Millions of graduates are left with an average of nearly $35,000 in student loan debt. As you embark on your career, debt is the last thing you want on your mind entering the workforce. Student loans cans hang around until long after you’ve completed school. In fact, 1 in 5 millennials expect to never pay off their debt. The best way to approach this financial burden is to pay it off as quickly as possible. Follow these tips to help you become student loan-free!
Pay More Than the Minimum
If possible, pay off more than the minimum payments each month. The government will automatically put you on a 10-year plan unless you decide differently. Many take this plan and stick to the numbers they are given without calculating if they could be paying more. Take some time too calculate your income vs. your expenses to see if you could be paying larger amounts each month to help you get to the finish line faster.
Something to watch out for when making larger payments is to ensure your servicer isn’t rolling the extra money into next month’s payment. Call and make sure that your fees are being collecting as one month’s payment to avoid stalling your progress.
Try Refinancing Your Student Loans
Refinancing will help you pay off student loans fast without making any extra payments. If you have good credit and a reliable job, you are more than likely a qualifier to have your student loans refinanced. Essentially, your student loans will be replaced with a single private loan at a lower interest rate. By not paying extra in interest every month, you will be able to pay off your debt much faster. This could shed years off of your current plan.
You are also able to choose a shorter-term than what you have previously decided on. This will make your monthly payments go up, but your overall timeline shrink.
Make Bi-Weekly Payments
Many people believe that paying off debt is a mind game with yourself. Making two payments a month can trick you into paying more off and thus becoming debt-free faster. For example, instead of having to make one large $400 payment each month, Make two smaller $215 payments each month. Paying smaller quantities may help you feel more comfortable and less stressed about these payments, especially for those who have spending guilt.
With this example you are also paying an extra $30 a month even though you may not realize it. Paying an extra $30 may not seem like much, but every dollar counts when paying off student loans.
Take Advantage of Windfalls
Windfall is a financial term for unexpectedly coming into money. No, we are not talking about if you happen to win a billion dollars in the lottery. We are talking about acquiring money through stock market investments, inheritance, or work bonuses/promotions.
Many people take unexpected money and put it towards something fun like a road trip or a new pair of shoes. However, these larger amounts of money are what will help you pay off your student loans debt fast. If you happen to come across one of these windfall scenario during your payment process be sure to use it wisely!
Cut Out Unnecessary Spending
It’s time to put your spending habits under a microscope. If you want to get serious about being debt-free, you have to get comfortable with being uncomfortable. You will have to cut back on unnecessary spending that you have become accustomed to making.
Of course, you don’t have to stop date nights, shopping, and fun activities all together, but you should try to cut back as much as you can. Make simple swaps like hosting friends at home instead of going out, or planning a free date night instead of going to a movie. Budgeting does not always equate to boring. There are plenty of ways to enjoy yourself without carelsslly spending money that could be put towards removing your debt burden.
The question you will have to continuously ask yourself is “Do I want to be debt-free or new shoes? or “Do I want lunch out everyday or to be debt-free?”
Paying off your student loan debt isn’t going to be a quick or easy process, but these tips will help you to make it as smooth as possible. For more tips on getting debt-free, click here!