Below is a post from my sister at Making Sense of Cents. Enjoy!
When I first graduated from college, I was very stressed out about my student loans. I had already been living on my own for several years and working full-time, but I made the mistake of not paying off my student loans in any manner whatsoever.
When I finally graduated from college, I received a letter from Sallie Mae stating how much I would owe each month.
The amount shocked me and I couldn’t believe it. I knew at that very moment that I needed to pay off my student loans quickly.
I didn’t want to be paying off hundreds of dollars in student loans for the next couple of decades – I knew that just wasn't for me.
So, I went on a mission. I took the actions below and I was able to pay off my student loans within 7 months of creating my plan. You can do it too!
Paying off your student loans as quickly as you really are able to (or at least figuring out how to refinance student loans) is always a great idea. Below are seven ways to pay off your student loans fast.
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1. Come to terms with reality
Many who have student loans do not know how much students loan debt they actually have. The very first step you should take when it comes to managing your student loans is to add up all of your student loans and write down their interest rates.
I recommend that you find out who your student loans are serviced through (if you do not know) and/or find your student loan documents that tell you how much you have taken out and what your interest rate on them is.
Almost all student loan lenders offer classes and FAQs on your student loans and taking part in them may help you understand your student loans better.
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2. Create a debt payoff plan
After you have come to the realization about how much student loan debt you have, you will want to figure out how much you should attempt to pay each month so that you can pay off your student loan debt early.
If you want to pay off your student loans fast, you will most likely have to pay more than just the minimum payment each month.
While it may seem difficult, if you are able to put double, triple, or even more towards your student loans each month, then you may be able to drastically cut down on the interest you are paying and the term of your student loans.
3. Eliminate high-interest rate student loan debt
If you want to save the most money and pay off your student loans the quickest, then paying off your student loans from the largest interest rate to the lowest makes the most sense.
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4. Cut your budget
The next thing you will want to look at is your budget. Are there any expenses that you can cut out so that you can put more money towards your student loans each month?
Even if you are only able to cut out $50 a month, that’s $600 more each year for your student loans. That could be an extra few payments that you are able to make!
Some things that you may want to look at in your budget include:
- Your entertainment spending. How much are you spending at the movies, on going out for drinks, and so on?
- Your coffee spending. While everyone brings this up when it comes to cutting your budget, small expenses like a $3 or $3 coffee can quickly add up.
- Your memberships or subscriptions. If you are a member or subscribe to anything such as a gym membership, cable, and so on, you may want to evaluate whether or not those expenses are worthwhile to you.
5. Earn side income
Earning extra money on the side may allow you to pay off your student loans quicker than ever.
Whether you are able to devote an extra hour each day or an extra 8 hours a day, earning side income is something that everyone can do.
You could find a part-time job, start a business, sell items on the side, and so on in order to earn extra money.
6. Put small amounts towards your student loans
Putting small amounts towards your student loans can make a significant impact over time.
If you are able to sell an item for just $25 or if you manage to find an extra $20 in your budget, then putting it towards your student loans is much better than spending it carelessly each month.
If you are able to do this a few times a month, it can greatly help!
You could even make a change jar and every 6 months put everything towards your student loans. It will add up quickly and it’s money that you will most likely not miss.
7. Set up automatic payments
With most student loans, you may qualify for a 0.25% interest rate reduction if you set up an auto payment each month.
While that percentage may not seem like a lot, it will help you save money over the life of your loan, plus it's an easy way to save!
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How long do you plan on “keeping” your student loans?
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