Getting out of debt regularly ranks in the top three most popular New Year’s Resolutions every year. And it’s for good reason. Debt, especially student loan debt, cause stress and delay borrowers from reaching other financial goals, such as buying a home or saving for retirement.
Instead of just accepting your student loans, make this the year to pay them off for good (or greatly reduce them). Here’s how to make this the year you pay off student loan debt:
Refinance your loans.
Refinancing your student loans can lower your interest rate, which will save you money overall and help you pay off your loans faster. Streamlining all of your loans into one monthly payment also makes it easier to manage and reduces the chances of a late payment. Keep in mind, however, that refinancing federal loans could mean that you will lose certain benefits, such as income-based repayment plans and any federal loan forgiveness.
Consider a big move.
There are many small changes you can make to pay down your debt, such as skipping your morning latte. But big moves – moving to a cheaper apartment (or back in with your parents) and finding a better paying job – are going to yield the most money to apply to your student loan debt. Moving to a cheaper area can free up hundreds or thousands of dollars every month. The average rent in Manhattan is $4,245 per month, but it’s only $887 in Indianapolis. If you live in a walkable city and could use public transportation, sell your car to save $8,000 per year.
Think outside the box.
Did you know there are cities that will pay your student loans if you move there? Some companies offer student loan assistance, too. There are jobs that also offer student loan forgiveness if you meet a set of requirements. You can start a crowdfunding page to ask friends and family for help, sell your stuff to make extra money to put towards your debt or explore other weird ways to pay off student loans.
Make a descriptive budget.
Creating a monthly budget is going to give you control of your money. You’ll know how much is coming and how much you’re spending. This will help you determine how much extra you can pay towards your student loans every month.
Need help creating a budget? Quicken is a budgeting software that allows you to connect your accounts and automatically categorize spending. Create a personalized budget and track and manage your spending.
Once you’ve made your budget, you can see which expenses you could cut to be able to apply more money towards your student loan debt. Go through each expense and figure out a way you could decrease it. Consider cutting cable or getting rid of your monthly gym membership. Even if you don’t want to drop cable, try asking them for a discount. Find a better monthly rate for your cell phone (or see if your employer would foot the bill). Lower what you’re spending on gas by carpooling to work, planning efficient routes for your errands and walking or biking whenever you can.
Earn more money.
There are two ways to increase your income. First, with your regular job, try to ask for a raise or work overtime to give your paycheck a boost. Alternately, you can find a job with a higher salary. If you’re in the market for a new job anyways, find one that offers student loan repayment as an incentive. Second, there are many interesting ways you can earn extra money on the side, such as getting a flexible part-time job, tutoring, walking dogs or house-sitting.
More Resources for Eliminating Student Loan Debt
Want some inspiration before you get started?
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