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The Smartest Way to Pay Off Your Student Loans

The Smartest Way to Pay Off Your Student Loans

Graduation is just around the corner for millions of college seniors around the world. Concerns like college rankings, mid-terms and essay samples will be a thing of the past. Of course, these will be replaced by new worries: finding a job, deciding on grad school and for most, the dreaded student loan repayment.

In today’s economy, students have more debt than ever before; some estimate the total amount of student loan debt is well over 1 trillion dollars in the United States alone. While these numbers are daunting, the repayment process doesn’t have to be. By following some simple suggestions, you can reduce you burden and your overall interest payments without living like a broke college student for the rest of your life!

Student loan

    1. Pay a little extra.

    Once you get started with your loan repayments, you might be feeling a little strapped for cash each month. The thought of sending them MORE money might seem a bit of a stretch. However, if you can manage to send even just $5 extra per month, even if it’s not every month, it can save you thousands in interest over the life of the loan. Experts estimate that for every extra dollar you spend, you can cut up to $2 off at the end. That can add up quick!

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      2. Biweekly payments.

      It may sound strange, but sending in half of your loan payment every two weeks will save you thousands of dollars. In addition to paying less interest, you also manage to make an extra full payment every year. Consider the approach, especially if you are paid biweekly.

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        3. Sign up for automated payments.

        Contact your lender and ask about this option. Most will allow you to have your payments automatically withdrawn from your checking or savings account on a regular interval you set up. The other good thing is that lenders will often lower your interest rate by as much as 0.25% if you make automatic payments. It may not sound like much, but it could knock a year, or more, off the life of your loan.

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        You can also have the payment automatically deducted from your paycheck; it won’t hurt nearly as much as writing out a check will. Because you never get to see the money, you won’t miss it as much!

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          4. Let the tax code work for you for a change.

          One of the good things about student loans is that the interest you pay on them is tax deductible, meaning you can subtract it right from your gross income. This means fewer taxes paid and usually a bigger refund for you.

          For example, if you pay $2,000 in interest on your loans in one year, and are taxed at a rate of 25%, that’s $500 less you owe in taxes, or $500 more in your refund check. If you turn that around and apply it as an extra payment towards your student loans, it means you will effectively be using the government’s money to lessen your debt.

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            5. Pay off variable rate loans first.

            If you have some loans that have a variable interest rate, consider paying them down faster first. While they may have a lower rate than your fixed rate loans, that can change quickly. As the economy improves (hopefully), interest rates can rise drastically, catching you off guard and raising your monthly payments significantly. You might even check into converting these to a fixed rate option. It never hurts to talk to your lender.

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              6. Consolidate.

              This option may not help newer loans that have a fixed interest rate, but for older loans, you can often consolidate them into one monthly payment. This is often at a rate lower than what you are paying on the individual loans. Even if you don’t get a better rate, it may still be easier for you to make one payment per month instead of several.

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              think about what you can do with the money

                7. Get someone else to pay it.

                While this sounds like a great idea, it’s not what you think—unless you have a rich uncle willing to write the check, that is! What you might seriously consider is that some companies that hire college grads may be willing to pay a lump sum payment towards your loans as part of your compensation package.

                You will probably have to accept a reduced salary, and agree to work for them for a specific number of years, but the reduced interest and length of time required to pay off your loans could make it worth it. Consider this option when you get to the salary negotiations stage or at your annual review if you are already working.

                No matter what you get your degree in, if you have student loans, repayment is soon going to be a reality for you. If you use some of these tips, you could easily save yourself thousands of dollars over the course of your loan. That’s no small change for simply applying some of these mostly painless suggestions.

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                Last Updated on January 21, 2020

                How to Develop a Millionaire Mindset in 6 Simple Steps

                How to Develop a Millionaire Mindset in 6 Simple Steps

                We all like to dream about being financially wealthy. For most people though, it remains a dream and nothing more. Why is that?

                It’s because most people don’t set their mind to achieving that goal. They might not be happy in their current situation but they’re comfortable – and comfort is one of the biggest enemies of growth.

