What about my Student Debt?
You went to college to get a better job and make more money. But now you feel discouraged and disappointed. Instead of having more money, it feels like you actually have less money because of the payments you are making on your student loans. Don’t despair, those payments don’t have to last the rest of your life!
There are some very valid reasons that it feels like it is taking forever to pay your loans off.
We live in a culture where you can get virtually everything instantly. Smart phones give you access to people and information from almost anywhere, right at your fingertips! Fast food restaurants pride themselves on serving you quickly. Microwave meals are a big meal preparation shortcut. Even mortgage companies give you quick responses on loans for customers who use their apps.
If you add to that all the publicity in the news about political candidates wanting to reduce student debt, it is no wonder that you are feeling dissatisfied.
But should you wait for the government to solve the student debt issue for you?
If you wait for the government, you’re very likely to be disappointed. A much better solution is to attack your student debt yourself.
As it is with any debt, eliminating student debt is a very straightforward process. Please don’t misunderstand me here, I am not saying that paying off your student debt is easy. For most people it is not.
But just because paying off your debt is not easy, doesn’t mean you shouldn’t make the effort to pay the debt down quickly.
You should make the effort.
Let me explain a bit to help you see why.
Let’s look first at “affordable” payments.
When the lenders set up a payment schedule, they make the payments look “affordable”. Their idea of affordable is to make the payment seem small in comparison to the total you are spending. But being affordable can be an illusion. When people lend you money, they are expecting to make money on YOU! Affordable payments cost you more by extending your repayment period, applying less to principal and tying up your money so you can’t use it.
In addition to tying up your money, the whole time you are making payments on your loan, the lender is making money on you. Your interest expense is their interest INCOME. The longer you make payments, the more money the lender makes. The higher the interest rate on your loan, the more money the lender makes through interest and fees.
While the lender is making money on you, you won’t have access to the money you use to make your payments. So while those payments may look “affordable“, they are NOT designed with your best interest in mind.
We live in a culture where debt is perceived as normal. A desire for instant gratification allows you to justify using debt to acquire what you want. Using debt to pay for your purchases robs you of being able to afford other opportunities.
Patience and time will often allow you to see opportunities that are more valuable to you. You also gain perspective so you often find that you really didn’t need or want the item you thought you had to have. But you won’t be able to pay for a new opportunity if you have already committed more funds to pay for past purchases over a longer time frame.
You may think that you can just borrow more money so you can pay for a great opportunity (instant gratification). But borrowing more money to do so just makes your debt problem bigger and ties up more of your money. You end up worse off than you were before.
Government payoffs are also not the answer. Remember, the government is you. If the government pays off (forgives) student debt, the government has to raise the money to pay it off. The way the government raises money is by increasing taxes. Instead of making student loan payments, you will pay higher taxes instead. Student loans are a fixed amount that you stop paying when the balance is paid off. Increased tax payments tend to not go away.
Another issue with government payoff of student debt is that the people who borrowed the money benefitted from using the money. They agreed to pay the money back. It would be unfair to the lender to not repay them. They provided the money for the loan, they should be repaid.
Change your perspective a little to see this point. When you work for an employer, you are giving (loaning) the employer your time and effort. You expect to be repaid (wages). Student loan lenders should also be repaid just like you expect to be paid.
What can you do about your student debt?
The short answer is to pay student debt off as quickly as possible. The sooner that your student debt is paid off, the quicker those funds become available for you to use as you choose.
Change your mindset.
A big key to eliminating student debt is to pay it off faster than the payment schedule calls for. Perhaps more simply said, you have to pay more than the minimum payment.
This is where the simple-but-not-easy comes in.
The simple part is this. You need to reduce your expenses to increase your funds available to pay down your student loan debt. This is a combination of spending less and creating more sources of money to pay off your debt.
Then you take the funds that you made available and apply them to your student loan debt. Keep doing this until your debt is paid off.
Stop borrowing money. Learn to live on the money you make.
The hard part is this: YOU have to discipline your spending to do the easy part.
This can happen through elimination of unnecessary spending.
Things like eating out.
Having the latest styles.
Buying cars and electronics that do not fit your budget right now.
Hey, once the debt is gone, save your money and reinstate these pleasures if you still want them then.
If you’ve got it, we wish you well!
If you would like some help, here is how we can help you here at BudgetingEssentials.com.
1. Take our FREE Debt Relief Workshop to help get you started! SIGN UP HERE with your name and email address.
2. If you still want or need some help, we also have a PAID CLASS to walk you step by step through the process of paying down debt quickly.
Don’t see value? Take the free workshop first. No obligation, nothing to pay.
Take your first step to eliminating that debt today. Sign up for the free workshop. You will be glad you did!