It’s a well-known fact that a majority of U.S. students graduate from college with hundreds of thousands of dollars worth of student loan debt. In fact, millions of Americans carry student loan debt of over $1.5 trillion collectively and that number is growing.
Just because you’re drowning in student debt doesn’t mean your life is over. Here are some actionable steps to eliminate your student loan debt and the stress that comes with it:
Educate yourself on personal finance
Read as many books as you can on the subject of personal finance and how to get out of debt. This could very well help you come up with effective strategies that allow you to eliminate debt and build wealth. There are many ways to consolidate and eventually pay off debt so reading up on the basic principles and strategies is a good place to start.
Figure out how much you owe
You can’t pay off what you don’t know. Before you decide on a strategy, gather all of your student loan documents and get clear on how much you owe and know the minimum payments and interest rates.
Use a basic loan calculator to determine how much extra you need to pay per month. The great thing about using a loan calculator is that you can use it to figure out how much you need to pay in order to reduce the number of years required to pay off the loan. You’ll also see how much you owe in interest.
Make sure the monthly minimum payment is an amount that you can handle so that it’s easier to create a realistic budget.
No more borrowing
You can’t get out of a hole while you’re digging at the bottom. Stop the borrowing and pay cash for your purchases -big or small. As the saying goes, “If you can’t afford to buy it cash, then you can’t afford it.”
Consider your options
If yours is a federal student loan, look at the different income-based repayment plans offered by the Student Federal Loan Office. That way, you can automatically allocate a percentage of your paycheck (usually 10 to 15%) to your loan repayment.
This might seem like a large amount, but there’s a lot of wiggle room to maneuver. Work with your borrowers to come up with a game plan that’ll prevent you from defaulting.
Spend less and earn more
The internet presents a minefield of temptations that trick us into spending in order to keep up with the Joneses. In a society that is rapidly embracing the principles of minimalism and simple living, it’s not that hard to spend less money. Thankfully, you don’t have to live like a monk to minimize spending. All it takes is an ability to prioritize your life, recognize what’s important and stop spending money on things that don’t add value to you.
Earning more money is easier said than done, but most of us do tend to earn more money as we develop our skills or stay in the same career over time. If you’re a business owner this could mean charging your clients more money. If you work in corporate America, then you can leverage another job to get a raise. Remember that bumping up your income will always carry a risk but it’s worth it if you want to tackle your debt and grow financially.
You may be anxious in the beginning but it’s important to realize that getting out of debt is a process. Short bursts of inspiration and motivation won’t carry you through the entire way. You must be patient, relax, take your time and stay disciplined.