Small Changes Can Speed Up Student Loan Repayment
Even small changes can help you repay your student loans faster. Student loan debt can feel like a huge weight on your shoulders preventing you from saving money or enjoying life to the fullest. Start these simple steps today to pay down your student loan debt even faster.
Manage Your Money
Understand your loans better. Make a list that shows each loan amount, the interest rate for that loan, the name of the lender or servicer, the monthly minimum payment and whether the loan is private or federal. Fully understanding your loans helps to make a more efficient game plan on repayment.
Create a repayment action plan. Now that you have all of your student loan information in one place, decide on a repayment action plan. You could start by tackling the loan with the highest interest rate, for example, while still making minimum payments on any remaining loans.
Pay more than the minimum. By cutting expenses, increasing income and selling some of your old stuff, you’ll be able to pay more than the minimum payment towards your debt. Extra money towards your student loans means you’ll be done sooner and end up paying less interest.
For example, say you have a $15,000 student loan at 4.13% on a standard 10-year repayment plan and a current $153 minimum monthly payment. This will take 10 years and $18,336 to pay off. If you could double your monthly payment, you’d be done with your loan in about 5 years and save about $1,880. You might not be able to double the payment, but paying anything extra helps.
Enroll in automatic payments for your student loans. Automatic payments help prevent late fees from getting added onto your balance. Some lenders will even reduce your interest rate a little, which will save you a bit of money.
Consider refinancing your student loans. Refinancing student loans could lower your interest rate, if you have a steady job and solid credit. However, refinancing federal student loans into a private one means you’ll lose federal loan perks, such as the option for income-based repayment plans and possible student loan forgiveness.
Analyze your spending. Go through your debit card and credit card statements to figure out where your money is going. Try to lower or eliminate each expense. You can eliminate monthly subscriptions you don’t need or other unnecessary spending, such as nights out at the bar. Cut sweets to once a week. Now you can create a budget based on what you’re bringing in and what’s going out every month.
Change your lifestyle
Slash your food budget. Here’s how:
- Start cooking at home instead of ordering takeout and eating at restaurants. It’ll also help you lose weight while repaying your student loans.
- Use your grocery store’s loyalty card, coupons and grocery apps that offer cash back.
- Buy items that are on sale and in-season.
- Don’t spend money on convenience items, such as chopped veggies or pre-portioned snacks.
- Bring your lunch and coffee to work and snacks when you’re traveling.
- On the occasion you are dining out, go during happy hour when it’s cheaper, use coupons and bring half of your meal home for lunch the next day.
Enjoy free and cheap things to do. So much of our social experience involves spending money. Instead, get together with friends for game nights, potlucks and movie nights. Find free concerts and events at your local library, community center and around your area.
Limit your spending. There are certain expenses, such as rent and utilities, that are mandatory. But there are many things we buy on a monthly basis that we don’t really need. Clothes, home décor, the latest technology and concert tickets are just a handful of these unnecessary purchases.
When you are making a purchase, shop around for the best deal and always check online for a coupon code or other discount.
Pay off your credit cards in full each month, so you never carry a balance and never pay interest. Then, use only credit cards that have no annual fee and pay you cash back for further savings.
Reduce transportation costs. You can save money on gas by walking and biking when you can, carpooling and planning your errands efficiently. If your city offers public transportation, compare that cost to what it costs to drive to your destination, factoring in tolls, parking costs and gas.
Make little changes in your daily routine. Be conscious about turning the lights off, and use natural light when you can. Wash your clothes in cold water instead of warm, and take shorter showers. Throw on a sweatshirt instead of cranking your thermostat up higher. Try do-it-yourself beauty regimens instead of heading to the salon or spa.
Make More Money
Sell your stuff. Whether it’s clothes, books or technology you’re no longer using, there’s a place that will buy it from you. Apply any money earned to your student loans. Plus, decluttering generally makes people less stressed and more productive.
Ask for a raise. If you’ve been working at your company for a while and have been doing a great job, don’t be afraid to ask for a raise. That one conversation can have a huge impact on paying your student loan debt faster as well as your entire career trajectory.
Start a side hustle. Even if you work full-time, there is always time for a side hustle you can do to make extra money. Try and grab one that you find combines your passion or you find fun to make it more enjoyable. Love to bake? Sell your sweet treats at the local farmer’s market. Love sports? Be a referee at your community park. Love dogs? Become a weekend dog walker.
What to Do Now
If you’re serious about paying your student loans faster, create an action plan for increasing your income and reducing what you’re spending.