Planning now could save you money in the future.
Graduation is an exciting time – as is starting your first job. However, once the dust has settled you may soon begin to realise just how much debt you’ve accrued and how long that is going to take to clear. Today, most students graduate with five figures in student debt and for most that represents decades worth of repayments. However, some smart money management – and a good plan – can help you to get debt free more quickly.
Student loan debt repayment plan
Stick to the repayment schedule. If you start missing payments on your student loan then you not only get into bad financial habits but could create an adverse credit history for yourself too. It’s not much fun making payments on student loans when you’d rather spend the money on something else but it will ensure that you are making progress every month towards being debt free.
Consider refinancing multiple loans. Student loans and finances can take many forms and you may have graduated with multiple debts to repay. Some of these could have high interest rates like bad credit loans or no credit check loans so refinancing those debts could help make repayment faster by giving you access to lower interest rates. With less interest to pay overall you’ll have a reduced total to clear. Look for refinancing options that give you a better deal than you have right now when it comes to fees and interest. A refinanced loan should be easier to manage – just one single monthly repayment – and cheaper too.
Look for ways to overpay. Making overpayments on your loan will enable you to clear your debt faster, meaning there is less interest to pay and you will be debt free sooner. But if you’re on a tight budget how do you do it? When you’re making a plan to pay off student debt, work with your budget and look for any opportunities to reduce spend in other areas so that you can apply it to your student loan repayments. This could include:
- Moving home for a short time so that you can pay off your student loan while living rent free.
- Reducing spend on “extras,” such as gym memberships, clothes, haircuts, going out etc. Remember that this isn’t a permanent commitment but a temporary one until the loan is cleared.
- Taking on additional work. The gig economy provides lots of opportunities to earn extra cash that can be applied towards clearing your student loans sooner rather than later. Whether you’re driving for an app taxi service, delivering takeaway food, completing ad hoc freelance jobs in writing or design, or renting out a spare room, there are many ways to earn extra income without too much effort.
- Selling items you no longer need. Auction sites, car boot sales and online forums offer many ways to generate more cash from what you already have. Student textbooks, sports equipment, even old cars or computers can all be used to create extra income so that you can make essential overpayments.