I recently watched a documentary online about the 2008 housing crisis. The film followed 3 individuals who unfortunately lost their homes at the time and covered their journey to rebuild their finances over the past 10 years.
It really inspired a lot of conversation about when the next financial crisis would occur in the U.S. – not if it would occur but when. Some economists and financial gurus brought up the idea that the next crisis could involve the massive student loan debt that Americans carry as a whole.
While the average student loan balance for a new grad is around $31,000, there are still plenty of borrowers who have larger amounts of debt including 6 figures of loan debt.
Having a ton of student loan debt can hinder your finances and your overall quality of life. Even though student loans tend to have lower interest rates, I’d recommend most people focus on paying off their loans early. Here are 7 real ways to help you pay off your student loans faster.
Round Up Your Payment
It’s no secret that you’ll need to make additional payments in order to pay off your student loan early. However, when you’re just starting out don’t overthink it or you’ll get intimidated.
Start by simply rounding up your minimum payment each month. For example, If you usually owe $360 per month, you can round up and pay $400 per month. You’ll get into the habit of paying extra and every dollar counts.
You can always increase your payments over time, but starting out by rounding up is one of the best ways to get into the habit of making extra payments.
Make Double Payments
Once you get comfortable with rounding up your minimum loan payment, consider doubling it. If you make double student loan payments each month, you can likely cut your repayment term in half.
This is something my husband and I set out to do. I was able to pay off my student loans in less than 3 years. We also wanted to invest, so we decided to take a different approach and pay his off on a slower pace.
With a minimum payment of $149 per month, we decided to pay $300 each month with the hopes of cutting down his 10 year repayment plan to 5 years.
Make Bi-Weekly Payments
Wondering when you should make your extra student loan payments? Consider making bi-weekly payments especially if you get paid on a bi-weekly schedule.
During the longer months, you’ll end up making 3 student loan payments. Over the course of the year, you’ll have effortlessly made extra principal payments.
See If Your Employer Offers Financial Assistance
Some jobs actually offer assistance when it comes to helping employees pay off their student loans. These jobs may also even offer tuition assistance so you can avoid taking out so many loans in the first place.
I know Best Buy is an employer who does this. Needless to say, it doesn’t hurt to ask if your employer offers a program or has resources on how you can get assistance.
If your employer assists in other ways like paying for your transportation, gym membership, or professional fees, use these perks to free up money in your budget so you can make extra student loan payments.
Pick Up Extra Work
Increasing my income was one of the best things I did to pay off my student loans faster. You should go into work mode if you’re super determined and see if you can pick up overtime hours or qualify for a bonus.
Sometimes, you can only earn so much at your job. When you feel like you’ve maxed out, start searching elsewhere for part-time work or side hustles. I enjoy doing online work like freelance writing and virtual assistant work because it’s flexible and pays well.
You may want to try options like driving for Uber or Lyft, walking dogs, babysitting, photography work, graphic design, or delivering Amazon orders as a solid extra income choice.
Whatever option you choose, settle on something that is sustainable and will pay you well for your time. It may take you a few years to pay down all your student loan debt. You want to find a way to increase your income consistently over time.
Cut Living Expenses
Think about which expenses you can cut to pay off your student loans faster. I recommend going through your budget line by line and asking yourself if each expense is necessary or if you could do without it.
You can also tackle your most expensive spending categories like housing, transportation, and food.
Perhaps you can get a roommate or move back in with family to pay off your student loans faster. I have a friend who lived with her in-laws for a few years so she and her husband could pay down their 6 figure student loan debt.
Instead of driving all the time, you could try getting a bike and riding it around for local errands. You can also limit dining out and bring your lunch to work. If you can cut your biggest expenses, you’ll free up a lot more money quickly. That way, you won’t have to stress out about small slip ups and purchases like coffee at Starbucks every now and then.
Stay Motivated and Throw Everything At Your Loans
Set a specific date highlighting when you want to have your student loans paid off then focus intensely on meeting that deadline. Motivate yourself by throwing everything you have at your loan balance.
Cut expenses and earn more to make extra payments. Get your whole household involved so you can lean on their support.
If you receive windfalls like a bonus at work, tax refund, or an overage check, put it directly toward your student loan debt. Forego taking a vacation until your debt is gone. By approaching your debt payoff with this strategy, you could easily pay thousands extra on your loan balance each year.
Carrying debt like student loans can make your finances pretty tight. Luckily, you don’t have to deal with the burden of having student loans long-term.
You may need to make some sacrifices to pay off your debt early, but it helps to have a clear plan and utilize some of these strategies mentioned above.