New Year, New Outlook on Finances: How I balance student debt and save

This post is sponsored by BECU. All opinions are my own.

I’m partnering with BECU
this year to focus on financial health and well-being as well as to open up
about my journey with debt and savings.
BECU is a member-owned credit union focused on helping increase the financial
health of its members

I feel passionate about this partnership as my personal
relationship with money and finances has fluctuated up and down in my life. In
2019, I’m working towards clear debt and
savings goals and I’m empowering you to also own your finances in the New Year.

Today I’m opening up about my $30,000 student loan story, my
long term goal with paying off this debt, and my three main savings goals of
2019.

My $30,000 student debt:

At 17 years old, I sat down and filled out my FAFSA for the
first time. I turned as grey as the January skies when I pulled my parent’s tax
returns and I learned my parents had no savings for me to go to college.

Like many immigrant families, my family came to the United
States with hopes of a better life. The education and opportunities in America outweighed
the Philippines. While my parents knew that college was the way out of hardship,
they did not know the price of an
education. My family did not know that the average cost of college per year
would be $20,000-$25,000. 

My parents came forward and let me know that they only made
enough money for us to live paycheck to paycheck. They’re combined income of
$70,000 a year was barely enough for our family of four. I felt sick when my
FAFSA determined that my family’s EFC (expected family contribution) was $8,000
a year because I knew my parents did not have that money.

But I knew that a college degree was destined to be my next step.

I didn’t want to wait or attend community college. I was ready to start my future at a four-year institution. I was motivated and I knew I had to make this work. So, I accepted that I would graduate with debt – and that I would make this financial investment (my degree) worth it.

My parents agreed to pull out federal loans alongside of me
for my first two years of college. And my junior and senior year, it was up to me to make ends meet. I
financed my total education with $30,000 of student loans and the rest in
scholarships, federal grants, and the money I had saved working two summer
internships at the Boeing Company.

I had so much fear and stress around how my student loans
would affect me after I left college. I was worried I wouldn’t be able to save,
to pursue a master’s degree, or live a life without financial hardship.

Life after Graduation:

My loan repayments started 6 months after graduation and I
was surprised that my life actually did
not end. I was working full time at PepsiCo, exploring Orange County and
LA, and traveled quite a bit my first year out of school. And I realized that I was paying my student loans and I still could
save and have fun.

It’s been four years since I started paying my student loans
back and in 2019 I’m setting bigger savings goals than ever. I wish I could
tell my 18, 19, 20, and 21 year-old self that the student loans aren’t going to
bury you. You can absolutely balance
your student debt with saving.

I’ve learned throughout the years that it’s about how you
choose to see your debt and finances and setting realistic goals.

How I approach student debt:

To be honest, I had a lot of shame around the debt I took
out to finance my education. There’re so many people out there questioning
whether degrees are worth it or not. But I knew I wanted and needed my business
degree so these last few years I’ve really tried to let go of the shame around
student debt.

A year out of college, I discovered Rich Bitch by
Nicole Lapin. Through her book I learned that you can change your outlook around debt by
prioritizing your debt by interest rates. BECU also has tips on ways you can reduce
debt while still saving. I realized that this is how I would
prioritize the debt in my life:

1. Credit Cards – 19-25%
2. Car Loans – 4-6%
3. Government Student Loans – 3-6%
4. (I don’t include a home and mortgage loan
   because I don’t own a home yet.)

I realized that my student loans had lower interest rates
than my car and credit card. So, rather than focusing all of my efforts in
paying off my student loans, I realized that I could make my monthly student
payments while paying off the travels I put on my credit card and my car loan.

My long term
financial goal for repaying student debt: December 2023

Personally, I plan on paying off my student loans in 5
years. I’ve budgeted the $350-400 a month of student loans since I graduated in
2014. In December of 2018, my remaining loan balance is $19,500.

To me, this debt is a line item in my budget and it doesn’t
overshadow or prohibit me from saving towards my other financial goals. If you
need help setting a budget, try out BECU’s interactive
budgeting guide.

How I approach saving while balancing student debt:

If you’ve set clear debt goals, you can also set clear
savings goals. I’m starting off 2019 with 3 clear short-term savings
goals. 

1. I’m making a separate savings account for my trips this year.

Savings
Goal End Date: December 2019

I recently took a BECU
Budgeting Class and learned that I can create a separate savings
account to help me save for all my 2019 travels. I’m heading to San Francisco,
Yosemite National Park, the Philippines, Japan, possibly Singapore, and New
York Fashion Week in September. 

Through the BECU Budgeting Class, I learned that I can add
up the total cost of the trips, divide by 12 months, and make it a priority to
put away few hundred dollars each month for those trips.

Example:

2. One of my biggest saving goals in 2019 is to turn 3 month emergency fund into 6 months’ worth of savings.

This is also a separate savings account.

Savings
Goal End Date: December 2019

When I graduated from college, I made it a priority to put
at least 3 months’ worth of my cost of living in savings. Four years later, I
know it’s time to put 6 months’ worth of
my cost of living in savings.

Why does an
emergency fund matter? While you may be healthy and employed right now,
you don’t know what the future brings. Your company could be hit with layoffs
or a medical emergency may happen and you may need to take time off work.

I updated and calculated my monthly expenses, multiplied it
by 6 months, and subtracted my initial 3 month savings. I took this remaining
amount, divided it by 12 months, and I’m making it a priority to save at least $300 a paycheck to put towards this
emergency fund.

3. Save and stick to my eating out budget.

Savings
Goal End Date: December 2019

I rarely ate out in college and was so strict about my
$30-35 weekly grocery budget for four years. When I graduated from college and
started working full-time, I was so excited and relieved that I could eat out
and actually spend more than $35 a week in food. I spent my first year out of
college exploring and brunching my way every weekend through LA. While it was
so much fun to try new brunch places, I learned after my first year out of
college how expensive eating out can be.

I’m saving at least $200 a month to eating out which equates
to eating out 2-3 times a week in the Seattle area. This eating out budget
includes my weekly Starbucks trips, random bubble tea, ice cream trips, and of
course, brunch.

In 2019, don’t let your student debt or lack of savings define you.

Here are a few tools that BECU offers:

You can pay off your debts and you can save. You can own your finances.

You have to be honest with yourself, sit down, and lay out your student debt, overall debt, and savings goals. If you need help or want somebody to talk to, you can always schedule a free financial health check session with BECU. In 45-60 minutes, a BECU representative can look at your accounts and help you make decisions about savings and debt management.

Another BECU tool I love is Money
Manager. When you are logged into your Online Banking, you click on
the “Budgets” tab in the top right hand corner. An interactive infographic pops
up and it shows you your highest spending categories. It was no surprise that
Shopping (includes Amazon, Groceries, and shopping for clothes) and Food were
my highest categories. This tool is a great way to see where most of your money
goes if you’re looking to create your first budget.

You can also join an online FREE webinar about Budgeting
with BECU! The next one is February 5^th and the webinars are hosted
live. You can view the all the available dates for 2019 on the Free
Seminars & Webinars page.

Lastly, remember to write out those student debt and savings goals and add a date to reach your goals by. According to Huffington Post, you’re 42% more likely to achieve your goals when you write them down. Here’s to a new year and a new outlook on finances.

Thank you for reading!

Love,

Emma  

Photos: Karya Schanilec

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