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8 Clever Ways to Save Money on Student Loans

8 Clever Ways to Save Money on Student Loans

Student loans have been weighing heavy on higher education students over the past decade – particularly those who can’t find adequate employment to justify the costs of college.

Politician, Mark Pocan gave one of the best quotes to sum up student loan frustration, stating, “By making college unaffordable and student loans unbearable, we risk deterring our best and brightest from pursuing higher education and securing a good-paying job.”

A study by The Institute for College Access & Success reported that between 2004 and 2014, student loan debt rose by a massive 56% on average – a leap from $18,550 to $28,950. Thus it has become critical for students to understand what they owe, who they owe, and most importantly, how they can owe less.

1. Automatic Payments

One of the easiest ways to immediately save is to sign up for automatic payments to be withdrawn straight from your bank account. Many companies now offer reduced interest rates simple for signing up for a convenient and secure payment method. The reduction rate is typically only a fraction of a percent, but it still keeps some extra cash in your pocket.

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2. Refinance

Refinancing loans is a popular method for reducing sky-high interest rates. High interest rates are particularly discouraging, making it seem as if you’ll never pay off your debt along with the rapidly accruing interest. Luckily, refinancing is a fairly simple process for those with a good credit score and a steady income. Those who are not in the best circumstances may apply for refinancing with a cosigner to increase their chances of acceptance.

3. Loan Forgiveness

While loan forgiveness is only applicable in certain circumstances, it is certainly worth looking into whether those circumstances apply to you or not. You may have access to loan forgiveness, for example, if you have worked in the public service field for several years. Teachers and other professionals can apply for public service loan forgiveness.

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4. Consolidation

Consolidation is one of the most common forms of loan management, but surprisingly, not everyone takes advantage of it. This method is beneficial for a few basic reasons. It allows you to combine payments so that you only have one monthly deadline to remember and one combined interest rate instead of several. In many cases, this will also lead to lower monthly payments. If you’ve yet to consolidate student loans, this is one way to streamline payments and avoid unnecessary late fees in the long run.

5. Program Assistance

Spend a day researching established student loan programs that help graduates in certain professions pay off their loans. A few examples include the Nursing Education Loan Repayment Program, programs for the Army, Air Force, National Guard, and Navy, and Teach for America. If you do qualify based on your profession, there is usually a few basic rules that must be followed, like committing to a position for 5 years or working in a particular location. Weigh the pros and cons of these offers to decide if any are right for you.

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6. Automatic Savings

One way to trick yourself into paying student loans off faster – and thus owing less in the long run – is to set up automatic deposits from your paycheck to your savings account. Whether it’s $10 or $200, this method allows you to save effortlessly and immediately deducts the money before you have a change to spend it.

7. Remember Taxes

Each year, student loan companies will send out tax forms showing the amount of interest you paid in the prior year. Don’t ignore or forget about these forms, as they can provide some decent tax deductions (up to $2500). Grad students are often eligible for tax credits, which can save you even more than tax deductions.

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8. Pay Faster

Last but not least this is an option for those who are not over-burdened financially. Just because your loan company asks for a set amount of money each month doesn’t mean you can’t or shouldn’t pay more. Throwing in extra payments here and there or doubling your payments altogether helps to reduce the principle quickly. Use a repayment calculator to determine how much you can save in what amount of time. By tightening your budget in a few minor ways, you may find that you can abolish debt in half the estimated time.

Featured photo credit: eflon via flickr.com

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Published on November 20, 2018

The Best Ways to Save Money Even Impulsive Spenders Can Get Behind

The Best Ways to Save Money Even Impulsive Spenders Can Get Behind

The truth is, there are many “money saving guides” online, but most don’t cover the root issue for not saving.

Once I’d discovered a few key factors that allowed me to save 10k in one year, I realized why most articles couldn’t help me. The problem is that even with the right strategies you can still fail to save money. You need to have the right systems in place and the right mindset.

In this guide, I’ll cover the best ways to save money — practical yet powerful steps you can take to start saving more. It won’t be easy but with hard work, I’m confident you’ll be able to save more money–even if you’re an impulsive spender.

Why Your Past Prevents You from Saving Money

Are you constantly thinking about your financial mistakes?

If so, these thoughts are holding you back from saving.

I get it, you wish you could go back in time to avoid your financial downfalls. But dwelling over your past will only rob you from your future. Instead, reflect on your mistakes and ask yourself what lessons you can learn from them.

It wasn’t easy for me to accept that I had accumulated thousands of dollars in credit card debt. Once I did, I started heading in the right direction. Embrace your past failures and use them as an opportunity to set new financial goals.

For example, after accepting that you’re thousands of dollars in debt create a plan to be debt free in a year or two. This way when you’ll be at peace even when you get negative thoughts about your finances. Now you can focus more time on saving and less on your past financial mistakes.

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How to Effortlessly Track Your Spending

Stop manually tracking your spending.

