If you have a student loan to repay it may feel too overwhelming as many people want to get rid of their debt faster. In real life, they have to cope with so many daily expenses, trying to save for a house, pay their monthly bills, and just live a normal life. There is no life hack to help you pay your student debt overnight but there are specific steps that may assist you in this process. But if you are planning to get rid of your debt as soon as possible and become financially free, check FitMyMoney expert tips on different financial cases and keep on reading to find professional advice.
1. Have a Budget
You may have already heard about budgeting. It can change your personal finances for the better. If you haven’t tried budgeting yet, it’s time to create and stick to it on a monthly basis. There are many online tools, special apps, and even online student loan calculators to help you master this method. Why is it useful? Budgeting is aimed at helping consumers understand where their money goes each month.
This is a great method for finding the categories of spending that may be lowered or omitted to have more funds left for the repayment of your student loans. You may even find that you earn enough funds per month and have some “extra” left that can be put toward loan repayment. Start budgeting and you will notice a difference over time.
2. Pay More Than the Minimum Loan Payment
Did you know that there are special calculators that will show the date when you will eventually repay the loan in full if you keep on making the same minimum monthly payments? This date may seem too far away and you may even start to worry about this tedious process. However, here is the solution. You should start making more than the minimum loan payment.
Making bigger payments each month will help you lower the principal amount as well the interest as you lower the repayment term. You may also pay biweekly to increase your payments and make them more affordable. Also, some service providers push the due date back if they see a borrower makes more than the minimum payment per month. Contact your servicer and ask that your due date remains the same so that you can really repay the debt faster.
3.Refinance Your Loan
If you don’t want to make extra loan payments or want to find an alternative solution, you may want to refinance it as well. This solution requires a borrower to have a stable source of monthly income. If you are a full-time employee you may opt for this solution. This way, you will be able to have a single loan payment instead of several payments each month. You should also have a lower interest rate to help you repay it faster.
The main aim of refinancing your debt is to increase your monthly payment but pay with less interest and repay the debt more quickly. However, there is another demand. Apart from having steady employment, you should also have a great credit history to qualify for this solution. Lenders and service providers want to check your creditworthiness to verify that you will be able to return the debt on time.
4. Use Autopay Option
Another popular solution to lower the rates on your student loan debt is to sign up for autopay. The majority of private services offer a discount for autopay deductions. Some federal student loan creditors also provide lowered rates for consumers who allow them to deduct loan payments automatically. You won’t be able to save a lot but it’s still a helpful tactic if you want to qualify for some discounts. For instance, you may save $144 if you have taken $10,000 for 10 years and lowered your interest rate from 4.5% to 4.25%.
5. Consider Your Lifestyle
One of the most important steps is to change your lifestyle. You don’t need to sacrifice everything but becoming more frugal and thinking about your monthly expenses can help you see the whole picture of where your funds are going and how well you spend them. You may find that some categories of spending may be lowered or replaced to give you more money for loan repayment.
After all, this is your top priority to repay the debt as fast as you can and then become financially independent again. Think about things that you can live without. Can you lower your monthly costs for entertainment or eating out? Can you give up on some subscriptions? Would you like to rent out a spare room in your house to lower housing expenses? There are so many ways of cutting down your monthly costs and having more funds for debt repayment.
6. Boost Your Monthly Income
It’s great to be a full-time employee and have a stable income each month. But you already know that making more than a minimum monthly loan payment may help you achieve your financial target faster. What if your salary isn’t enough to increase monthly debt payments even if you cut down unnecessary expenses?
A great solution is to find a side gig to boost your income. It may be a part-time job that you do at the weekend or in the evenings. There are plenty of options for such side hustles. Think about possible ways of generating additional income such as becoming an Uber driver, a pet sitter, delivering food, or being a freelancer. Decide what you can do and how many spare hours you have to earn extra money.
Bureau of Labor Statistics shows that people at the age of 25 and over earn $1,000 and more/week which is enough to cover all necessary spending and save a part of income (or cover student loan debt with this savings).
7. Consider Repayment Assistance from Your Recruiter
Some recruiters already offer tuition reimbursement options or student loan repayment aid. Walmart and Starbucks, for instance, provide free college for their employees who choose certain schools and courses and sign up for degree programs. A great benefit is that this assistance isn’t considered as taxable income. Check this information at your work to see what options you can qualify for.
All in all, all of these pieces of professional advice may help you lower your student loan burden and repay this debt faster. This path isn’t as easy as you may think at first. It takes some time, dedication, and effort to get rid of debt but it’s totally worth it.