Grads now face paying off student loan debts

Buffalo, N.Y. (WBEN) - Many students crossed the stage this past weekend to pick up their diplomas, and are now facing the obstacle of paying off student loan debt. One financial planner has advice as grads also have new income from their jobs.

Michael Angelucci of Level Financial Advisers suggests looking at ways the government can help you pay off that debt. "The government does offer a number of programs that will allow you to extend your payments, and even to the extent that if you extend those payments, and you work for a nonprofit, you could potentially after 10 years have your debt forgiven," explains Angelucci. He says there are also income based plans that will adjust the payment based on your income.

Some grads are moving out of their parents' homes and living on their own. That means expenses like rent. "A lot of young people are getting apartments with one or two other people in the apartment with them to cut those costs. Because we know those lease costs are," says Angelucci. He also says don't buy that brand new car. "Go for a cheaper, used car, something that is efficient, that's not going to hurt you at the pump," he notes.

Josh Moshier also works at Level Financial, and is balancing the paydown of debt with new income he's earning with his job. He says one peril is lifestyle creep. "Being fresh out of college, you get a huge increase in income, and it can be very difficult not to buy all the more lavish items that you've thought about while you're in college like a nice watch or a new pair of shoes," says Moshier. His advice is to build a base budget first, based on what your fixed expenses will be. "What I did for my student loans was, I pay them off over 10 years. So I figure out what's the minimum monthly amount my need for that, and then I add that to my rent, and my other fixed expenses. And that kind of gives me an overall picture of what my cash flows look like," explains Moshier.

Moshier says he gave himself a bit of wiggle room in putting his budget together. "Let's start with the minimum (debt payment). I'm gonna give myself maybe a three to four month window here to track my expenses, and then kind of figure out what the average is for each area. Then from there, I was like, I have a $500 cash flow excess every month," which he would apply to his loan payments. He says it's an art and a science to balance things out.

Angelucci says another factor to think about: the future. He says if you employer offers a matching 401k, take advantage of it. 'Even if you can only do 1% or % or 3% of your pay. do that because then the employer is going to match you," explains Angelucci. He says if you can do this now in your 20s it'll go a long way later in life.