Leverage powerful analytic tools such as Personal Capital and these money management apps to do the work for you. This tool has worked for me and has kept me motivated to why I’m saving in the first place. Once you login to your Personal Capital dashboard, you’re able to view your net worth.

When I’d first signed up with Personal Capital, I had a negative net worth, but this motivated me to save more. With this tool, you can also view your spending patterns, expenses, and how much money you’re saving.

Use your net worth as your north star to saving more. Whenever you experience financial setbacks, view how far you’ve come along. Saving money is only half the battle, being consistent is the other half.

The Truth on Why You Keep Failing

Saving money isn’t sexy. If it was, wouldn’t everyone be doing it?

Some people are natural savers, but most are impulsive spenders. Instead of denying that you’re an impulsive spender, embrace it.

Don’t try to save 60 to 70% of your income if this means you’ll live a miserable life. Saving money isn’t a race but a marathon. You’re saving for retirement and for large purchases.

If you’re currently having a hard time saving, start spending more money on nice things. This may sound counterintuitive but hear me out. Wouldn’t it be better to save $200 each month for 12 months instead of $500 for 3 months?

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Most people run into trouble because they create budgets that set them up for failure. This system won’t work for those who are frugal, but chances are they don’t need help saving. This system is for those who can’t save money and need to be rewarded for their hard work.

Only because you’re buying nice things doesn’t mean that you’ll save less. Here are some rules you should have in place:

  1. Save more than 50% of your available money (after expenses)
  2. Only buy nice things after saving
  3. Automate your savings with automatic bank transfers

These are the same rules that helped me save thousands each year while buying the latest iPhone. Focus only on items that are important to you. Remember, you can afford anything but not everything.

How to Foolproof Yourself out of Debt

Personal finance is a game. On one end, you’re earning money; and on the to other, you’re saving. But what ends up counting in the end isn’t how much you earn but how much you save. Research shows that about 60% of Americans spend more than they save.[1]

So how can you separate yourself from the 60%?

By not accumulating more debt. This way you’ll have more money to save and avoid having more financial obligations. A great way to stop accumulating debt is using cash to pay for all your transactions.

This will be challenging, depending on how reliant you are with your credit card, but it’s worth the effort. Not only will you stop accruing debt, but you’ll also be more conscious with what you buy.

For example, you’ll think twice about purchasing a new $200 headphone despite having the cash to buy them. According to a poll conducted by The CreditCards.com, 5 out of 6 Americans are impulsive spenders.[2]

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Telling yourself that you’ll have the discipline to not buy things won’t cut it. This is equal to having junk food in your fridge while trying to eat healthy–it’s only a matter of time before you slip. By using cash to make your purchases, you’ll spend less and save more.

A Proven Formula to Skyrocket Your Savings

Having proven systems in place to help you save more is important, but they’re not the best way to save money.

You can search for dozens of ways to save money, but there’ll always be a limit. Instead of spending the majority of your effort saving, look for ways to increase your income. The truth is that once you have the right systems in place, saving is easy.

What’s challenging is earning more money. There are many routes you can take to achieve this. For example, you can work long and hard at your current job to earn a raise. But there’s one problem–you’re depending on someone else to give you a raise.

Your company will have to have the budget, and you’ll have to know how to toot your own horn to get this raise. This isn’t to say that earning a raise is impossible, but things are better when you’re in control right? That’s why building a side-hustle is the best way to increase your income.

Think of your side-hustle as a part-time job doing something you enjoy. You can sell items on eBay for a profit, or design websites for small businesses. Building a side-hustle will be on the hardest things you’ll do, be too stubborn to quit.

During the early stages, you won’t be making money and that’s okay. Since you already have a source of income, you won’t be dependent on your side-hustle to pay for your expenses. Depending on how much time you invest in your side-hustle, it can one day replace your current income.

Whatever route you take, focus more on earning and save as much as possible. You have more control than you give yourself credit for.

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Transform Yourself into a Saving Money Machine

Saving money isn’t complicated but it’s one of the hardest things you’ll do.

By learning from your mistakes and rewarding yourself after saving you’ll save more. What would you do with an extra $200 or $500 each month? To some, this is life-changing money that can improve the quality of their lives.

The truth is saving money is an art. Save too much and you’ll quit, but save too little and you’ll pay for the consequences in the future. Saving money takes effort and having the right systems in place.

Imagine if you’d started saving an extra $100 this next month? Or, saved $20K in one year? Although it’s hard to imagine, this can be your reality if you follow the principles covered in this guide.

Take a moment to brainstorm which goals you’d be able to reach if you had extra money each month. Use these goals as motivation to help you stay on track on your journey to saving more. If I was able to save thousands of dollars with little guidance, imagine what you’ll be able to do.

What are you waiting for? Go and start saving money, the sky is your limit.

Featured photo credit: rawpixel via unsplash.com

Reference

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