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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One of the easiest ways to immediately save is to sign up for automatic payments to be withdrawn straight from your bank account.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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Last Updated on April 3, 2019

How to Nix Your Credit Card Debt in Less Than 3 Years

How to Nix Your Credit Card Debt in Less Than 3 Years

Debt is never a fun thing to be in. But, there are many actions that you can take that will help you rid yourself of the burden of debt once and for all.

By coming up with a set plan, eliminating your debt can feel much easier than constantly thinking about it.

This post will provide some tips on how you can do this to help you nix your credit card debt in less than 3 years.

Hint: there are ways that are easier than you think.

1. Consider Consolidating Multiple Credit Cards If Possible

This may not be applicable to you, but if you have multiple cards – it is something to consider. Keeping up with multiple bills is time consuming.

It will depend on the balance you have on each. Consolidate ones you can but do not do it to the point that you get too close to the maximum limit. Also, it is ideal to pick the card with the lower interest rate.

Consider if there are any fees or alternatively, rewards, with transferring a balance to another card. Watch out for fees. Note that some cards offer rewards for transferring a balance to them. This is extra cash that can help go towards paying off your debt.

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Having one or two cards can make nixing your debt much simpler than keeping up with the balance of a bunch of cards. Keeping track of paying the minimum towards a bunch of cards is time consuming. Spend the time to consolidate instead to make the overall process simpler going forward.

My tip: Have one main credit card. Have a second one that you use for necessities – such as groceries or gas – that offers rewards for those purchases (a lot of cards do) and set the second one on auto-pay. You should be able to pay off a smaller amount on auto-pay if it is a necessity. If you think you cannot, then you may need to cut down a lot on expenses.

Why do I suggest doing this? Having one thing set to auto-pay is one less thing to think about. One less thing to waste time on. Same idea with consolidating to one main card. Tracking down too many is a hassle.

2. Try to Pay the Full Balance You Spent Each Month at the Very Least

You need to pay off the amount you are spending each month when that bill comes in. This is the amount you spent THAT month.

Do not let the debt keep accruing while you work on paying any unpaid debt that has accrued. It will become a never-ending battle. Try as best as you can to be current on paying for each month’s expenses when that month’s bill comes out.

If this is a strain, consider why. You may need to cut expenses. Or you may need to consider other cards. Or look at where this money is going.

3. Pay Extra When You Can – Every Small Amount Counts

This cannot be emphasized enough. If you are looking at a lot of credit card debt, it can look daunting, but each extra amount that you can put towards the debt will really add up – no matter how small it is.

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It does not just reduce the principal amount that you have left to pay off, but it reduces the amount that is collecting interest. You will always save money with that reduced interest.

4. Create a Plan on How to Pay Extra

Back to the main point, having this plan is giving you one less thing to think about.

This plan should be a plan that works for you. If it does not work for you, your spending habits, and your views on debt, then it will not be an effective plan.

For instance, if a set plan of an extra $50 (or another amount that you know you can afford) works for you, then do that. Set that aside every month and pay that extra amount. Treat it like a bill. Choose an amount that works for you and pay it like clockwork as though it was a bill you had to pay each month.

Little amounts will not nix it entirely, but they will help tackle it and having a set plan can make it less of a chore. Creating a new plan of how much to put towards it each month is an unnecessary added stress.

5. Cut out Costs for Services You Do Not Use

If you are signed up for subscriptions that you do not use because of some free trial or for some other reason, cut it out. Your overall financial position will look better.

In turn, that will make cutting your credit card debt easier. Look at your statements to find these expenses. If you do not use them, you may forget you are paying some unnecessary amount each month. Cutting it out can really add up in savings that you can put towards other needed expenses.

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6. Get Aggressive About It

Consider these points:

Depending on the interest and the level of debt, you may need to give up a few indulgences. For example, instead of ordering delivery or going out to eat, cook at home. Everything adds up.

Other things may be more of a sacrifice. It may be a trip you wanted to go on, or a daily latte habit you’ve picked up. In these instances, consider how important it is to you and if it’s worth the sacrifice. And if it is a costly expense, think whether you can wait to indulge.

Cutting an extravagant expense can really help make a dent in your overall debt. Try not to add to debt when you are trying to pay it off. It will be a never-ending battle. Make it less of a battle with these tips and it will feel easier.

Bottom line: Do what you can to make this process easier for you. Implement steps that do this. It takes time now, but will help overall. Also, keep track of your spending and paying down of your debts. Which is the next point.

7. Reevaluate Your Progress at Set Intervals

Doing a regular check-in can help you see your efforts pay off or maybe indicate that you need to give this a bit more effort. If you check every 3-6 months, it will not feel so much like a chore or feel so daunting.

By doing this, you will be able to better understand your progress and perhaps readjust your plan. Bonus: if you see it pay off, it will feel great to do this check-in. You will get there.

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Finally (and most importantly)…

8. Keep Trying

Do not get discouraged. Pushing it off will make it worse. Just keep trying.

Once your debt becomes lower, each monthly payment will reduce the balance more. Why? You are paying less towards interest. It will be a snowball effect eventually and it will become much easier to manage. Just get to that point. And know once you do, it will feel easier and motivating.

Start Knocking out Your Debt Today

The best way to eliminate debt is to get started right away. Begin by implementing the above steps and watch your debt just melt away. Try out some of the above strategies and see what works best for you. Soon you’ll be on your way to a debt free life.

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Featured photo credit: Pexels via pexels.com

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