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So you went to college to land that dream job but wound up in thousands of dollars in student loan debt instead, right?
Yep, welcome to my world and the world of 44 million other borrowers who owe more than $1.4 trillion in student loan debt.
To say the least, it sucks to have a huge chunk of your income going towards something you hoped would increase it, but luckily there are ways to pay off student loans fast, even when your money is a little funny.
Refinance your loans
Refinancing your high-interest student loans is one of the best ways to decrease your payments and pay off your debt faster. Instead of being eaten alive by interest, you can save thousands with low rates.
To sum it up, refinancing is when you get a new loan to pay off your existing loans with your current lender. Instead of keeping up with multiple payments, they’re all consolidated into one.
If you’re interested in refinancing, I highly recommend using SoFi. SoFi is the leading student loan refinancing provider in the entire US, and 98% of members who refinance with them say that they would recommend them to a friend.
In addition to lower rates and flexible terms, you’ll get free financial advice, career coaching, and other added benefits!
Check your rate for free here (without it affecting your credit) to find out how much you’ll be saving. Be sure that your rate is lower than the original rate to reduce paying more over the life of the loan.
As with any good thing, there’s also a downside. This option is only available through private lenders which means you may lose the benefit of applying for programs such as an income-driven repayment plan or loan forgiveness. Be sure to do your research before making the switch.
Use large chunks of money
Many people receive a large sum of money at least once a year in the form of a tax return, lawsuit settlement, etc. Instead of living la vida loca, consider using a portion of those funds as a loan payment to help get you ahead of the game.
Back in my college days, I would take a percentage of my student refund check and apply it to the lowest loan balance. By doing this, I managed to pay off one of my student loans before I even graduated!
Comb through your budget and trim the fat
There’s no easier way to find extra money than by combing through your budget to determine where you can make cuts and adjustments. Even if you feel as though there’s no more wiggle room, chances are there’s something that can be adjusted.
Negotiate lower payments with service providers and determine which plans you can downgrade or get rid of completely. I saved around $55 just by switching from an unlimited data cell phone plan to a prepaid plan.
Honestly, I can’t even tell the difference!
Then, take the extra money that you find and use it to beef up your student loan payment.
Expenses to reduce/downgrade
- Cell phone plans
- Cable/WiFi plans
- Eating out
Expenses to cut
Related posts to check out next!
Find a side hustle
A side hustle provides you with an additional source of income. This can be anything from your typical part-time job to a hobby that you’ve monetized, such as writing.
Here are a few ideas to get you started:
Sell old/unwanted items. Instead of letting old and unwanted items sit around hogging up space, turn them into a profit. Host a yard/garage sale from time to time or put your items up for sale online. Sites like eBay and Mercari allow you to easily post your items for sale.
Get paid to take surveys during your spare time. Did you know that you can get paid to surf the web and watch videos?
Sites, such as Swagbucks, allow you to earn free gift cards and cash by simply completing a few small tasks that you probably do daily anyway.
Offer your services for a fee. When you’ve got a gift then add tax.
I’ve always enjoyed writing and others would often ask me to help them write and edit their papers. Once I realized I could make a profit from these ‘favors’, I began charging a small fee for proofreading and editing. I even went on to work as a freelance academic writer making roughly $10 a page.
There’s a side hustle out there that works for you and your schedule, you just have to find it!
Related reading: 10 Easy Ways You Can Make Extra Money From Home
Use repayment programs only when necessary
Repayment programs, such as the Income-Driven Repayment Plan or the Pay as You Earn Repayment Plan, can significantly lengthen the amount of time it will take you to pay off your student loan debt. This causes you to pay out more in interest, thus losing thousands!
Of course, not everyone can afford the standard payment so take advantage of these programs only when you need them. I’ve been on the Income-Driven Repayment Plan before and there’s no shame over this way.
If you can afford to be without these programs then try to stay away from the apply button. When you’re only making a $5 payment on a $20,000 loan can you imagine just how long it’s going to take you to get to a $0 balance? Hello grandma.
