Are you currently drowning in student loan debt, just praying that someday it will eventually go away? I know the feeling. Having student loan debt can be financially stressful and mentally draining.
For 1 in 4 Americans, this is their reality. As of 2020, 44.7 million Americans have student loan debt with the average student loan debt being $37,172. Imagine what you could do with that money if you didn’t have a monthly loan payment.
Although having debt is a reality that a lot of people struggle with, there are strategies you can use to pay off your loans quickly and achieve the financial freedom you deserve! You CAN achieve a debt-free life and I’m going to walk you through the steps you can take to do so.
In a year and a half, I’ve been able to pay off $28,000 of my debt using the 8 strategies I’m going to share with you below, this incredible budgeting tool and a positive mindset!
Keep reading to learn how you too can pay off your loans faster, achieve financial freedom and start living your dream life!
Disclosure: This post may contain affiliate links which means I receive a small commission if you make a purchase from one of the links. Obviously all opinions are my own! I only share products that I use and truly love! 🙂
1. Start paying back your loans ASAP
First thing that I highly, HIGHLY recommend you do is start paying back your loans as soon as possible! My student loans were in a grace period for 6 months, so I wasn’t required to pay anything until the November after I graduated college.
I didn’t think it was a big deal to wait until November to start paying my loans back, but I wish I would’ve realized sooner how important it is to pay off your loans as soon as you can. EVEN during your grace period.
The longer you wait to start paying back your loans, the more interest that will accrue. Which means, you will have to pay back even MORE money.
Learn from my mistake and start paying off your loans as soon as you are able to. If you can put $50 towards your loans while you’re still in college do it! Continue paying whatever you can during your grace period. It makes all the difference.
Five months into my grace period (a month before I had to start making monthly payments on my loans), I read a book called The Financial Diet by Chelsea Fagan. It was easy to follow and simple to understand for anyone who doesn’t even know where to begin when it comes to finances.
Reading this book made me extremely motivated to get a head start on paying off my student loans and becoming debt free. The day after I finished the book, I submitted my first online payment to my loan provider! Now, although I only made one early monthly payment, it was a start. Because of it, I will be one month closer to paying off my loans.
So, what can you take away from this? If you are currently sitting on any amount of debt, go and make an online payment right now. You will thank me later.
2. Look at how much debt you owe
Now, I know the amount of debt you owe might be scary and you probably don’t want to look at your account. But, you are not doing yourself any favors by not looking at the amount of debt you owe.
The debt will still be there no matter what! So you might as well look at it, so you can create a plan for how you are going to tackle it. Waiting around will do you no good because more interest is accruing each day. And interest sucks!
I remember making my first payment of $400. I was so proud to start making a dent. Then, I looked at my account again a week later and another $10 was just added on. (That might not seem like a ton, but it’s money that I would much rather have in my pocket).
As a rule of thumb, look at your account every couple weeks to keep yourself on track, check progress, re-evaluate goals, etc.
3. Always pay more than the minimum monthly payment
If possible, always, always, always, pay more than your monthly minimum payment. If I paid the minimum payment on my loans, it would take me 10 years to pay off my debt. I can’t imagine having my student loan debt loom over me for that long.
At the moment, I’m on track to pay off all of my loans within the next 11 months. That means I will have paid off a total of $50,000 within 3 years. Do you want to know how I was able to do it? I paid significantly more than the minimum payment and I budgeted hard-core. There were some months where I paid over 7x more than the minimum payment.
I don’t say this to brag, I say this to motivate you!! If you pay any amount more than the minimum payment set for you, you will pay your loans off sooner.
Now, how much sooner is totally dependent on how much extra you can put down. Obviously, the amount will vary from person to person, but if you can put down an extra $500 do it! If you can only put down an extra $50, do that! Do whatever is within your means.
If you are passionate about living a debt-free life and finally saying good-bye to your student loans, then you need to get serious about how much extra money you can realistically put down each month. This is how you’re going to get out of debt faster.
For the time being, cut out some of your entertainment or “fun” expenses from your budget until you’re in a good place financially. If you need some tips, I have an entire blog post talking about the 15 money saving hacks that I use to save hundreds.
4. Set up auto-payments!
Typically, when you set up auto-payments, you’ll get an interest rate reduction, which is awesome! I know my loan provider offers a 0.25% interest rate reduction just by enrolling in monthly automatic payments. Although this is a small amount, every penny makes a difference. And this is the easiest way to reduce the amount of money you have to pay without doing anything!
5. Track your payments, goals, and progress!
Another tip that has really helped me as I pay off my loans is documenting all of my payments, my goals and my progress. This is useful because when you’re six month into paying off your loans and you’re feeling discouraged, you can look back and see the progress that you’ve made!
To track my payments and manage all my finances, I use Google Sheets. I specifically like using Google Sheets because I’m able to view my documents on any device. If you don’t have a document that you use to track your monthly payments and progress, I highly recommend you set one up.
If you don’t want to set it up yourself, I have a super awesome, customizable budgeting tool that I’ll be sharing with you all very soon. This is the exact document that I use to track all my expenses, income, debt and monthly bills.
6. Set Debt Repayment Goals
Setting goals around debt repayment is important because it gives you something to work towards. Get out a piece of paper and write down your debt payoff goals for this year. Write down both short and long term goals that you have.
Think about when you want to have your loans paid off by. How many years will it take you to pay off all of your debt? Think about how much money you want to pay off in the next year. How much money can you realistically pay off every month?
Ask yourself all of these questions and form your goals around your answers. I’ve found that it works best if you first determine when you want to have your loans paid off by and then figure out what it will take for you to achieve that.
For example. My goal is to have all my loans paid off within three years of graduating college. Now to accomplish that, I had to figure out what I needed to pay monthly.
Having solid goals in place and seeing the progress that you’re making on paying off your debt will push you to keep going! That feeling of accomplishment has such a positive impact on your mood and your feelings towards debt repayment. So go set some goals!!
7. Cut back spending in other places!
If you’re serious about paying off your loans quickly, then you should be willing to cut back your spending in other areas of your life. Maybe that means not buying any new clothes for a little while, not going out for dinner and drinks with friends every weekend, not splurging on concert tickets, etc. Take a look at your expenses and figure out where you can cut back a little. Remember this is just temporary and it will allow you to live a financially free life!
If you’re really looking to cut back your spending, one of the best things you can try is a 30 day no-spend challenge! I actually did this challenge at the beginning of the year and it was life-changing. Not only was I able to pay $1,000 towards my student loans, but I also paid $430 towards my car loan. If you want to learn more about how you can do a no-spend challenge and save major money so you can pay off your debt faster, click HERE!
8. Put extra money you receive towards your debt!
Any money you receive from your tax refund, holidays, birthdays, work bonuses, etc. should be used to pay off debt! This is all extra money that can be used to lower your overall debt and pay it down faster.
When I received my tax refund this year, I put 75% of it towards my student loans. This was money that I wasn’t expecting, so putting it towards my loans didn’t bother me. If you receive extra money, I highly recommend doing this as well. Whatever you do, do not go out and spend it all!
Extra Tip!
Lastly, another great tip is to refinance your student loans to get a better interest rate. This will help you save money on interest in the long run! I personally haven’t done this because my interest rate is low to begin with. But, if you think you could get a lower rate, definitely look into refinancing!
Hopefully this was helpful to all of you college grads or anyone who is getting close to graduating! I wish I would have known some of these earlier on so that I could have acted on them sooner!
Need more money saving strategies? Click here to read about the 9 money saving and spending tips that I live by and you should too!
Have an amazing week!
