Lately, I have received many questions asking how I was able to pay off my student loans so quickly. I haven't talked much about my student loans since I paid them off in July of 2013, but I know many struggle with their student loan repayment plan each and every day.
Due to this, it is a topic I am always happy to cover. Paying off your student loans is a wonderful feeling and I want to help everyone else experience the same.
Background on my student loans.
To start off, I am going to provide a quick background on my student loans.
I worked full-time all throughout college. I worked as a retail manager from when I was a teenager until I graduated with my two undergraduate degrees (I was a double major). Then, I was lucky and found a financial analyst position right when I graduated. I took around six months off from college, then I went back to get my Finance MBA, all while still working full-time and building my business.
Even though I worked full-time, I didn't really put any money towards my student loan debt while I was in college.
Instead, I spent money on ridiculous things like going to my favorite Mexican restaurant WAY too many times each week and spending money on clothing that I didn't need.
I didn't have a realistic budget back then, at least not a good one. I didn't think about my student loan repayment plan at all either!
So, when I finished my Finance MBA, I finally came to terms with the fact that I needed to start getting real about my student loans. I had six months after the day I graduated with my Finance MBA until my student loans would come out of deferment.
I knew I had to create an action plan to get rid of my student loans.
And that's when I took a HUGE gulp and decided to add up the total of what I owed.
After adding all of my student loans together, I realized I had $38,000 in student loan debt. No, this might not be as much as some of the crazy stories you hear out there where others have hundreds of thousands of dollars worth of student loan debt, but I wasn't exactly near the average of what others owed either. I also wasn't happy because I kept thinking about how I had been working full-time for many years, yet I didn't even put a dent on my student loans.
After totaling what I owed, I decided to buckle down and start my debt payoff near the end of 2012.
I ended up finishing paying off my student loans in early July of 2013, which means it took right around seven months for me to pay them off completely.
It's still something I cannot believe is true. I always thought I would have student loans hanging over my head for years, so I am extremely grateful that I was able to eliminate them so quickly.
Now, you may be wondering “Well, how do I do the same?” Or you might even be thinking that it's not possible for you.
However, I believe you CAN do the same and that it IS possible for you.
For some, it might take longer to pay off your student loans or it might even take less. It depends on how much you owe, how much time you can spend on making more money, and honestly, it also depends on how bad you want it.
Related tip: I highly recommend SoFi for student loan refinancing. You can lower the interest rate on your student loans significantly by using SoFi which may help you shave thousands off your student loan bill over time.
Here are my tips to pay off your student loans quickly:
Do you know how much student loan debt you have?
Like I said above, the first thing that made me jumpstart my student loan repayment plan was the fact that I took the time to add up how much student loan debt I had.
It shocked me so much that I probably wanted to throw up. That's good though because it can be a good source of motivation for most people. I know it was for me!
When you add up your student loans, do not just take a guess. Actually pull up each student loan and tally everything down to the exact penny.
I highly recommend that you check out Personal Capital (a free service) if you are interested in gaining control of your financial situation. Personal Capital is very similar to Mint.com, but 100 times better as it allows you to gain control of your investment and retirement accounts, whereas Mint.com does not. Personal Capital allows you to aggregate your financial accounts so that you can easily see your financial situation, your cash flow, detailed graphs, and more. You can connect accounts such as your mortgage, bank accounts, credit card accounts, investment accounts, retirement accounts, and more, and it is FREE.
Understand your student loans.
There are many people out there who do not fully understand their student loans. There are many things you should do your research on so that you can create the best student loan repayment plan.
This mainly includes:
- Your interest rate. Some student loans have fixed interest rates, whereas others might have variable rates. You'll want to figure out what the interest rate on your loans are because that may impact the student loan repayment plan you decide on. For example, you might choose to pay off your student loans that have the highest interest rates first so that you can pay less money over time.
- Student loan reimbursements. Some employers will give you money to put towards your student loans, but you should always do your research when it comes to this area. Some employers will require that you work for them for a certain amount of time, you have great grades, good attendance, and they might have other requirements as well. There are many employers out there who will pay your student loans back (fully or partially), so definitely look into this option.
- Auto-payments. For most student loans, you can probably auto-pay them and receive a discount. Always look into this as you may be able to lower your interest rate by 0.25% on each of your student loans.
Create a budget.
If you don't have one already, then you should create a budget immediately.
First, include your actual income and expenses for each month. This will help show you how much money you have left over each month and how much money should be going towards your student loan debt each month.
Cut your budget to create a quicker student loan repayment plan.
The next step is to cut your budget so that you can have a better student loan repayment plan. Even though you may have just created a budget, you should go through it line by line and see what you really do not need to be spending money on.
There's probably SOMETHING that can be cut.
You might not have even realized it until after you wrote down exactly how much money you were shoveling towards nonsense until now. However, now is better than never!
We worked towards cutting our budget as much as we could. I can't remember exactly how much we cut it by, but I know that it was enough to where I felt like I was putting a dent in my student loans.
Even if all you can cut is $100 each month, that is much better than nothing. That's $1,200 a year right there!
Side note: If you are still in college, I highly recommend that you check out Campus Book Rentals. It allows you to get your text books for cheap. I almost ALWAYS rented my text books and it saved me a ton of money!
Earn more money as a part of your student loan repayment plan.
The month I paid off my student loans was a month where I earned over $11,000 in extra income. While this does sound crazy, I did start off by making just $0 in extra income. Everyone has to start somewhere.
Even if $11,000 a month isn't possible for you, I'm sure something is. If you can make an extra $1,000 a month in extra income, that can help you knock out your student loans in no time.
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Pay more than the minimum payment each month.
The point of all of the above is to help you pay off your student loans. However, you can always go a little bit further and pay off your student loans more quickly. The key to this is that you will need to pay more than the minimum each month for you to speed up your student loan repayment plan process.
It may sound hard, but it really doesn't have to be. Whatever extra you can afford, you should think about putting it towards your student loans. You may be able to shave years of your student loans!
How much student loan debt do you have? What's your student loan repayment plan?
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