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3 Tips To Help You Pay Off Student Debt Faster

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Ugh, student loans.

Most of us have them, and for a lot of us, they’re unavoidable.

They’re always nagging us, reminding us that they need to be paid or it will reflect poorly on our credit, or that our interest is slowly creeping up and the total amount is getting bigger and bigger.
And look, you’re living paycheck to paycheck, barely making rent, trying to find a job with the degree you just spent all that money on and it can seem like there is no possible way you will be able to pay them back.

Oh! Have we got news for you! *cue VeggieTales theme song*

Student loans don’t need to be as scary as everyone makes them out to be. Yes, it’s a lot of money, yes, they’re getting bigger the longer you wait to pay them off, and yes, you probably shouldn’t have taken so many out in the first place.

But the reality is, you’ve taken them out, the deed is done, there’s literally no turning back. So let’s face these loans with our chests puffed out and our heads held high, and let’s bring these suckers down.

Now, most likely when you pulled out your loans the person who was helping you gave you a cheerful explanation of their 10-year payback program.
They probably told you how you really only need to make the minimum payments (maaaaybe a little extra) and how, before you know it, your kids will be graduating from college, you’ll be set to retire within the next couple of years, and your loans will almost be paid off!

Alright, maybe not so extreme, but 10 years is a really long time to payback your loans. And, the longer you take to pay them off, the more money you’re giving the agency you borrowed from.
So, what if I told you that you could be rid of your student debt in two years? Yep. You read that right. Two. Years. And all of the nagging phone calls and annoying emails would go away.
Trust me on this one. It’s possible. And I’m going to show you how. It’ll take some work and sacrifice on your part, but in just a short amount of time, you will be free, my friend.

Step #1: Save everything (read: Make A Budget)

When it comes to paying off student loans, a budget is your best friend. A budget gives you an inside scoop on exactly where your money is going and gives you the opportunity to put any spare money towards those loans.

Wait. Spare money? HA! Good one.

I know. If you currently don’t have a budget, having “spare money” can seem crazy, even down-right whacko. But setting up your budget will show you where your money is actually going.
Before my budget, I could barely make rent payments and I felt like I was always struggling to do anything that costs money. But when I actually sat down to see where I was spending my money, I realized that I had more than enough to live on and to pay down my student debt.

Yes, I had to cut out my daily dining out and spontaneous shopping trips, but it gave me more control over my life and my situation and got those loans paid off lickedy-split.
If you don’t know where to start, check out my post on zero-based budgeting, then sign up for my FREE 4-day budgeting course, geared specifically towards students!

Step #2 – Pay double or more than the minimum payment

This is one of the biggest tricks loan collectors will play on you. Whether is student debt or consumer debt, everyone kind of brushes interest rates to the side saying they’re not that big of a deal, just make the minimum payments and you’ll be fine.

Calculating interest is tricky business, and with so many different interest rates and policies, it can be so gosh darn confusing. But here’s the gist of it.
When you pull out a loan, that loan has an interest rate. The interest rate can be compounded daily or yearly. In general, government-funded student loans for undergrad are compounded daily at a yearly interest rate between 3% and 6%.

So what happens is at the end of the year, your loan amount gets multiplied by your interest rate. Say you start with $30,000 and your yearly interest rate is 6%.

Since it’s compounded daily, you’ll have to find the daily interest amount, which is your yearly interest divided by 365, or .016%.

Take your starting amount, $30,000, and multiply by .016%. You are gaining $4.80 of interest per day. At the end of each day, they add that interest to your total amount, then they start the same process with your new total. So the following day your starting amount is $30,004.80.

Now here’s the crazy part. By the end of the month when your payment is due, you will have accrued $144.33 in interest alone. And your minimum monthly payment? Generally around $100.
You’re not even paying enough to pay off your monthly interest!! My tip? Pay at least double your minimum payment. This guarantees that you are paying off any accrued interest and paying to bring down the principal so that interest doesn’t get keep getting higher.

Step #3 – Set an exact goal for when you want to pay them off

Have you heard of a S.M.A.R.T. goal? This is a goal that is specific, measurable, attainable, relevant and timely.

In order to pay off your debt in 2 years, you need to make a S.M.A.R.T. goal.

Your goal could look something like this: I have $30,000 of debt. I will pay this debt off completely by December 31, 2022. Each month, I will pay a minimum of $1,250 towards that debt.

Pretty simple, right?

Setting a goal like this helps you have a clear end date in mind. Instead of saying, “oh ya, I’ll have it paid off at the end of 2022,” you have given yourself and exact time frame to complete the task.

OF COURSE, this goal can change. But if it does, you must keep the change specific, measurable, attainable, relevant and timely.

So there you have it!! 3 tips for paying off your student debt. Using these steps, we were able to pay off $30,000 or student debt in only 2 years.

If you have more than that, don’t think all is lost! You can still pay it off in way less time than your student loan agent will tell you.

Just follow these steps and you’re well on your way to a debt-free life.

This was a Guest Post by Tamela Nielsen, a fellow personal finance blogger.

You can find more excellent content of hers at Living On A Loan



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