On this site we’ve covered student debt and how much it can negatively impact your life.
Americans owe $1.48 trillion in student debt and it’s crippling a lot of people the moment they step out of college and university halls.
Yet, once students graduate, a lot of them continue to make bad financial decisions that leave them struggling in life outside of college.
Here’s the deal: there’s no reason why you should spiral out of control or feel shame that you have this debt. You have to be proactive and decide you’re going to get it taken care of quickly.
If that means moving back home as part of the process, then don’t be afraid to do it. Not everyone will settle into the career of their dreams immediately after graduation. In a lot of cases, if you have outstanding debt that defaults, you legally won’t be able to work in your chosen field, as the state will pull your license.
The overall problem with debt is even when you pay it off regularly, most of the payments you make go straight to interest. And you better believe the bank gave you an interest-heavy loan coming out of high school, with no income and a lack of work experience.
If you’re one of millions of graduates suffering with student debt you’re not sure how you will ever get paid off, here are 7 strategies that will help you:
1) Set an Aggressive Payoff Date
If you just stick to paying the minimum amount, you can spend the next 8-10 years paying off your debt, the majority of your payments going towards interest. That’s thousands of extra dollars you don’t need to be paying, and you won’t if you pay more than just the minimum each month.
Rather than sticking to the minimum, set a more aggressive payoff debt. It’s very possible to pay off your debt in 3-5 years instead of 8-10. Having a sooner date will keep you motivated!
2) Look into Refinancing
Your current rate doesn’t have to be the same rate you pay throughout the life of your loan. If you’re doing well after you graduate, you have a job, making decent money, and your credit score has improved, then you can refinance your loan and get a better rate. You can ultimately save thousands of dollars by refinancing.
3) Do Your Research
As discussed in the first strategy, a lot of your payment goes towards interest. Whatever you pay after that goes straight to the principal amount. It’s always a good idea to have a working understanding of how your loan operates, how much of your payment goes towards interest, and so on.
If you have more than one loan, you can decide to pay the smaller one off sooner (which can motivate you big time). What you decide is up to you, but you really can’t get into the game without knowing your numbers and having a good idea how it works.
4) Don’t Go the Forbearance Route!
It’s always tempting to want to push off making payments, but it’s not practical! You might be thinking you’re buying yourself some time, but the interest will still add up! You can add thousands of dollars’ worth of interest this way, only making the process take years longer. So, even when money is tight, pay your bill.
One of the first steps in achieving this freedom is asking for help. We are the experts in taking care of student debt problems, including refinance and debt consolidation. If you have any questions about your options, give us a call at the number below!
5) Look for Ways to Cut Your Spending
This part will suck, but remember, it’s only temporary! If you want to get rid of your loans sooner, cut back on spending. Can you forgo the vacation for the next couple of years and apply that money towards the loan instead? Maybe consider a cheaper car, cutting cable, and waiting to buy that house. Your #1 goal should be getting out from under this massive burden.
There are lots of things you can do to help make the process go faster:
-Get a roommate to help share the bills.
-Get a second job or even a side hustle.
-Give up the luxuries. If you don’t need that gym membership or the extra subscriptions, cut them!
-Move back home. If your parents are willing to help you out, take the time to settle in your new career while paying less bills, allowing you to pay off your debt sooner.
6) Keep Track of Your Payments
A great way to stay motivated is keeping track of your payments. With each payment you make, you can see your overall total going down, which is such a good feeling. You can use a spreadsheet or just record the numbers in a notebook. Either way, keeping track is effective!
7) Don’t Give Up!
I know it’s tough looking at that big number and staying motivated. It might make you want to push off paying it, or avoid is as much as possible. This is the worst thing you can do, as mentioned previously, the interest will still rack up. The only way to get rid of it is to pay it off. Declaring bankruptcy won’t touch your student loan.
It’s a lot of money, but you can do it! And if you’re proactive, you can do it in a few years. Even if money is tight, keep paying. Before you know it, you’ll have achieved financial freedom and can move on with your life.