In the past few years, student loan debt has become an epidemic. With prices of education rising so high that even state schools are becoming out of reach without the aid of loans, more and more students have been borrowing large sums of money. According to The Project on Student Debt, 69% of graduates in 2013 had an average balance of $28,400 and that number is only growing.
But like all borrowed money, it has to be paid back. Although paying off student loans can seem like a daunting task, it can be done. If you want to pay off your student loans quickly, here are 4 tips to get started:
Think of It as An Investment
Any money put toward student loan debt acts as a sort of investment. If you have interest rates of 7.9%, and you pay down debt, it is like getting a return on your investment of 7.9% guaranteed. When you adopt the mentality that paying off debt will reduce how much interest accrues every day, the idea of paying a bit more toward it here and there begins to seem a bit easier. Paying more early on will significantly reduce the total amount you would pay over time, freeing up that money for other important financial goals.
Pay More Than Once a Month
Many people simply make a payment to their debt each month, to keep up with their monthly payments. However, your interest most likely accrues every day. If you pay only once a month, that's a whole 30 or so days that your interest is allowed to grow, making it that much more difficult to make a dent in your principal.
Consider making smaller payments each week to cut down on interest and get motivated by seeing that balance go down!
Put All Extra Money to Debt
If you are effectively maintaining your lifestyle on your regular income, then one of the best ways to use unexpected money is to throw it straight at your debt. Did you get an unexpected tax return? Did someone send you some extra cash for your birthday? Did you find cash on the street? Think of extra money as just that and don't add it to your budget. It can be tempting to spend, but it will work harder for you if you put it towards debt.
Cutting back is a great way to save money, but if you really want to expedite your student loan payoff, you have to earn more. You can do this in a variety of ways:
- Ask for a raise
- See if you can work overtime
- Sell your used items like books, CDs, etc.
- Start a side hustle such as babysitting, pet sitting, freelance writing, etc.
- Get a second or seasonal job
- Use a site like Gradible to help pay off your student loans
There are many ways you can make extra money, but you have to be committed and get in the right mindset. It may be tough to work even more, on top of your day job, but it's a temporary sacrifice for a long-term gain.
The key to paying off student loans quickly is by getting in the right mindset, cutting back, earning more, and throwing all extra money towards debt. It's not glamorous, or easy, but it can be done!