Having student loan debt can be a huge burden, but it doesn’t have to be. Paying off your student loans quickly is one of the best things you can do for your future financial health.
Not only will you learn how to free up money in the short term, but paying off your student loans fast will also allow you to start investing sooner and build wealth for yourself and your family.
In addition, getting out of debt quicker also helps improve your credit score and puts more money back into the economy through increased consumer spending. With this in mind, here are eight tips for paying off student loans quickly so you can get on with living without worrying about debt!
1. Devise a Plan
Paying off student loans fast can be an enormous undertaking, especially with interest accruing on top of the original principal.
The first thing you should do is create a plan and stick to it. Sit down, take stock of your finances, and decide how much you can afford to put toward your monthly loans.
Just like with a sports team, once you have a game plan, all you need to do is step out on the field and execute. Reevaluate your budget periodically to see if you can pay more. Over time, you’ll find yourself getting closer and closer to completely wiping off those pesky student loans so you can move on with your life.
2. Pay More
One of the best ways to ensure those loans are paid off promptly is to pay more than the minimum monthly payment. This step can reduce the amount of interest paid over time for your loan, allowing for faster repayment and saving you money in the long run.
Try looking into a budgeting app or other financial management tools. They can help track your expenses and allow you to see where extra funds could be redirected from one expense to another so you can allocate more money toward paying off those student loans.
3. Refinance Your Student Loans
Refinancing your student loans can reduce the interest rate and, subsequently, the amount of money you’ll pay back over time.
Many online lenders offer refinancing options and other services, such as loan consolidation or deferment, that could help make paying off student loans faster and easier. Be sure to shop around and compare offers to get the best terms.
4. Consolidate Everything Into One Loan
Consolidating all of your student loans into one loan can help simplify the repayment process and make it easier to keep track of. You can reduce your interest rate by combining multiple loans with different rates into a single loan.
You can either do this yourself by shopping around and using personal loan comparison tools, or you may be able to find services or lenders that can help you with this process. Be aware, however, that consolidating your student loans could extend the length of your repayment period and may increase the total amount paid over time.
5. Tackle High-Interest Loans First
If you have multiple student loans with different interest rates, try tackling the ones with higher interest first. This strategy will reduce the amount of money spent on interest over time and help you pay off your loans more quickly.
Now, this doesn’t mean you shouldn’t pay the other obligations. Be sure to make minimum payments for all of your student loans, but if possible, give extra attention to those with a higher rate.
6. Use Windfalls Wisely
Any windfalls or extra money – such as tax refunds, bonuses, holiday gifts, etc. – can help you get ahead on student loan payments. Surprise money can’t be allocated in any budget. Intelligently using these funds requires a ton of discipline.
When you receive unexpected funds, consider putting that towards your student loans instead of spending it elsewhere.
7. Live BelowYour Means
Have you ever heard of lifestyle creep? As you move forward in life, your tastes and lifestyle start to evolve as you make more money. You get a raise, you get a new car. Just got a fresh bonus? You start shopping for a bigger house.
It’s a phenomenon that has been plaguing our society for decades. But you don’t have to be part of this problem.
Try to stick to a budget and avoid buying things you don’t need or that are outside of your financial means. This will help ensure that all of your money goes toward your student loans and not toward unnecessary purchases.
8. Automate Your Payments
Make your payments on time every month with the help of automation tools. They eliminate the risk of forgetting to make a payment, making it late, and incurring additional fees.
Many lenders will allow you to set up automatic payments directly from your bank account, so you can rest assured that your payments will be made on time. You can also set up alerts in different budgeting apps that remind you of when and how much money is about to be taken from your account.
The Bottom Line
With the right strategy and tools, paying off your loans doesn’t have to feel overwhelming.
By following these tips, such as consolidating loans into one loan, tackling high-interest loans first, using windfalls wisely, and automating your payments, you can make paying off your debt an achievable goal.
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