For most of us, paying off student debt in 2 years or less in not realistic with other obligations
I am now 5 years removed from completing my undergraduate studies and 2 years removed from completing my masters program. Here I am today, with a fairly sizable student loan balance and a monthly payment that’s more than my mortgage. Since completing my undergraduate program, I have read countless articles and blogs that frame up how these people paid off their students loans in 1 or 2 years. That is great, but that is not my reality. And I imagine that is not most college graduates’ realities these days.
I feel your pain. Every monthly, 20% of my income goes directly to my minimum monthly payment. Juggling this with a mortgage, auto-loan, bills, and savings can be overwhelming, especially when I first graduated college. I am hear to tell you that everything will be okay! Where there’s a will, there’s a way. With that being said here are tips I learned that can help you manage your budget while paying off little bits of your students at the same time.
Prioritize What’s Important to You Financially
Prioritizing my financial goals ultimately drives how much my student debt repayment is. For instance, I prioritize investment and traveling over being debt-free. On the other hand, some people prioritize being debt-free. Here are a few examples of things you can prioritize:
- Owning your home
- Making investments
- Saving for retirement
- Funding your children’s educations
- Paying off debt
- Traveling
- Starting a business
All these goals are amazing and everyone has different goals they work to achieve. Prioritize for your goals, write up a plan (literally), execute the plan, and refine the plan.
Tactics to Attack Student Debt
Student debt is two-fold for me. Although, I hate seeing that payment come out of my account every month and imagine what else I could do with those funds; I also know my education was an investment into my career trajectory. I may have debt but I have the education and a good career path to show for it. Here are a few things I do to help pay down my debt and pay less in interest over time.
- Pay as much extra each month as I am comfortable with.
- Use part of a bonus or tax return to pay down the loan with the highest interest rate.
- Use part of my yearly wage increase to put towards my additional monthly payment.
- Have a side job and use the earning towards student debt.
- Refinance the student loans to lower the interest rate or shorten the loan terms.
Stay Focused and Don’t Give In
I have a tendency to lose focus on my goals and become discouraged if I don’t see the progress I expect. Other times, I forget to make the additional payments and forget my ultimate goal. When I do backslide and lose focus, sometimes it helps me to look back to the beginning and remember how far I’ve come. I think back to my undergraduate commencement and remember having $100 in my bank account and a pile of fresh debt I hadn’t started paying yet. Five years later, some debt is paid, I own a home, and am well positioned for retirement. To keep me from losing focus, here are a few things I do to stay on track with my goals:
- Set auto-payments from my bank account to my investment account, savings account, or loan.
- Use my phone’s calendar to send reminders of extra payments.
- Document the plan and make it easily accessible.
In the end, it’s important to understand that paying off any debt is a process. Paying it off doesn’t happen overnight. It takes time and patience, just remember to make a plan, prioritize, and stay focused!
