Student debt is a prison. It’s a ball and chain that – if you’re not careful – you can drag around for decades of your life. That’s no way to live. For that reason, you want to make sure you take the right steps to get rid of it and not live with that shadow hanging over you, leeching the fun out of life and limiting your options.
Fortunately, there are quite a few good strategies that you can follow which will make it far easier to pay off your student debt. Here are nine of the best ones out there that are both easy and effective. Now that sounds pretty good, right?
So let’s not waste any more time and dive right in.
The first thing that you want to do is start paying early. For that reason, when you’re just out of college to make sure that you put in some serious debt payment time. Why does this work so well?
Because of compound interest.
That’s the same thing that makes money you save in your 20s far more valuable than the money you save later on in life because every year that passes makes that money grow. That is the strategy often used to keep you in debt for longer, by making every dollar bigger as you go along.
For that reason, every bit of extra payment you can do early on will save you a huge amount down the road.
Skip the grace period
For that exact same reason, skip the grace period if you can. Yes, it will hurt more today, but it will make it less likely that your debt will balloon out of control and keep following you around. Don’t let the banks get their hooks in you by starting to pay off immediately!
It doesn’t have to be much. Every little bit helps.
Pay more than once a month
On many loans, if you can pay more than once a month the interest rate drops. Yes, that’s right. That means that your payments are doing double duty. They’re bringing down your debt and making sure that at the end of the month not that much more is added.
That double whammy makes it far easier to deal with your debt. So, instead of just paying one big sum, divide it up into several chunks. You can still automate it (in fact you should as much as possible) just automate it several times!
Yes, I know it’s enticing to move into some big pad when you’re done with university. Resist that urge. Trust me, it’s much easier to stay in a cheaper place coming out of college than to downgrade later one. Once you’re used to better digs, you’ll feel like you’re really sacrificing when you give them up again.
That isn’t the case when you come out of college. So, if you can, continue to live in the same place you were living before while you start making serious money. If that’s not possible, find somewhere else that is well within your budget.
Hold off on the car and the gadgets
If your car still works and your phone is still calling, don’t feel the need to upgrade. Instead, throw that money at your debt. If you’re buying a new phone for 300 dollars a year and you switch over to only buying once every three years, that’s 600 dollars extra that you’re paying down from your debt.
In fact, it’s more. After all, you won’t have to pay interest on any of the money your throw at your debt early on.
Similarly, don’t buy a new car. I promise, paying off that debt will be far nicer than owning a new car. No, I know, it won’t feel that way, but it’s true. That’s because you’ll only enjoy that new car for a few weeks, a few months at most before you adjust to it.
Not having any debt, in the meantime, will kill all those moments in your life when you break out in a cold sweat because your debt is still haunting you. And that’s worth a thousand cars.
Pay off the highest interest loans first
The best way to get out from under the compound interest dragon is to pay off the ones with the highest interest first. For the other ones, just meet the basic requirements and throw all of your earnings at tackling the big and bad ones.
In that way, you’ll spend less money just paying off your interest and more money working down your debt. And that won’t just feel good. It will slay that scaled monster all the sooner as well.
Work for the money
Yes, you’ve got dreams. We’ve all got dreams. When you’re just out of college, however, might not be the best time to do that. Instead, focus on a job that will pay you well with the understanding that when the debt is gone, you’ll get the hell out of dodge.
This might actually benefit you in far more ways than you realize. High-paying jobs will often teach you valuable skills that will suit you well when you’re starting your own business, pursuing that career as a painter or traveling the world and living out of the back of a van.
Afraid you’ll get stuck? Not if you make sure that you really use the money you’re making to pay off your debt. Then you won’t get sucked into the life of luxury – seeing as you’re not actually living it. Instead, if you choose to stay in that life, it’s because you enjoy the work, not because of the benefits.
Get an extra job
Alternatively, do what you love, but spend some time on an extra job so that you can throw the money at solving your problems. There are so many things you can do nowadays that will make you an extra bit of money. Perhaps you can launch a successful freelance writing career. Alternatively, start working for a site like a get academic help where your degree can make you a lot of money.
Find something that you can do that pays well and do it a couple of hours a day. This will both make you a bit of extra cash to throw at your debt and will also cut down your free time, which will make you spend less. A double win!
Have a debt jar
Life is full of temptations. The trick to paying off your debt is to make sure you resist them. To help you in that fight, have a place where you can throw the money that you would otherwise have spent on the temptation.
So, if you’d really like to get a coffee down the street, but instead decide to make one at home to save the money, throw that money into a debt jar. Doing this will give you the satisfaction of actually seeing the amount of money you’ve saved grow (and will make you feel guilty if that isn’t happening).
What I’d do is take the money out of the jar at the end of the month, count it and then send a bank transfer from my bank account towards paying my debt. Then I would put the money in a drawer in lots that I normally would draw from the cash machine and grab from there instead of going to a hole in the wall and taking money out of my account.
Debt is a hydra that will grow new heads if you don’t deal with it correctly. For every day you wait with dealing with it lets it grow an extra head and makes your future life that much harder. Therefore, don’t neglect it. Don’t put your head on the ground. Instead, start to deal with it right from day one.
Yes, it might make your life harder for the moment, but I promise you, your future self will be immensely grateful for it. And if you don’t do it? Then it’s possible that your still dealing with this crappy problem when other big expenses in life – like marriage and children, or starting a new company – crop up and make paying off this debt later even more of a hassle.
So don’t let it get that far. Give yourself a break by breaking the hold the banks have over you.