The millennial generation is the most educated generational group the world has had yet, in fact, many graduates are still celebrating their recent degree accomplishments. And so they should, for getting a degree is no small feat and an imperative step towards a sound financial future. However, only once the graduation celebrations are over do you begin to understand how daunting paying off those student loans really is.
It takes a lot of discipline and hard work to pay off your student loans in sufficient time. In fact, managing to do so feels almost impossible as you’re sure to slip up and make wrong turns along the way. But if you are dedicated and determined enough to live a life debt free then paying off your student loans can be much more manageable than it seems. In fact, tackling your student debt with these four simple rules has never been easier.
Understand your Loans
Understanding the ins and outs of your student loans is one of the most important things you can do, although this may seem basic a lot of graduates ignore this step shrugging it off as irrelevant or unnecessary. However, it is not enough to just blindly pay the minimum repayment amount each month, you should know your exact balance, lender and status of every loan you’ve taken out – It’s also important to know how long your grace period is before you must pay back your loan too. They say knowledge is power and debt is no different. The more informed you are the better, more responsible decisions you can make in planning a secure financial future.
Take Advantage of Your Grace Period
Depending on your loan type your creditor may grant you a grace period after you have completed your degree where you are not required to make any payments towards your loan. Avoid the tempting urge to fully ignore your debt repayments during this time. Although you do not have to make the payments doesn’t mean that the money or interest you owe goes away. Instead use this time to understand your loan repayments better, to make a game plan on how to tackle your payments and if possible, start making them.
Prioritize Your Loans
Not all loans are created equal. No two loans are the same some loans and policies have higher interest rates or shorter ‘grace’ period than others. So it is important to ensure you prioritize your payments into the most important to the least.
Pay More (when you can)
If your financial situation allows for it, if you inherit some money or come into some excess cash then you should put more than the minimum amount of your monthly repayment. Doing this over the lifespan of your loan will help reduce the total amount of interest you will have to pay. As well as help pay off your loan faster, making a debt-free future closer to becoming a reality.
Continue Your College Lifestyle
We get that the college lifestyle isn’t for the faint hearted – you’re done with the two-minute noodles, box wine and used furniture. You’ve worked your butt off to get a job (hopefully), you deserve to start living better, right? Wrong. You need to face the reality of your debt situation and work towards paying off your loan – and that takes sacrifice. The longer you keep living your simple bare-bone varsity lifestyle the faster you can pay off your student loans.
- Continue living in a shared space to share rent and other expenses.
- Skip pricey dinners, concerts and bar tabs in favour of free things to do.
- Take advantage of public transport, carpooling, walking or biking to work instead of spending money on car-maintenance petrol or expensive travel cost.
- It doesn’t have to be Maggie’s Two Minute Noodles, but you should try and cook whenever you have the opportunity.
Earn More Money
This is easier said than done, but it’s the best most effective way to quickly and effectively put a dent in your student loans. If you are already employed, you could ask for a promotion or even start a side hustle to bring in some extra money.
Don’t Take on More Big Debts
The phrase after college is long anticipated and often ends up being the most expensive; with new goals such as marriage, purchasing a car or buying home adding to your financial stress. These are all big and exiting steps that are great if you can afford them. However, if you are already dealing with loan repayments going deeper into debt for these is not worth it.
Paying off your student loans can be a long and overwhelming process. Your situation can change over the years but no matter how bad it may be or how bad it may get there is always an option for a road out. As long as you stay informed on your loan situation nothing can take you by surprise. With a little will to understand your situation and how you can help to make it better goes a long way in securing a financial future for you and your family.