                How do you go about developing that millionaire mindset? By following these simple steps:

                1. Focus On What You Want – And Take It!

                So many people are too timid to admit they want something and go for it. When there is something that you want to accomplish don’t think “I could never actually do that”, think “I could do that and I WILL do that”.

                Millionaires play to win, not to avoid defeat.

                This doesn’t mean to have to become a selfish jerk. What it means is becoming more assertive and honest with yourself. You don’t have to grab off other people. There is a big pot of unclaimed gold in the middle of the table — why shouldn’t you be the one to claim it? You deserve it!

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                2. Become Goal-Orientated

                It’s almost impossible to achieve anything if you don’t set firm goals. Only lottery winners become millionaires overnight. By setting yourself attainable goals, you will get there eventually. Don’t try to get rich quickly — get rich slowly.

                Let’s take the idea of making your first million dollars and expand on what kind of goals you might set to get there. Let’s also say you’re starting at a break-even position – you’re making enough to get by with a few luxuries, but nothing more.

                Your goal for the first year can be having $10,000 in the bank within a year. It won’t be easy but it is doable. Next, you need to figure out the steps you need to take to achieve that goal.

                Always look at ways to make growth before cutbacks. With that in mind, you might want to see if you can negotiate a pay rise with your boss, or if there’s another job out there that will pay better. You might be comfortable in your old job but remember, comfort stunts growth.

                You may also have other skills outside of your workplace that you can monetize to boost your bank balance. Maybe you can design websites for people, at a fee of course, or make alterations to clothes.

                If this is still not enough to make the money you need to save $10,000 in a year, then it’s time to look at cutbacks. Do you have a bunch of old junk that someone else might love? Sell it! Do you really need to spend $10 on your lunch everyday when you could make your own for a fraction of the cost?

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                If you are to become a millionaire, you need to start accumulating money.

                Here’re some tips to help you: How to Become Goal Oriented and Achieve More in Life

                3. Don’t Spend Your Money – Invest It

                The reason you need to accumulate money is for step three. Millionaires tend to be frugal people, and that’s because they know the true value of money is in investing. Being your own boss goes hand-in-hand with becoming a millionaire. You’ll want to quit your regular job at some point.

                Stop working for your money and make your money work for you.

                Rather than buying yourself a new iPad, that $500 could be used to invest in the stock market. Find the right shares (more on that later), and that money could easily double within a year.

                There’s not just the stock market — there’s also property, and your own education.

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                4. Never Stop Learning

                The best thing you can invest in is yourself.

                Once most people leave the education system, they think their learning days are over. Well theirs might be, but yours shouldn’t be. Successful people continually learn and adapt.

                Billionaire Warren Buffet estimates that he read at least 100 books on investing before he turned twenty. Most people never read another book after they’ve left school. Who would you rather be?

                Learn everything you can about how economics works, how the stocks markets work, how they trend.

                Learn new skills. If you have an interest in it, learn everything you can about it. You’d be surprised at how often, seemingly useless skills, can become extremely useful in the right situation.

                Start developing the habit of learning continuously: How to Create a Habit of Continuous Learning for a Better You

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                5. Think Big

                While I advise to start off with small goals, you absolutely should have a big goal in mind. If you have a business idea, then that is your ultimate goal – to start that business and make a success of it. If you want to invest your way to millions of dollars and do little work other than research, then that is your big goal.

                There is no shame in not achieving a big goal. If you run a business and aim to make $1 million profit in a year and “only” make $200,000, then you’re still significantly ahead of most people.

                Aim for the stars, if you fail you’ll still be over the moon.

                6. Enjoy the Attention

                To be successful, you have to be willing to promote yourself and enjoy the attention to a certain extent. Now the attention doesn’t need to be on yourself, it could be on your brand, but attention definitely attracts money.

                Never be embarrassed to get your name out there. That means finding a spotlight and being brave enough to step right up underneath it.

                If you run a business, try contacting the local papers. You’d be surprised at how amenable they often are to running a story about you and your business, and it’s all free publicity.

                Above all, remember: You control your own destiny. Push hard enough for anything and you’ll get it.

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                Featured photo credit: Austin Distel via unsplash.com

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