Smart Post-graduation Financial Plans Will Pay Off – College graduates have a lot to think about — finding a job, finding a place to live, figuring out how to manage their finances. Whether or not you graduate with student loans or other debt, creating a post-graduation financial plan will pay off later. Develop good financial habits now and make it more fun for “grown-ups”. Get started with these time-tested tips:

• Set aside savings. Once you start making money, it’s time to start saving. Most financial planners recommend that you aim to save 20% of your income, but even 1% is a good place to start. Don’t let the ability to save 20% scare you off from getting into the savings slot. If you set up an automatic savings system, you can save without thinking. Set up direct deposit so that some of your paycheck goes into a separate savings account, or have some of it sent directly to an employer 401(k).

Smart Post-graduation Financial Plans Will Pay Off

• Spend wisely. Think about budgeting now so you can reap the benefits later. “Break your take-home income into three parts: 65% to 70% for living expenses and debt service; 10% to 15% for entertainment, vacations, and gifts; and 20% for savings.” For, ” Certified financial planner professionals recommend Tom Morris. To help with budgeting, Morris recommends budgeting apps like Mint and You Need a Budget (YNAB).

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• increase profit. Your salary is only one part of your financial picture when considering job opportunities. Be sure to review employee benefits and take them into consideration. Preferred benefits include paid time off, health/life/dental/vision insurance and healthcare spending accounts such as health savings accounts, flexible spending accounts and health payment arrangements. Other benefits that can save you money include relocation expenses, long-term or short-term disability insurance, tuition reimbursement, child care benefits, gym memberships or discounts, and wellness plans.

• take care of yourself. Many young people think they are invincible, but in today’s uncertain world, protecting your earning power is important. Check out disability insurance, which can help cover you if you have a serious health crisis that prevents you from working. Some employers offer disability insurance, but you may want to consider getting more. Policies can be complicated, so do your homework or consult a CFP® professional to find the right coverage for you.

• Reduce your debt. Most college graduates have some ongoing debt that needs to be paid off, whether it’s a car loan, student loan, or credit card bill. Automatic monthly payments are a great way to make sure you pay on time to avoid late fees or other penalties. By Michelle Black Arrow Right Staff Writer Michelle Lambright Black is a credit specialist, freelance writer and certified credit expert witness with 19 years of experience. In addition to her writing, Michelle’s work has appeared in numerous publications, including FICO, Experian, Forbes, U.S. News & World Report, and Reader’s Digest, among others. Connect with Michelle Black on Twitter Connect with Michelle Black on Twitter Connect with Michelle Black on LinkedIn LinkedIn

Edited by Chelsea Wing Chelsea Wing Arrow Right Student Loan Manager Chelsea has been in office since early 2020. She works to help students navigate the high cost of college and navigate the complexities of student loans. Connect with Chelsea Wing on LinkedIn Linkedin Chelsea Wing

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If you are having trouble paying off your federal student loans, income-driven repayment (IDR) programs, such as Pay Income Payment (PAYE) or Enhanced Income Payment (REPAYE), can help.

PAYE and REPAYE are payment plans for federal student loans that set your payment at 10% of your discretionary income. After 20 or 25 years of payment, your balance will be forgiven.

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Choosing REPAYE or PAYE depends on your financial hardship, your preferred repayment period and whether you are married. PAYE is usually the best option for married borrowers, while REPAYE is usually the best option for single borrowers.

Government pays additional interest on subsidized loans for three years, followed by 50% in subsequent years; government always pays 50% additional interest on unsubsidized loans

Pay As You Earn is an income-driven repayment plan that typically bases your monthly repayments on 10% of your disposable income, but your repayments cannot exceed 10 years of repayment The amount you will pay under the plan.

Also, if you are married but filing separately, your spouse’s income will not be counted. According to student loan expert Mark Kantrowitz, PAYE offers the lowest monthly loan payments for most borrowers. After 20 years of repayment, your student loan balance is usually forgiven.

What Student Loan Forgiveness Means For You

Only direct loans to students are eligible for PAYE, although some combined FFEL and Perkins loans are also eligible. To be eligible, you must be a new borrower (no outstanding loans prior to October 1, 2007), and your loan must be paid off on or after October 1, 2011.

With PAYE, your monthly payments may be too small to cover the interest your loan earns each month. This is called negative immunity. Additional interest charges on subsidized loans are not capitalized under PAYE. Accrued interest means that unpaid interest is added to your loan principal balance. Instead, the federal government pays for the first three years of your plan. If you leave the plan, some of the interest can be invested.

Modified Pay As You Earn is an income-driven repayment plan that limits federal student loan repayments to 10% of discretionary income. However, there is no limit to monthly payments. If your income increases, you may pay more than a standard repayment plan.

Additionally, REPAYE has a “marriage penalty”; your loan payments are based on your and your spouse’s income, even if you file your taxes separately.

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Repayment terms of REPAYE

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