Budgeting Essentials
Get That Student Loan Paid Off Fast: Strategies
Facts
$1.6 trillion dollars in student debt belongs to 42.7 million borrowers.
Over 5 million of these borrowers have not made payments in the last year.
38% of these borrowers are making payments and are current on their loans.
This information comes from the U.S. Department of Education.
Here is a link to that article.
( or copy and paste this:
https://www.ed.gov/about/news/press-release/us- help-borrowers-get-back-repayment ).
This article is an easy read and will supply you with information
like a link to the default resolution group. They also mention things
like the “income-driven” repayment plan, and loan rehabilitation.
You do not want to end up having your wages garnished.
Please read the article.
My Story
When I first got out of college, my goal was to find a job.
I knew I had a six-month grace period, so, I wanted to get
the best job possible and I was not the least bit concerned
about paying back my student loan for those “free” six months.
Looking back,
I would now tell my younger self a few things:
By signing that loan, I promised to pay it back.
Start making monthly payments now and bank those first 6.
For your word to be trusted, do what you say you will do. No exceptions.
The sooner you start paying back your student loan, the sooner it will be gone.
Repayment strategy 1:
Always pay more than the minimum amount due.
The minimum payment is set up for you to payoff your loan timely
according to how your loan repayment was structured.
Over the life of the loan, you will pay both the
principle and the interest on your loan balance.
The purpose for paying more than the minimum payment is to
pay as much as you can toward the principal amount
(the original borrowed amount)
to decrease your remaining principal balance to zero
as quickly as you can. Why?
To reduce or minimize the total amount of interest you pay
over the life of your loan.
Both interest (and late fees) are costs that are added
to your loan,
increasing the time it will take you to pay off your loan.
Keep in mind that anytime you pay less than the amount due
on your student loan, interest will accrue.
Even on some income-driven repayment plans (IDR for short),
if the payment is less than the amount of interest that has accrued,
the unpaid accrued interest
will be added to the balance of your loan.
This will increase the amount of money that you will have to pay back.
Some banking institutions use a phrase called “paid ahead status.”
At first glance, this may seem like a good thing.
This generally means that you have made the next payment of
regular principal and interest. However, what you really want to do, is
take any extra money you can get and apply it toward your principal balance.
This means that you are in effect knocking down
the original amount you borrowed,
as well as the amount of interest that will be charged
to your outstanding balance.
In simplistic terms, this is how that works:
Let’s say you borrowed $30,000 at 6.5% interest.
The result is how much interest you will pay in a month:
30,000 x 0.065 / 365 x 30 = $160.27
29,500 x 0.065 / 365 x 30 = $157.60
29000 x 0.065 / 365 x 30 = $154.93
28500 x 0.065 / 365 x 30 = $152.26
No matter how small the amount,
anytime you can reduce the amount of interest
being applied to your principal – this is a good thing.
So, when you pay more than the minimum amount due,
let the loan servicer know that you want that extra dollar amount
applied directly to your outstanding principal balance.
Paying more than the minimum dollar amount
reduces your principal balance faster.
Repayment Strategy #2:
Put your skills to good use.
Where do you get the money to pay more
than the minimum balance due each month on your student loan?
Since you have spent good money learning specific skills,
you can certainly use those skills to help people in need.
There is someone or several persons out there
who will pay you for your expertise.
Think of small business owners who could use
your skills and abilities.
You can do this on a part time basis (maybe even working from home).
You might take your skillset to any number of platforms
that are looking for gig workers to join their team.
Alternatively, you can offer your services
to entrepreneurs who are seeking help.
Entrepreneurs are either working toward getting a business started,
or they have started and needs lots of help.
They may not be looking for employees,
but they may well need your skills on an “as needed” basis.
Charge an appropriate hourly rate and give them your best work.
Who knows?
They may want to take you on full time.
When you are doing your best work for others, they are likely
to tell other entrepreneurs about you as well.
Take advantage of the contacts you have made thus far.
Share your story.
Talk about your accomplishments as it relates
to what they are doing.
When you do this, they are sure to listen and want your contact information.
Use the money you get from side hustles
and hourly engagements to aggressively paydown that student loan debt.
This is a decision you will never regret. Why?
The sooner your student loan is gone,
the better off you will find yourself financially, mentally, and emotionally.
Repayment Strategy #3
Use your time wisely.
People like you, who prefer experiences over material possessions,
will already know that as you travel,
you are generally surrounded by other human beings
nearly everywhere you go.
Here is how this can be advantageous for you.
People love to talk about themselves.
Let them talk.
Listen to determine if you can be of help to them.
Enjoying your experiences can be a perfect time
to mix pleasure with future endeavors.
Talk to everyone you interact with.
Ask them about themselves.
Ask questions that show you care and
are interested in them and what they do.
What are they passionate about?
What are their current or future dreams?
What side hustles do they have?
Do they have an entrepreneurial spirit?
Is this person currently working any side hustles?
Have they partnered up with someone to begin a business? If so, what is it?
Be a good listener and you will find out much.
If you discover mutual interests, get their contact information.
Follow them on social.
Offer whatever free help that you can to them,
while letting them know of your expertise
that pertains to their interests.
Keep in mind, nobody really wants to know
every detail about what you know.
Rather, people listen to what interests them.
Be of great interest to others.
Remember the Goal:
Get That Student Loan Paid Off Fast!
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