You may even have to juggle multiple loan payments at once – this can put an immense amount of stress not only on your finances, but your mental well-being too. Here are five tips to help you pay off those loans faster and achieve financial nirvana.
1. Bump up your payments.
Paying more than the minimum amount on a loan payment is extremely beneficial to reducing the time that it will take you to pay off the loan. This could be as simple as rounding up the payment, if you owe $255 a month then pay $300 a month, or simply add on an extra $100 to your payment principal. If you know that you’re allocating your funds for a larger payment each month, you can plan your budget accordingly.
2. Live cheaply.
This tip can be interpreted in many different ways, as it depends on what your current lifestyle allows. If you just graduated and have a large amount of student loans to pay off then moving back home with your parents, should the situation allow it, is a good strategy to live cheaply and accumulate extra funds to put towards a loan payment. Or, if you have a car loan and a mortgage payment it may be time to re-evaluate your budget to see where you can shave away unnecessary costs, like going out, shopping, expensive trips, etc. If you look closely, you’ll find an area in your budget to cut down on excess expenses, just remember to put that newly saved money towards your loan payments.
3. Luck out on extra money? Put it towards your loans.
Should the occasion arise where you come into some extra money; this could be inheritance, lottery winnings, and even your tax return refund, you will be tempted to put this money towards wants. Resist the urge and put the funds towards something that matters – using the newly gained money towards loan payments. It’s not the most glamorous scenario, but it is the most fiscally responsible, as it will save you from interest costs in the end. And, you’ll thank yourself later once your loans are paid off and it’s time to congratulate yourself with that wanted item.
4. Extra time = Extra job.
If you have extra time on your hands, most likely evenings and weekends, you could pursue an additional job as another stream of income to put towards those loan payments. If you’re willing to give up some of your free-time in the short-term in order to have less loan payments to pay in the long-term, it will put you ahead of those future loan costs. If you’re a student, this could be revisiting the idea of a waitressing job or doubling as a nanny, and working during the weekends while you fill your week with a career-oriented job. If you’re further along in life and haven’t had a part-time job for years, it can be hard to overcome pride and apply for an hourly-waged job. However, it is still an avenue worth pursuing if you have the time and abilities to make it happen.
5. Employer repayment opportunities.
Employer repayment programs are something that you should investigate if you currently are interviewing for jobs, or have just been hired at a new place of employment, especially if you have just graduated. Certain places of employment, mainly federal and non-profits, participate in The Public Service Loan Forgiveness Program. The department of Federal Student Aid describes this program as: “forgiveness on the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer.” [1] If you have access to this program through your current employer, you should definitely take advantage of it as a way assist with repaying your loans.
If you truly want to pay off your loans in a quick and efficient way, these strategies will help you set the foundation. It won’t be easy; however, it will be financially worth it in the long run.
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Source:
[1] Public Service Loan Forgiveness, Federal Student Aid
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