I also know that accidents happen. If you’re worried about being able to afford your holiday student loan paymentshere are some tips for prioritizing the two, and what to do if your payment is late.
Don’t skip student loan payments just to have extra shopping expenses
Missing Student Loan Payments May Have serious consequencessuch as filing a negative report with a credit bureau. this may hurt you credit score and history. And you still have to make up missed payments, which may incur late fees and accrued interest.
If you’re worried your monthly student loan payment is too high, check out federal student loans Income driven repayment plan. These plans will base your monthly payments on your income rather than your outstanding balance, which may lower your monthly payments.
Enrolling in autopay can help you prioritize your student loan payments and potentially get a small interest rate reduction. However, it is crucial to manage your bank account balance to avoid overdraft — If you don’t have enough funds to cover your scheduled payment, this can result in fees and other complications.
Read more: How the Fed’s interest rate decisions affect student loan borrowers
Be honest about your budget
The holidays can be a stressful and expensive season. Once you fall behind, you may start to spiral and take on more debt to get by – e.g. Buy now, pay later plan and credit cards. “One of the Biggest”wealth killer” is debt, especially High Interest Credit Card DebtAccording to the editor. The goal with all spending, not just during the holidays, is to avoid overspending to help maintain financial stability.
It may sound like a no-brainer, but checking your budget before purchasing holiday sale items is crucial to staying on track. Look for any limitations, such as monthly bills and necessities. Figuring out what’s left can help determine a feasible budget for holiday shopping.
Set gift-giving expectations with your friends and family
In practice loud budget Can come in handy if you’re on a tight budget. This social media trend encourages you to let your friends and family know that you are prioritizing certain financial goals, such as paying off your student loans, and let them know that you may need to opt out of expensive activities or find affordable alternatives.
What does that look like? Here are some suggestions:
exchange gifts
Instead of buying a gift for everyone on your list, encourage your friends or family to participate in a Secret Santa or white elephant. This allows you Buy fewer gifts While still celebrating with your loved ones.
One of my favorite family traditions is exchanging white elephant gifts with my cousins. We’ve set a gift limit between $10 and $25 to make gift shopping less stressful. It’s a fun time for everyone, and we save some money in the process.
Find deals that fit your budget
If you’ve narrowed down your gift list, be sure to keep an eye out for deals to save even more. I always have good luck shopping at my local wholesale club. I can get gift card deals, like two $50 gift cards for $80, automatically saving 20%. Note that as the holidays approach, these known deals may sell out, so plan ahead and remember to stay within your budget.
Give a memorable but less expensive gift
You don’t need to give a gift to enjoy the season, either. Instead, you can mail a card with a personalized, heartfelt message or create a gift from materials you already have. If you haven’t had contact with your loved ones for a while, make it a priority to invite them for coffee or dinner after the holidays to reduce your stress. Budget over the next few weeks.
What to do if you default on your student loans
If you accidentally overspend and can’t make your loan payments, you’ll need to call your loan servicer or lender. Federal student loan programs may provide options to change your repayment plan or defer payments.
Private student lenders, on the other hand, may put your loans into forbearance to give you some breathing room. Just make sure you understand how this will affect your loan and its future benefits. For example, interest may continue to accrue. But it’s best to call before you fall behind, because the longer you wait, the fewer options you have.
