With student loan figures seeming to climb higher and higher for new graduates, it’s important to learn all you can about how to pay off those loans, and the ways that you can get your financial freedom back. Here are five tips to help you on the path to being student loan free.
1. Set a goal – Whenever you are trying to execute a financial plan, the psychological side is very important. One way to help there is to set a plan. It might be something like “cut student loan debt in half in two years,” or something else that is clearly laid out. If you do this, it will make putting extra money toward student loans easier to do, because you know exactly what you want to achieve. This will help you get over the mental hurdle of spending less money on “wants” and more on getting rid of that student loan debt.
2. Have a plan – Once you have your goal in place, it is time to make a plan so that you can achieve the goal. For example, if the goal was to eliminate your student loan debt in three years, then this is where you figure out how much you need to pay each month in order to make this goal happen. Looking at making a plan will do wonders in helping you fully understand the situation and whether your goal is achievable
3. Pay off extra each month – It goes without saying that this is the easiest way to more quickly eliminate your debt. If you pay only the minimum, it will take a long time to pay off your student loans and you will be paying a bunch of money in interest. This is great for the banks, but not so good for you. Pay off as much as you can… not only will it help you eliminate your student loan as quickly as possible, but it will save you a bunch of money in interest.
4. Consolidate if needed – Some of your student loans may be higher-interest private loans (as opposed to a federal loan where your interest was deferred). If that is the case, the money will be growing more rapidly, and you may look at consolidating your loans to get a better interest rate. Another option may be to get a credit card with a zero balance transfer amount. However, if you go this route, you have to be sure to pay that card off before interest begins to kick in.
5. Don’t burden yourself with other debt – If you are paying off your student loans, the worst thing that you can do it get yourself into credit card, because then that is something else you will be paying interest on and will be working to pay off. Do yourself a favor and avoid credit card debt at all costs, especially if you are also trying to pay off student loans. This will greatly help accelerate the payoff process.
Many people find student loans to be overwhelming after college, but if you use these five tips, it will minimize the amount of time it takes to pay off your student loans. That can help give you financial freedom earlier, which can help in your personal and professional life.