Student tip: Keep loan interest in check with a few bucks a day
As a veterinary student, my job is to learn not only about veterinary medicine, but also about money. Becoming financially literate is a lifelong skill that more of us need lessons on early in our careers. Personally, I’ve tried to go out of my way to understand basic financial concepts and terminology while I’m still in school.
One of the best things I’ve learned is a formula that helps my personal budget. Here it is:
Interest rate (in decimal format) x current principal balance ÷ number of days in the year = daily interest
Depending on a student’s principal balance, the interest he or she accrues is typically around a few dollars a day. If many days go by with the interest accruing on the principal balance, then daily interest will of course go up; a larger numerator with an unchanging denominator produces a bigger number.
It’s easy to keep this daily interest down with a budget plan. By saving just $20 a week at the grocery store, you can put that saved money toward accruing interest and decrease a growing mountain of student debt.
Knowledge is power, and I think if more students are financially cognizant and active, then we’ll see debt-related frustration, anxiety, anger and struggle decrease. Our debt will become not a weakness but a mastered skill.