Pay off your student debts asap with these tips
Paying off your student loans can feel totally overwhelming; however, it does not have to be. Whether you will be graduating from college soon or trying to get rid of student loans for a decade, you can create a plan for paying off student loans faster.
Let us outline some expectations first. There is no magic strategy for paying off your student loans. There is no special trick to share to help you pay off the student loan overnight. Sorry, guys.
However, the following steps can get you fast on track to getting rid of your student loan debt for good. Bear in mind that paying off student loans takes time, hard work, and sacrifices. But it is doable, so let us make it happen!
Create a budget
This is serious. If you are not already doing this, today is the time to create a budget and stick to it. A zero-based monthly budget will show you where your money is going and where you can cut back. You might even find ‘additional’ money you didn’t know existed.
Put that money toward student loans per month, and you will be making progress in no time. You can put a line item in your budget with the free budgeting app EveryDollar for every student loan you are paying for. This way, you will see the progress as you keep crushing that student loan debt, and you will see the progress.
Pay more than the minimum payment
You have possibly heard this tip before. As long as you are only paying the minimum payment per month, you are not getting anywhere fast. You may not even be breaking even with interest you are piling up. But you will be able to attack the amount you owe at a quicker rate by making larger payments. You can apply the student loan payoff calculator to identify how fast you can pay off your loans by making additional payments.
Note that when you pay more than the minimum monthly payment, the student loan servicers may put that extra amount onto the next month’s payment. This will push the due date back; however, you will not actually pay off your loan any faster. Request your loan servicer to keep next month’s due date the same and to apply the additional amount of money to your current loan balance. With all that said, if you are having trouble even making the minimum payment per month, you might think paying more money is a joke, but the next point will help you through.
Make some financial sacrifices
Remember when we talked about sacrifice earlier? It comes to play here. Look at your lifestyle and cut any extra stuff that you have been living with that you can actually do without. Say goodbye to subscription boxes, and cable packages. You can even cut your housing cost in half by finding a roommate. If you have a guest room that is not getting much use, go ahead and rent it out. Just visualize how faster you can pay off your loans if your housing costs were cut way down.
How about selling some things you do not need anymore? Go through your garage, closet, and storage to check what you can put on Craigslist or eBay. Now, add up what you spend eating out every week. Start making food instead of eating out- there are many ways to get creative and save.
Take out a different kind of credit
If you are an adult with a regular job, you should qualify for credit in the same way your older friends, parents, and relatives do. That means a world of credit cards and loans is open to you, and you can refinance your student debt and get better repayment terms than the one you currently have. If you are concerned that repaying your student loan will take too long, get a three to five-year loan for the value of the debt, pay the student debt off, and then maintain your monthly loan repayments over the shorter term. It may cost more per month over those years; however, the debt will be gone much faster. Based on the terms you were provided when you signed your student loan agreement, it may be possible for you to attain a lower interest rate, indicating you pay less back overall than you would by keeping the original loan.
Keep living like a student
There are two main stereotypes about the student lifestyle, both of which are valid to some extent. First, students party and drink heavily. Students’ parties do occur; however, we are sure that you know all-too-well that having the money to go out, and the party is a rare luxury, especially when you have a debt to pay. The other stereotype is that students often live very frugally, and can survive for several days on baked beans if they are waiting for a loan payment to come through. Whereas this is a necessity more than a choice, that frugal lifestyle will teach a few skills. It might be tempting to buy nice things and rent a nice apartment from your first job; however, if you can live like a student for a year or even two after you graduate, you can possibly shift that student debt in no time. Consider it as short-term pain for a long term gain.
Use windfalls responsibly
If we win, get gifted money or inherit some money, the first thing any of us want is to go out and blow it or spend it on a major purchase. This is merely human nature.
However, would it be better to use it to pay down your debt? If you played online slots and won a jackpot, your mind will start thinking vacation; but, you will know in your gut that your unexpected online slots fortune should be put to more responsible use. Moreover, you should not really be playing online slots while in debt; however, the purpose of this post is not to judge you.
Consider the 50/50 principle- if you win or come into money that you were not expecting and have not planned for; Use half of it to pay your debt and then keep the other half for yourself. That feels fair and balanced.
Increase your income with a side hustle
If your biggest challenge is income, pick up a part-time job on the weekends or nights to help you stack cash faster. Then, toss that additional money directly at your student loan debt. There are many side hustle options out there- everything from walking dogs, driving Uber to house-sitting.
Just remember that a side hustle will not last forever. You are just trying to get intense and kick that student loan debt out of your life.
Do not bank on student loan forgiveness
Probably you were told taking out student loans was not a big deal since you could be forgiven later.
However, student loan forgiveness is not really a dream come true it sounds like. There are many requirements you have to meet to be eligible (such as working in a public service job for ten years). And even then, forgiveness is not assured. You are better off having a job that pays well- that you actually like- so you can go ahead and pay off the loan as quickly as you can. This way, you will not spend years of your life waiting to have your loans forgiven.
Apply for every tax refund and rise toward paying off your student loans
For most people, when they get a raise, they blow it through like it is nothing. And then they start wondering why it felt like they did not get a raise. As you keep making it in your career and getting promotions as you go, put some additional income toward paying off those student loans. Do not move to a nicer house, buy a new car, or even purchase designer threads. Do not even think of upgrading your smartphone. Use the income to boost to make significant progress in your flight against student loan debt.
Volunteer your time
Few people are aware of this method; however, it is viable as far as you live in an area where an ideal scheme is in operation. You might be able to have some of your student debt paid off by a third party as far as you are inclined to volunteer some of your effort and time for good causes. Organizations such as SponsorChange provide these schemes and will make pre-agreed payments against the balance of your student debt upon the completion of particular programs and tasks. If you are a charitable-minded person who does not mind putting in the effort to assist people or cause less fortunate than yourself, then this is a double win. You get to go out and do well, and the longer you do it, the more your student debt goes down.
Work in the public sector
Hopefully, you will have a long and successful career, and the possibilities are that you will not spend all of it in the same job.
If you are staring at a huge student debt that you may still be repaying when you are fifty, there is another shortcut. Begin your career in the public sector, and stick it out there for a while. As discussed earlier, it may not be ideal; however, you can choose valuable professional experience while you are there. You can earn a good salary if you progress up the ranks while you are there.
After you have been engaged in public sector work for ten whole years, most of your student debt will be canceled. You will either have no balance at all or low residual balance. At this point, you will be free to pursue the career you always wanted to pursue and ten years of professional experience, which can be useful in that endeavor. Sadly if you live in Europe, this method only works in the United States of America.
Typically, if you put more effort into your student loan, it will be gone even before you know it.