Throughout the country, current and former students have extraordinary amounts of student loan debt. It’s not unusual for these numbers to exceed $100,000. Fortunately, there’s no immediate need to panic. You can pay off your student loan debt quickly – and continue to save for emergencies and retirement.
Take a look at these tips so that you can find some financial peace of mind.
1. Create a Monthly Budget
If you don’t already stick to a budget, it’s time to get serious. A set allowance makes it easier to spend money the right way – in other words, it’s time to give up those $10 salads. You can use your leftover cash to pay down your student loan debt. Easy, right?
Once you’re aware of your after-tax income, you can choose the right budget system for your needs. Each method takes a different approach. For example, the 50/30/20 strategy allocates your funds in percentages. 50% goes toward necessities, 30% goes toward wants and 20% goes toward debt. Many people prefer this tactic because it’s so straightforward.
Whatever you decide, make sure that you create a monthly budget.
2. Eliminate Capitalized Interest
Typically, student loan debt has a grace period of six months. In particular circumstances, you can extend this term – like if you join the military. But in general, students have half a year to find employment so that they can make payments. At this time, it’s wise to pay off any accrued capitalized interest. This amount increases whenever you don’t put any money toward your student loan debt.
Essentially, it’s another charge that you’ll need to deal with either way. And often, this specific number can add up to thousands of dollars. It’s beneficial to get rid of it before it capitalizes when your grace period ends.
3. Refinance Your Debt
You could also choose to refinance your student loan debt. This tactic allows you to reevaluate your current situation. If you have a decent credit score and a steady income, a different lender can take over. They’ll calculate a new rate and term that you’ll have to pay instead.
This new loan balance is equivalent to the same amount as your original loan. So, if you owe $5,000, you’ll still need to pay $5,000. But you’ll be able to do so much faster because you’ll pay less interest. You may also be able to reduce your monthly payments. Together, these aspects make it easier to pay off your student loan debt as soon as possible.
4. Make Extra Payments
Sometimes, servicers allow borrowers to make extra payments on their student loan debt. For instance, you currently pay $300 a month. It makes sense to add $100 to that total whenever you have the disposable income. As a result, you’ll pay less in interest over time – and become debt-free much earlier.
But before you start, you’ll need to notify your lender. It’s not uncommon for them to apply extra money to the interest of your loan. If that’s the case, you won’t be able to accomplish significant progress. Any additional money needs to go toward the principal balance. That’s the amount that you borrowed in the first place – minus all other fees.
Talk to your lender before you start to make extra payments.
Use These Tricks to Eliminate Student Loan Debt Quickly
It’s not feasible to become debt-free overnight – but you can make this process a whole lot easier. Consider these tips to pay off your student loan debt fast.
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