3 Tips for Paying Off Your Student Loans
July 15, 2019
Student loan debt can be daunting. You left for school with the best of intentions. You worked your tail off for four years and got a degree. You throw your cap into the air in celebration, and by the time it lands, you have a bill for $29,400.
When dollar amounts are that high, it’s difficult to make them seem real. As a recent grad, you have all kinds of financial obligations. It’s easy to let those student loan notices pile up and focus on furnishing a household, buying a nicer car or starting your adult life.
It’s difficult to pay down that debt, but it’s possible! Let’s take a look at three pieces of advice for paying off debts in record time:
1. Find your motivation.
Getting out of debt is always an instrumental good. People don’t pay off their loans for the fun of it; they do so to get earlier or better access to something else they want. Finding a motivation is central to making the debt-free project work. Paying off your debt will be expensive, and it can be easy to think of more fun ways to spend your money, rather than your loan payment. You could do a lot with that $30,000, such as take a month long backpacking trip to Europe or buy a brand new car. However, setting a goal and getting motivated about reducing your debt will help you avoid the temptation to cheat on your budget and will make writing check to the loan company a little easier.
There are as many motivations as there are graduates. Maybe you want to get debt free to reduce your stress. Maybe you need to boost your credit score before buying a house or car. Maybe you want to reduce your debt so you can start saving for retirement. Finding and focusing on a motivation to get yourself out of debt can make sticking to a debt-free plan much easier.
2. Cut your expenses.
The biggest areas of expense in your budget are likely rent and transportation. Taking big steps, like getting a roommate, moving closer to your job or using public transportation will make big dents in your budget. Saving a few dollars by switching to store brands can help too, but you probably won’t see drastic progress that way. Live like you’re still in college for a few more years! Eat at home as much as you can and make cheaper meals, share a small space with a roommate, and call takeout and Netflix a romantic dinner date. Defer these savings onto your loan repayment process to pay down your debt even faster!
3. Don’t forget to budget for fun!
A budget of pure austerity is one you’re not likely to stick with long-term. Constant denial and deprivation can really tax your willpower. You can still have room in your budget for little indulgences, by building in some funds for relaxation and rest. Whether it’s small travels, dining out or a hobby, you need to remember to take care of yourself too! It can be difficult to commit to unwinding if you’re staring down several thousand dollars in debt. However, taking care of yourself will save you more in the long run.
Budgeting for fun expenses can be a way to ensure you enjoy it. If your luxury money gets eaten up by tiny bits, like a candy bar here or a cocktail there, you’re less likely to mindfully enjoy it. If you save and plan you will be more cognizant of the experience and more likely to remember it.
Greater Iowa Credit Union has many financial tools and tips and we’d love to talk with you about your financial situation! We can help you budget to pay off your student loans as quickly as possible. We can offer you free checking, or other great checking accounts, and a variety of savings accounts. We’d love to talk with you and help you reach your financial goals!