4 Tips for Tackling Student Loan Debt Quicker | Molly’s Money
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Ahhhhh student loans. Sometimes they are a necessary evil when it comes to getting an education. As much as some would love to avoid them, it’s often just not possible. But, that doesn’t mean you have to become a slave to them when it comes time to start paying them off.
You don’t have to feel like you’re staring at 5, 10, 15, or even 30 years of debt… you CAN pay them off sooner. It’s just a matter of purpose, planning, and a little know how.
Here are FOUR TIPS for paying off those student loans just a little faster…
1. Get an extra part-time job
One of the best things you can do is get a part-time job and take ALL the money you make at that job and throw it at your debt. Don’t spend that earned money on ANYTHING else. Just mentally prepare yourself for the fact that every dollar that comes in from that job is getting put towards your student loan debt. You’ll be surprised at how quickly that debt disappears once you make a commitment like that.
2. Treat your student loan debt like a mortgage
Similar to a mortgage, the longer it takes you to pay off your debt the more interest you will pay. And interest is pretty much the worst. It’s like throwing money away. So, the more money that you can throw at it early on – even an extra $10 here or $50 there or $100 everywhere, the quicker it’s going to go down and the less interest you will pay… thus, you could save hundreds, if not THOUSANDS of dollars over the course of a few years.
3. Write out a written plan
By taking the time to sit down and WRITE out a plan for HOW you’re going to tackle your student loan debt gives you the drive, the motivation, and the PURPOSE for which you’re going to pay off that debt sooner. Without a plan, it just becomes this nebulous thing that you pay for each month and it can seem really overwhelming. It’s pretty much a proven fact that people who budget, plan, and set a course of action for their finances are going to be successful in achieving their desired goals.
4. Consolidate your loans
Now, I have a caveat, ONLY do this if you are going to be able to consolidate and LOWER your interest rates. There are a lot of companies that will take all the loans you have and consolidate them into one payment for you and bring your interest rate down. This way you don’t feel like you’re tackling seven elephants… you just feel like you’re taking on ONE (with a much smaller trunk, or something).
Now what about you? What tips would you have for someone who is looking to get rid of that pesky college loan debt quicker?
I had seven separate student loans through three lenders and looked at consolidation. My highest interest rate was 6.8% (the federal loans), and the best consolidation rate I was offered was 9%. While having one payment would’ve been nice, it would’ve made zero sense. I set up auto-debit and have interest rates below 3% on my two remaining loans after months of paying on time.
I work a part-time job in addition to my full-time job plus live at home so I can put more money down on my student loans.
Like @Robin_Daggers:disqus said, go ahead and get a jump start on paying! I’m in optometry school right now, and racking up student loans by the minute. However, my husband and I pay a little each month even though we are not yet “required” to. This often applies to the principal, directly taking some off the top of the loan. We actually have set up an auto-pay of a certain amount each month so we won’t miss an opportunity to pay on it. Every so often, we assess our finances and pay a larger sum on the principal. Also, if you are in school now, assess your budget at the beginning of each loan disbursement cycle and make sure you are taking out only the minimum necessary. This prevents building interest on loan money you really don’t need. This has been a key in taking out less than many of my classmates.
I hate, hate, HATE, student loans. I was very blessed that my parents paid for my college education. However, my husband has more than $30k and we are barely making a dent! I do not want to be paying on this until we’re 70 so we are going to try to make larger payments very soon.
If you’re still in school and not yet required to start repaying that debt (or if you’ve gone to grad school and your payments have been postponed) it’s a great time to make payments anyway. When I was an undergrad NOBODY told me that I could have been making payments as I went along. Fortunately I figured it out early on and even if I could only pay $10 a month I did it. As a result, I came out of college with about $5,000 less in debt than I would have overall, and much less interest over time. I was able to pay off the remainer in four years instead of ten.
My husband and I decided to put my entire salary towards paying off debt and just live off of his income. We were debt free in 5 months.