Hope you enjoy this GUEST POST by Jon Dulin @ PennyThots.com:
Ahh, that pesky student loan payment that needs to be made every month. It ís a pain. I had student loan debt for a number of years after I graduated college. I still remember when I made my last payment. It felt like a weight was lifted off my shoulders.
Even though my monthly payment was $250 a month, and I could afford it, I still didn’t like it. So, I decided to take some steps to help me pay off the debt quicker.
Below are the things I did to help me pay off my student loans quickly. There are also some things I learned along the way that I wasn’t able to take advantage of but hopefully you can.
If you want to get rid of your student loans sooner than what your anticipated pay off date is, be sure to use as many of the options below that make sense for you.
And if you are in the situation where you are still in college or haven’t had to start making payments yet, there is one important tip for you too!
Strategies I Used To Pay Off My Student Loans
Here are the strategies I used to help me get rid of my student loans quickly. They are not listed in order for what you should do, just listed in order of what I did.
Refinance: After I began to make payments, I refinanced my loans. When I took out the loans, my interest rate was set at 5%. By the time I graduated, interest rates dropped and I could refinance at a rate of 3%.
This dropped my monthly payment by $40 a month. If I were to just pay the minimum due each month, I would save close to $10,000 in interest.
Made Old Payments: The next thing I did was to make my monthly payment as if I had never refinanced. This meant paying $250 every month instead of the $210 that was due. Just doing this saved me another $2,700 in interest.
Work On The Side: I made the extra $40 a month payment for a couple months as I was just working a part time job. Once I landed a full time job, I kept the part time job. Most of the money I made from the part time job went towards my student loans.
This was an extra $400 that went towards paying off my student loans each month. This allowed me to save another $9,000 in interest charges.
Use Windfalls: Finally, I took tax refunds and bonuses that I received and put a portion of them towards my student debt. I usually put around 50% of these windfalls towards my debt.
I don’t have an exact number for how much this saved me as there were various bonuses and tax refunds I received during this time.
Make It A Game: Lastly, I made paying off my student loans a game. I would see how much I paid towards my loans at the end of the year and I would try to beat this amount the following year. It may sounds silly, but if you are competitive like I am, it works amazingly well.
Other Strategies To Pay Off Your Student Loans
There are some other things you can do in addition to what I did in order to pay off your student loans quickly. Here they are in no particular order.
Declutter: Go around your house and see what you no longer use or need. Then see if you can sell these things on eBay or Craigslist. Take any money you make and put it towards your student loans.
Go On Spending Holidays: If you find you don’t have a lot of clutter collecting dust, try going on a spending holiday. Go a month without eating out and take that money you saved and put it towards your student loans. The next month, pick another area to cut back on and put that money towards your student loans.
Use Automation: Figure out a small amount of money you can save each month without really noticing it is missing from your checking account. Let’s say this amount is $20. Set up an automatic transfer to a savings account for $20 each month. Then forget about it. At the end of the year, take that money and put it towards your student loans.
If you can save $20 a month, that comes to $240 a year and could be the same as making an extra payment each year.
Volunteer: If you volunteer for PeaceCorps, they will pay your student loans for you. Before you get too excited, they don’t pay off your loans completely. But they will pay off $5,000 or so.
My sister-in-law worked for PeaceCorps in New Orleans after the hurricane and while it was a lot of work, the payment towards her student loans was worth it.
Have Someone Else Pay Your Loans: If you are a public service employee, like a teacher or police officer, you can get some of your student loans forgiven. My best friend took a teaching job out of college and had $2,000 of his student loans forgiven each year for 3 years. Not bad if you plan to work in these fields.
If you aren’t planning to be a teacher, don’t worry. Many companies now are offering help with student loan repayment for new employees too. Be sure to ask if yours offers this benefit.
Tip For Those Still In College
For readers who are still in college or are not yet making payments, this is for you. Take a couple of minutes and open up a savings account. Then take whatever amount you can afford each month and put it into the savings account.
I know while in college money is tight. But just move $5 or $10 a month if you can. Once you start making payments, take this money you saved and put it towards your loans. It may not be a huge amount but it will help.
If you are working but are still in the grace period and not paying your loans back yet, start making payments. Just don’t actually make them. What I mean by this is to transfer the money each month into your savings account. Act as though you have that payment now.
In my case, I would have transferred $250 each month to my savings account. Since the grace period ends 6 months after graduating, I would have $1,500 to put towards my student loans.
A Word Of Caution When Paying Off Your Student Loans
If you are competitive like me, you can go overboard with paying off your student loan debt. I urge you to not do this. Don’t take every last cent you have and put it towards your debt. You will quickly resent your debt and will act out.
You need to live and have fun. This is exactly why when I received windfalls, I only put 50% towards my debt. I took the other half and invested some and used the rest to save up for some things I wanted to buy.
Getting out of student loan debt quickly is a great goal, just don’t try to get out of $40,000 of debt by the weekend.
If you want to get out of student loan debt quickly, there are many options out there for you to help put extra money towards your debt. There are also options out there for you to reduce your monthly payment amount as well.
Take a few minutes to do some research and determine which strategies make the most sense for you and start applying them. The sooner you start, the sooner you can get rid of your student loans.
I know the balance now may look overwhelming but try to only focus on it once per year. Then see the progress you made to keep you motivated to continue paying extra.
You can and will get out of student loan debt, you just have to have a plan and start paying extra today.
Author Bio: Jon writes at PennyThots, a personal finance blog whose mission is to help you to improve your finances one day at a time.
(featured image was downloaded from Pexels.com)