The journey into entrepreneurship can be a very fulfilling experience, with the option to work on projects you believe in and do the work you love every day. Taking this leap also comes with the challenge of drumming up and scaling your business, while generating enough revenue to not only cover business expenses and reinvest but also to pay yourself, well.
In addition, if you are a Millennial with student debt, there is the added responsibility of meeting your repayment obligations, since your student loan lender does not care much about your entrepreneurial endeavors. You will definitely need to have a personal financial cushion on this journey to meet both your essential living expenses while accounting for your monthly student loan payments.
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Understand the Type and Terms of Your Student Loan Debt
Student loans can be private or federal, with fixed or variable interest rates and different repayment and deferment options (Note: Caribbean student loans are considered private loans). Make sure that you understand the types of student loans that you have, their interest rates, the minimum monthly payment required and the repayment options available to you.
Private student loans usually have more rigid repayment requirements and should be prioritized in your personal budget, to pay every month. When it comes to federal student loans, deferment or income-driven repayment options can be used to lower your payments, while you scale up your business.
Keep in mind, that deferment or income-driven plans are not necessarily a long-term strategy for paying off your student loan debt. Regardless of the required minimum payment, you should always aim to make payments that cover the monthly accrued interest. Not doing so can lead to a larger principal balance and an increase in the total cost to you, over the life of the loan.
Minimize Your Personal Expenses
In order to meet your student loan obligation, while you are building your business, cut back on your discretionary personal expenses, like entertainment and eating out, and major costs like transportation. Making these temporary sacrifices can allow you to increase the mileage of your personal savings and help you to comfortably accommodate your student loan payments.
Generate Income Fast
While you are working on your amazing, well thought out program, product or service, it is important to generate income in your business quickly and to have a plan for growth. Consider offering digital products, paid webinars or even freelance services on the side, to get revenue flowing. You cannot afford not to when you have student loans.
While you are working on your amazing, well thought out program, product or service, it is important to generate income in your business quickly and to have a plan for growth.
Barter for Services
Every dollar that you do not have to spend on your business, is a dollar you can put towards your financial responsibilities, including your student loans. Look for opportunities to barter for services with other entrepreneurs, where you can offer and exchange valuable services. For example, you can offer to write a freelance article on a topic in your expertise for an online magazine startup, and receive a branded graphic design service in exchange.
Apply for Small Business Prizes and Pitch Competitions
Accessing free money is a great approach to get funding for your business. It will also enable you to preserve the personal funds you will need to make your student loan payments. Check out this $25,000 FedEX Small Business Grant or the opportunity to win $10,000 from Black Enterprise’s $10,000 Pitch competition and search other opportunities for free money.
Student loans should never discourage you from becoming an entrepreneur but are real obligations that you must account for when you take the leap. Use these tips to make the challenge of balance student loan debt more manageable along the way.
Student loans should never discourage you from becoming an entrepreneur but are real obligations that you must account for when you take the leap.