When facing the uncertain future of looming student debts, credit card payments, and other loans that need to be paid back, many of us practice prolonged procrastination and avoidance because it can seem overwhelming to sit down and take a hard look at our family finances. For people living month to month (without savings or a well-paying job) getting our financial situation under control can seem especially insurmountable when we can barely afford to pay the essentials, like food, utilities, transportation expenses, and rent.
As hard as it may be to make the time to take a hard, yet compassionate, look at our situations, the best thing we can do to make a plan for our financial future health is to sit down with ourselves (and our loved ones) and make an effort to get a clear picture of where we are at and where we need to go. Instead of wondering where our money goes each month we can start telling our money where to go, and put it places where it is most needed or where it will have the biggest impact on our future financial health.
There are various apps and software on the market, many of them free for basic services (some premium paid services as well if needed) that can help you get a good picture of where you are right now, but also make projections about where you may be able to go in the future under different scenarios, and by changing only a few variables, like monthly payments.
Zilchworks is arguably the best free software for getting a good idea of where your student loans, or other interest-based loans are (in terms of repaying the loans). On their website they have both basic free and premium paid versions of their tools and calculators that can help you get a great idea of what paying the minimums will really cost you in the years ahead. With the click of a button you can play around with different possible payment scenarios and see how fast your total debt will be paid in the long term, and your cumulative savings by changing only a few variables. They also have a few sample budgets so you can see how their plans look in action, and in real-world situations.
You Need a Budget (YNAB) is a phone app that is great for getting a handle on your spending and other expenditures. It works similar to the “envelope system” for budgeting, but in a digital way. For those unfamiliar with the envelope system of budgeting – each month when you get your paycheck(s) or funds you budget certain amounts for different expenses (for example; food, healthcare, transportation and repairs, clothing, utilities, entertainment, loans, and even modest savings). You put the corresponding amounts of cash in each envelope and once those funds are gone, they’re gone, and you’re not allowed to borrow from other envelopes or use any credit cards to pay your remaining expenses. For people who are addicted to “plastic” this is the fastest and easiest way to force yourself to budget for all your expenses. The amounts in the “envelopes” can also be adjusted each month as needed – and YNAB encourages you to do so. Be sure to enter your receipts and re-visit your different expenditure categories on a weekly basis, see where you are at and where you need to make modifications, and keep on track.
If you are facing seemingly insurmountable student debt it is also important to research and consider if any loan forgiveness, or other student loan consolidation options, are a good fit for your individual situation. You may be a candidate for complete forgiveness of your loans, income-based repayments (that take your current income and family size into account), or, depending on where you are working and where you plan to look for work in the future, you may be eligible for special programs that forgive your loans after a certain period of government, education, or not-for-profit organization work. Do look into your options in this regard to determine if you are a candidate for any of the federal- or state-sponsored debt-relief programs.
Once you are able to get the “big picture” look at your finances, and rein them in under your control, you’ll be able to make all of your financial decisions from a place of being informed and in control of your money, instead of your money controlling you.
What are some of your favorite bill pay or budgeting apps? Share your favorites with our readers in the comments section below.
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