In the second quarter of 2019, US student debt exceeded $1.6 trillion. Student loan debt is the most overwhelming debt a person may undergo. Student loan debt has the potential to hinder home purchase, vehicle purchase, and other milestone purchases a graduate may want to enjoy.
While several recommendations and resources are available to graduates, the ability to successfully pay off student loans as quickly as possible ultimately depends on the income a graduate is receiving. The more income a graduate has depositing in their accounts, the more money they are able to set aside for the debt. If a graduate is working a job with a less favorable salary, however, their payment plan will be more lengthy and difficult to complete.
Rather than following a suggestion to use funding initially stored in savings accounts for long-term savings or retirement, other methods have been recommended to pay off student loans as quickly as possible.
Limit Necessary Expenses
Necessary expenses is funding budgeted toward necessary services. Necessary services include grooming services (haircuts, waxing, etc.) and grocery services. Rather than utilizing a boutique or posh establishment to have these services done, search for training schools or coupon deals for discounted services. Groupon in particular is an excellent forum that provides discounts for necessary services.
Another way to minimize necessary expenses is to seek out side gigs that come with dual benefit opportunities. For example, a part time side gig at a grocery store or restaurant come with the benefit of free or discounted food and groceries.
The goal is to minimize the amount of expenses to as little as possible so there is a higher portioned amount of money to go towards the loan payment.
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The payments towards the student loan must be made on time. To aggressively pay the loan off as quickly as possible, payments must also be more than the required minimum.
Managing several debts at once can be difficult if you are not sure which debt to tackle first. As a general rule of thumb, the debt with the highest interest rate should be paid off first as quickly as possible. Alternatively, if all of the debts have the same interest rate, or if none of the debts have a high interest rate, pick the debt that upsets you the most to pay off first. An upsetting debt can be a student loan from a university where you did not have a pleasant experience, or a credit card debt that is attached to someone you do not favor.
If you are a person who struggles with keeping up with payment due dates, be sure to set alarms or make notes in your personal calendar a few days prior to the due date, and add subsequent reminders leading up to the due date of the payment.
In the unfortunate event you find yourself in an emergency where you do not foresee you are able to make your loan repayment, contact your loan service officer as soon as possible. Let the loan service officer know your circumstances and see how they can work with you. Communication will usually result in the loan officer agreeing to some sort of resolution that provides you some relief until you can financially get back on track with your repayment plan.
Be transparent and honest with yourself, list your spending triggers. If a bad day causes you to engage in retail therapy, or if you notice you have a habit of buying take out for lunch or purchasing daily morning coffee, take note of these. Admitting these triggers and bad habits serve as acknowledgement that they need to be changed. The acknowledgement will serve as a motivation to remain strictly disciplined to your budget.
Listen to your feelings. When you feel a trigger coming on to unnecessarily spend, but there is a fighting force telling you not to engage, follow it. Your feelings will usually lead you to become motivated to pull yourself out of debt and towards financial freedom.
Before choosing your loan term, educate yourself on the interest rates associated with the particular loan terms. Ask questions to the loan officer and discuss your goals to determine which loan is the best fit for you.
The key to paying off student loans is to minimize your spending as much as possible, while simultaneously, bring in as much income as possible to designate towards the loan debt. Paying off student loan debt is achievable with the right discipline and dedication.