It is a fact that thousands of students graduate each year with thousands of dollars of student loans weighing them down. Some students do not pay off their loans as soon as it is convenient for them to do so. Instead, they focus on enjoying their sudden steady source of cash in the form of salaries. Unfortunately, as they are enjoying their new found source of wealth, the interest on their student loans keeps growing at an astronomical rate. In the end, they will find themselves with too much debt to be able to pay down comfortably. The good news is that you do not have to wait till you get to this point of pain and suffering in order to repay your debts to society.
The following are a few tips and suggestions that will go a long way in helping you repay your student loans quickly and efficiently:
- Get the lay of the land before you begin planning on how to reduce your debt
The first thing that should be on your agenda is to know how bad the situation really is, before you can begin planning on how to start paying off the thousands of dollars that you owe the federal government. This will entail you writing down all the student loans that you took while you were in college. You will also need an accurate picture of how much you owe the government and banks as of this very moment, including the interest rates and the minimum payment that is required each month for every loan outstanding. All this information will be very useful when crafting your repayment strategy.
- Know how much money you can put aside for repaying the loans every month
After knowing how bad (or how good) your loan situation looks like, the next step will be to determine how much money you can comfortably put aside each month to repay your debts. This means that you will have to give up any notions of living above your means. Your expenses should only be limited to essential expenses like food, rent and paying utility bills. Once you have a juicy, fat amount of money set aside for your student loans, you can then deduct your minimum monthly payments from this amount. The money that will be left will then be poured into the loan with the highest interest rate first. By focusing your extra monies on the loans with the highest interest rates, you will be significantly cutting down on your interest payments, something that can keep you in debt for a very long time.
- Make some small sacrifices along the way
You will need to make some budget cuts on some items or habits that you enjoy so as to start the journey of being financially free as soon as is humanly possible. This means that your appetite for designer clothes and fine dining experiences will have to take a back seat for some time, at least until you can pay off all your loans. You will not have to make major sacrifices across the board, but some things will have to feature less prominently in your loss of financial obligations as you take care of your debts.