Take advantage of automatic enrollment interest reductions
Some lenders may offer an interest rate reduction to those who sign up to have their loan payments automatically deducted from their bank accounts. Be sure to take advantage of this to help your dollar stretch further.
Give up your raise
OK, so you’re not really giving up your raise, but in a sense you are.
Calculate how much more you are making after your raise and use that amount to throw towards your loans. You’ve made it to this far without that extra money so you can survive a while longer.
If you’re really hurting for cash, just use the extra money as part of your minimum payment but ideally, this will need to be used as an additional payment. Making extra payments helps to reduce the amount of interest paid on your loans thus helping you pay them off quicker.
The quicker you get out of student loan debt, the quicker you can get back to enjoying those extra funds.
Use credit card rewards
If you’re someone who has a hard time resisting the temptation of credit, just keep scrolling. If you feel as though you’re responsible, cashback rewards are great for helping to pay off your student loans.
This requires no extra work on your end. Simply use your credit card to make the purchases you were going to anyway and get cashback.
Related reading: The Simple Trick to Paying off Credit Card Debt Fast!
Some cards offer a specific amount of cashback if you meet the spending requirements within a certain amount of time. For example, spending $1,000 within three months of opening your account may give you $150 in cashback rewards.
To maximize the rewards, consider paying your bills using your credit card and then paying off the balance by transferring funds from your bank account. You’ll meet the minimum spending requirements and be able to use that extra money as part of your student loan payment.
Jake over at IHeartBudgets explains how he used credit card rewards to pay off $1100 worth of student loan debt by meeting the minimum spending requirements!
Now, this option is not for those who have a hard time resisting temptation because you’ll wind up in a bigger mess than what you originally started with.
Credit cards that I own with cashback rewards and 0% intro APRs
Discover: This card has a 0% intro APR for 14 months. You can earn 5% cashback on rotating quarterly categories, and 1% cashback on all other purchases.
Get a $50 statement credit when you make your first purchase within three months through this link.
American Express: This card has a 0% intro APR for 15 months. You can earn 3% cashback at supermarkets, 2% cashback at U.S. gas stations & select U.S. department stores, and 1% cashback on all other purchases.
Get $200 back after you spend $1,000 in purchases within the first 3 months.
Go with the snowball or the avalanche
If you want to pay off your student loans, you need a strategy that compliments your income and behavior. In the personal finance world, there are two common methods you can use: the snowball or the avalanche.
The snowball method is when you start with the lowest debt balance first and then work your way up. Paying off debt is hard and at times the stagnancy can make you feel like you’re getting nowhere fast.
By targeting your smallest balance first, you get quicker wins which helps you gain momentum. When that balance is paid in full you roll the extra money into the next smallest balance.
Avalanching your debt is when you tackle the balance with the highest interest rate first. Although this method may make you feel as though you are moving at a snail’s pace (instant gratification millennials beware), it does help to cut down the amount you pay in interest thus getting you out of debt quicker.
Not sure which method to choose? Read The Debt Snowball vs Avalanche. Which is Right for You?
When doing my research about student loans I came across this free program and decided to check it out. Upromise allows members to earn cashback by shopping online, eating out at participating restaurants, and using a Upromise Mastercard.
Your earnings can be deposited directly into a checking or savings account to be used towards a student loan. You can even link a 529 Plan and transfer earned dollars!
It seems as though millennials, myself included, are up to their eyeballs in student loan debt without any hope of getting out soon. Despite how we all may feel, your loans do not have to be a death sentence in regards to your finances.
Creating a specific plan-of-action can help you pay off student loans fast and put you on the path towards financial freedom.
Resources I’m Loving!
Pay off Your First Debt Balance. I wrote this eBook to prove to others that income shouldn’t hold them back. I ripped through more than $19k in under 3 years on a single, moderate-income and I’m giving you all the strategies that I used to do it! Grab it here.
Digit. Designed for those with bad spending habits, Digit finds money that it can set aside for you. Simply connect your checking account, and Digit will analyze your income and spending. You’ll be saving and not even know it! Try it free for 30 days!