When you have a specific career goal, a college degree is usually associated with it. Thousands of people go to school and graduate each year with a lot of student loan debt to pay off. This debt doesn’t have to be debilitating, however. There are particular strategies to paying off student loan debt. Take a look at the best ways to clear this balance from your personal finances.
Create a Budget
No one can get ahead of their debt if there’s no budget in mind. Compare your income to your expenses. Try to remain within your income amount each month. You should be able to afford the basics, such as rent and groceries, along with some casual spending.
Be sure to allocate the minimum payment on your student loans every month too. Any supplemental income might go towards the balance as a way to pay back the loan at a faster pace. Paying an extra $10 or $20 a month can add up to interest savings.
Become a Saver
A great way to stay on top of your student loan debt is by being financially responsible. Don’t just pay those bills every month. Remember that saving is another goal. These funds can help you if a job loss occurs or medical issues arise.
Save up an emergency fund over time that includes about six month’s worth of income. Don’t forget to save for retirement too. An IRA or 401(k) are both viable accounts that can be started through your employer. You’ll be able to keep up with your student loans with these savings intact during tough times.
Be Wary About Credit Cards
Being qualified for a credit card means that you can access money at any time. Spending can get out of hand with these tools, however. Build your credit history and score with credit cards, but don’t carry a balance. Paying off your student loans will be much harder if you’re fighting high interest on those credit cards.
Pay off any credit-card balance each month. Remember that your budget still applies when you use the card. Funnel the rest of your money into debt repayment. Your credit will improve over time.
Try the Interest-Rate Game
If you’re focused on paying those loans as quickly as possible, pay careful attention to the interest rates. You might have two or three loans with completely different rates. Try to put more money toward the higher interest loans first. Paying down these debts will reduce the amount of interest paid over the life of the loan.
Keep up with the minimum payments on the other loans until you can add more funds to the next highest interest rate. The debt will seem to disappear overnight with this strategy.
Refinance the Loans
After working and paying your bills for at least a year, you might consider a refinance option. A solid credit score now can translate into a lower interest rate on your loans. Speak to your bank or other lender that can refinance these types of loans. It’s possible to lower your monthly payment and score a low rate.
Use the new loan as a jumping off point to faster repayment. Add a little bit more to each payment to see the loan disappear. It’s not necessary to remain in debt for decades at a time.
Remember that there is some benefit to having student loan debt. The interest is often a tax-deductible option on your income taxes. Be diligent about paying off any debt so that you can focus on future goals for yourself and family members.
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The Law Office of Barbara B. Braziel helps people get out of debt. We offer free consultations to people of Savannah, GA and the surrounding areas, including Richmond Hill, Hinesville, Pooler, Port Wentworth, Tybee Island, Clyo, Ellabel, Midway, Ludowici, Springfield, Pembroke, Brooklet, and Garden City.
We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.