How to Pay Off Student Loan Debt: Paying Off $20,000 in 2 Years
For many of us, student loans are the only way to get ourselves through university. However, being in debt is really stressful, and I think the best thing we can do is to get rid of the debt as soon as possible once we graduate.
Today I want to share with you some tips on how to pay off student loan debt faster.
Before I get started with sharing tips on paying off student loan debt, I want to share some context into how I got into debt in the first place.
When I was 18, I went to Toronto to go to university, and I finished when I was 22. By the time I had graduated, I had accumulated over $20,000 in debt. I felt that this was a normal thing and that everyone who goes to university ends up going into debt.
This is somewhat true, unfortunately: when you are that young, you don't really know any better. I went into student debt in order to pay off my tuition fees every semester, as well as my books, rent, food, etc.
At that time, I had no idea how I was going to pay off my student loans. I did not know where to start, but I knew that I did not want to be in a position where I felt like I owed anything to anybody.
Luckily for me, before I graduated from university, I was able to secure a two-year fixed-term contract, and I was promised a specific salary each year.
Knowing the approximate amount of salary that I would get every year, as well as the basic expenses such as rent or utilities, I knew that the leftover amount from my pay would be used to pay off my student loan debt as soon as possible.
Now that I have given you a little bit of context as to how I got into debt, now let's get on to the tips.
1. Figure out the numbers
The first step in repaying student debt is figuring out how much you actually owe. I know that it might seem scary or a little bit nerve-wracking, having that piece of paper with the total amount of money that you owe, since it might be a really huge figure.
Still, the best way to pay off student debt is to try to face the facts instead of running away from them. Figure out what it is that you actually owe, the total amount of it, the minimum monthly payments, as well as the interest rate for that loan.
2. Evaluate your student loan repayment options
Your options are going to depend on the type of loans that you owe, how much you can afford to pay, and your financial goals.
Personally, I knew that I wanted to get rid of my debt as quickly as possible, so I was ready to have a higher monthly payment for a shorter term period. For you, it might be different, if your financial situation and goals are different.
3. Set up automatic payments
Next, make sure that you pay your loans automatically. Set up your loan payments so that they are automatically deducted from your checking account each month. By doing this, you will not have to worry about paying late or damaging your credit.
4. Pay a little extra
My next step is to be consistent and pay extra if I have newfound money. Newfound money does not necessarily have to be money that you find on the ground or in between your couch cushions.
Rather, it could be any money that you did not expect to receive, such as a tax refund, rebates, gifts from your family, or a bonus. You can use this newfound money for your loan principal so that it really takes out a huge chunk from your loan every time.
5. Set up more frequent payments
My last tip is for you to try weekly or biweekly payments if possible. Personally, I did monthly payments, but in retrospect, I wish I would have made biweekly payments, as it would help me pay it off a lot faster.
How to pay off student loan debt
Tackling your student debt more proactively means that you are paying it off sooner rather than later.
There are a lot of ways for you to manage your debt, but the worst thing that you can do is nothing. Make sure to take the first step in getting out of debt so that you can get on your way to financial independence.
Do you have any student loan debt? If you had any in the past, how long did it take you to pay it off and what helped you on your debt-free journey?
Feel free to leave a comment and share your own experience and tips on getting out of debt.