Student loan debt has reached yet another all time high at $1.48 trillion, according to Student Loan Hero. That’s more than double the amount of outstanding credit card debt in the United States. To say student loan debt is a drag on the economy would be an understatement.
Recent graduates are delaying home ownership, passing up on buying cars, avoiding vacations, and even postponing marriage become of burdensome college loan debt. According to a recent Gallup poll roughly 59% of Millennials are single and have never been married. Compare that with just 16% of Gen Xers at the same age.
With student loan debt rising and the cost of living going up each year how can recent grads avoid becoming another statistic?
Put Student Loans Front and Center
The only way to defeat student loans is by putting them front and center.
If you put the same energy and focus you put into getting your degree towards paying off your loans than tackling student loans will be a breeze.
Pay More Than The Minimum
The only way to pay off your student loans is by actually paying off your student loans. The math is simple – if you owe $50,000 in student loans then you will have to pay $50,000 in cash plus interest.
Paying the minimum is a sure-fire way to be in student loan debt for the next 30 years. I know what you’re thinking,
“But I can’t even afford the minimum payment.”
If you can’t afford the payment now then you won’t be able to afford it in 10 years when your student loan balance doubles, you have a wife, kids, and a mortgage!
That’s right, if you’re not paying more than the interest that is accruing monthly then your student loans are actually growing. Minimum payments, loan consolidations, refinancing, and praying your loans will get forgiven isn’t a winning strategy. The best way to pay down the balance is to pay as much as financially possible within your budget.
Make a Budget
If you constantly ask yourself, “where does all my money go?” Then you probably don’t have a clear budget. If you don’t have a clear budget then there’s no way you can pay more than the minimum payment. Creating a monthly budget and cutting out unnecessary expenses will free up more of your income to pay down debt.
Make a goal for yourself – say you want to pay off your student loans in 3 years. Calculate what you will have to pay monthly and incorporate that payment into your budget. You might have to go without a fancy vacation for a year or two but paying off your student loans will ensure you’ll enjoy vacations for the rest of your life.
Stop Making Excuses
Before you can begin your journey of paying off your student loans you must take responsibility for your finances.
- Yes, the system is unfair and the college experience is overpriced.
- Yes, it was irresponsible of your parents to let an 18-year-old get into tens of thousands of dollars of student loan debt.
- Yes, you might not have the job you’ve always wanted and can’t afford to pay as much towards your loans as possible.
Regardless of all these facts, student loans are here to stay. Acceptance is the first step to recovery. However, there is hope! Understand that you don’t have to carry this student loan burden for the rest of your life and paying off the balance faster will ensure the health of your financial future.
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