5 Steps on How to Manage Student Loan Debt
Student loans are a natural part of the education system. Everyone wants an education, but some of us have to find creative ways to pay for it. This is especially true if you have to work full time on top of the full time school. Student loans are also a great way to build credit when you are young, as long as you don't default. When I finished my bachelors degree I had a big student loan. Thankfully I lived within my means and did not have a car payment or have credit card debt to add onto that. There was a downfall though; I am our family's only source of income. This made the idea of paying back my student loan a hard one. I worried that our lifestyle would start to feel a squeeze and I would feel trapped in that cage of never ending debt. I also acquired my student loans partially when the loan interest was at its high point of 6.85%. This created a lot of stress because I knew that when I started to pay it back, I might only be able to make minimum payments which would put me in debt jail for at least the next ten years. If there was ever hope to be able to save for a house and raise a family, I needed a strategy, so I made one.
First step: Tax refunds are not for splurging if I am in debt.
I didn't want to make me feel like I was in trouble and not able to spend anything, so I told myself that I could take a portion of the refund and buy something for me or pay for a small trip locally, but the rest must go towards my loans.
Second step: Look to see ways to lower my interest rates.
I owned my car and have good credit, so when my bank offered a 2.99% interest rate on a car loan, I immediately took in my pink slip and got it. That money was able to pay down almost all of the higher interest rate portions so that I only had the 3.86% loans left.
Third step: See where I could save each month.
Every paycheck I would see what I had left over from the paycheck before and add that to my savings account. Simply take your new balance and minus your current pay check. The left over I transferred into savings. After a full month of it being in savings, I added it to my loan pay off. It may seem like you are adding interest you don't need to have by waiting, but if something came up, I would much rather use my savings than my credit card and add to the cycle.
Fourth Step: Set up auto pay.
Even if your loans are not due, paying a small amount each month can keep your total down to a manageable amount. Plus you keep your accrued interest lower so the amount to pay back stays small.
Fifth Step: Stay diligent.
I was able to pay off $18,000.00 last year due to this system. I have another $15,000.00 to go, but I am hopeful that I will be debt free again in less than two years.
No matter what your situation, there are ways to make yourself student loan free. There are loan forgiveness options if you have been a longstanding loan holder with consistent payments, and there are many programs out there to help minimize the monthly amount so you can tackle the loan itself and not just the interest each month. Just talk with your loan holding company and you can be less stressed about your financial situation.
Live, Love, June,
Carson
First step: Tax refunds are not for splurging if I am in debt.
I didn't want to make me feel like I was in trouble and not able to spend anything, so I told myself that I could take a portion of the refund and buy something for me or pay for a small trip locally, but the rest must go towards my loans.
Second step: Look to see ways to lower my interest rates.
I owned my car and have good credit, so when my bank offered a 2.99% interest rate on a car loan, I immediately took in my pink slip and got it. That money was able to pay down almost all of the higher interest rate portions so that I only had the 3.86% loans left.
Third step: See where I could save each month.
Every paycheck I would see what I had left over from the paycheck before and add that to my savings account. Simply take your new balance and minus your current pay check. The left over I transferred into savings. After a full month of it being in savings, I added it to my loan pay off. It may seem like you are adding interest you don't need to have by waiting, but if something came up, I would much rather use my savings than my credit card and add to the cycle.
Fourth Step: Set up auto pay.
Even if your loans are not due, paying a small amount each month can keep your total down to a manageable amount. Plus you keep your accrued interest lower so the amount to pay back stays small.
Fifth Step: Stay diligent.
I was able to pay off $18,000.00 last year due to this system. I have another $15,000.00 to go, but I am hopeful that I will be debt free again in less than two years.
No matter what your situation, there are ways to make yourself student loan free. There are loan forgiveness options if you have been a longstanding loan holder with consistent payments, and there are many programs out there to help minimize the monthly amount so you can tackle the loan itself and not just the interest each month. Just talk with your loan holding company and you can be less stressed about your financial situation.
Live, Love, June,
Carson
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