Being saddled with debt is a stressful way to start out adult life, to say the least. If you’re unsure how to pay off student loans, well, you’ve come to the right place. Today we’ll walk through, step by step, what you need to do to pay off your student loans and live a debt-free life. Check out my five essential tips ahead!
1. Know what you owe.
No financial plan for the future can begin without an understanding of where you are today. You might have taken out a loan and figured that you would deal with it when you graduate. Now, the bills keep coming in, but you don’t have a good understanding of what you owe and how long you have to pay it for.
If this is you, no worries: It’s best to call your loan provider and ask them to walk you through the specifics of your loan–that includes the amount, interest, term and monthly payment. You can also ask them to send you a summary statement of your account.
2. Budget.
One of the “perks” that comes with adulting is the opportunity to budget. A budget will help you see, in plain view, where you’re spending money and where you’re potentially wasting it. If you’re new to budgeting, you can check out this guide.
3. Accelerate your loan repayment schedule.
If you’re doing all the right things, including meeting your minimum monthly payment, you might still find yourself paying off the same debt years later. Instead, paying more than your monthly minimum will ensure that you are ahead of schedule–and that you’re not caught in a cycle of paying more in interest expenses than is necessary.
4. Live like you’re still a student.
There is nothing more exciting than graduating, entering the workforce, and having a steady stream of income coming into your bank account each month. It’s the perfect set up for a lifestyle upgrade. However, if you’re saddled with debt, you may want to consider hitting the pause button on getting that brand-new couch for your apartment and instead, settle for a less expensive option.
Lifestyle choices matter and have a huge impact on your ability to pay off your loans quickly. Are you going to brunch every weekend with friends? Is an unjustifiable portion of your paycheck going to cable? If you’re nodding away, consider taking a few steps back and adopting a simpler and more affordable lifestyle to help keep expenses down.
5. Think beyond your paycheck.
In today’s economy, the opportunities for earning additional income are limitless. Every dollar you earn can help you get out of debt faster so taking on additional work or starting a fun side hustle can make a world of a difference to your finances. If you’re stranded on side hustle ideas, you can check out a few great ones here. Another option is income from your tax refund, which should absolutely be used to make debt payments if and when possible.
While debt can at times feel overwhelming, there are many steps you can take to gain complete control and work your way out of it, no matter the size. Starting here is a great first step–you got this!
Have questions about how to pay off student loans or other debt? Ask in the comments!
Bola Sokunbi, founder of Clever Girl Finance, is a Certified Financial Education Instructor, money expert, CEO, and best-selling author. Sokunbi aims to help women like you take charge of your finances, stop living paycheck to paycheck, build real wealth, and get you in control of the life you really want to live.
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