The issue of student loans has been getting much attention lately. Here at SmartAsset, we’ve written on entrepreneurs such as Peter Thiel who are creating programs for young students to drop out of school and pursue their interests directly. States such as Oregon are coming up with alternative methods to pay for state college tuition. However, for many of us, these programs are coming out a little too late. We’re already saddled with student loan debt. While this debt cannot be reversed, if you take some smart steps to pay down your debt sooner than expected.
1. Create a budget
Going over your monthly expenses and creating a budget can help you find areas where you can save money. If you reduce your monthly expenses by 10% or more you can apply that money to your monthly loan payments.
Look for ways to save money, for example can you brown bag your lunch most days instead of eating out? Can you change your cable package so you pay less? Can you take public transportation instead of using your own vehicle to and from work? These are little daily expenses, but over the course of a month they can add up. Reducing these expenses will free up money to put towards your loan payments on a monthly basis, which will serve to pay off your debt much sooner.
2. Automatic payments
Setting up automatic payments does a couple of things. First, it helps to avoid late payments since you do not have to constantly be reminded to pay. The money is automatically deducted from your account. However, you should set up some type of reminder a week or a few days in advance just to make sure you have enough money in your account so you are not charged in the event of insufficient funds.
The second way automatic payments help pay your debt down faster is because many holders of student loan debt will shave off a small portion of interest for those who use automatic payments. A reduction in interest means an overall reduction in the total amount you have to pay, which means you pay off the loan sooner.
3. Make payments more often
While payments may be due on the 15th of the month, if you find yourself with a few extra dollars from a Christmas or birthday gift, use that money to put towards your loans, whenever you have the money. Using money received from gifts or even tax returns may put a damper on those vacation plans you had, but it will pay down your debt sooner, freeing you to put more money towards your other goals later down the road.
4. Pick up a side job
Taking on a part-time job or picking up odd side jobs will help to earn extra cash that can be applied to student loans and help you build a rainy day fund. There are many part-time positions in department stores, writing gigs or babysitting jobs that are available. Check with friends and family to see if they know of any part-time positions or odd jobs you may be eligible for or check out online job boards.
5. Make peace with your debt
One thing many of us with student loan debt end up feeling is a sense of resentment. We did everything right; went to school and got the coveted higher education, and now we are (hopefully) working, only to be haunted by the seemingly never-ending student loan debt. Unfortunately, that resentment can actually hinder our ability to get down to business when it comes to paying off our debt.
We resent not being able to go out and have a good time with friends or take that vacation we deserve because we have student loan debts to pay. The resentment gets in the way of our ability to think positively and tackle our debt in a constructive manner. Our student loan debt was an investment in our education and careers and should be thought of as such. Taking on a more positive attitude will help in taking the necessary steps to pay down that student loan debt quicker.
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