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Student loan debt is at an all-time high.
According to the Federal Reserve Bank of New York, student loan debt has reached over $1.3 trillion.(1) If that’s not disturbing enough, the average student loan debt per student is hovering at $37,172.(2) Student loans are the most popular form of debt in America right now—even more so than credit cards, mortgages, or any other kind of loan.
Whether you’ll be graduating from college in the upcoming months or you’ve been nursing those student loans for a decade, you can establish a plan for paying off student loans quickly.
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There Isn’t a Magic Solution for Paying Off Student Loans Quickly
Alright, before we dive in—let’s just clear the air. There is no magic plan for paying off your student loans. We don’t have a special trick to share or a way to help you get rid of it all in 30 days flat. It’s not going to happen overnight. Sorry, folks.
But by implementing these steps, you can get on a fast track to dumping your student loan debt for good. Paying off your student loans is 100% doable, but it’s going to take time, dedication, and a whole lot of sacrifice.
Make a Budget
Are you sticking to a budget each month? If not, you need to start doing this ASAP. A monthly budget will show you exactly where your money is going and where you can cut back. You might even find "extra" funds you didn’t know you had. Throw that money at your student loans each month, and you’ll be making progress in no time.
With our free budgeting app EveryDollar, you can even create a line item in your budget for each student loan you’re paying off. That way you’ll see the progress as you continue to chip away at student loan debt.
Pay More Than the Minimum
You’ve probably heard this one before. If you’re only paying the minimum each month, you’re not getting anywhere fast. You might not even be breaking even with the interest you’re accruing! By making larger payments, you’ll be able to attack the principal at a quicker rate. Of course, if you’re having trouble even making that minimum payment each month, you might find the idea of paying more money completely laughable. With that in mind . . .
Be Ready to Make Sacrifices
Remember when we mentioned sacrifice? Here’s where it comes into play.
Look at your lifestyle. What "luxuries" have you been living with that you can do without? We’re looking at you, fancy cable package. Maybe slice your housing cost in half by finding a roommate. Do you have a spare guest room not getting much use these days? Rent it out! Imagine how quickly you could pay off your loans if your housing costs were drastically cut.
What do you have that you could sell? Dig through your closet and comb through your garage and storage. And if your biggest problem is income, pick up a part-time job on the nights or weekends and toss that extra cash directly at your student loan debt.
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Pay Off Student Loans With the Debt Snowball
The debt snowball method has helped millions of people dump their debt, and it can work for student loans, too! Simply list all of your loan debts from smallest balance to largest. Start paying on the smallest balance first. Put every extra bit of money you have into paying off that first debt while still paying the minimums on everything else.
Once you’ve paid off the first debt, move to the second smallest balance. Take everything you were putting toward the first one and add it to the minimum of the second balance. Once that debt is paid, move on to the next one and repeat the process until you’re finally out of debt.
You might be thinking, Ugh, this is going to take forever! It definitely isn’t going to happen overnight. But as you work the debt snowball method, you’ll feel the progress you’re making as each student loan disappears. Knocking those little ones out first will give you a couple of quick wins to keep you motivated as you start paying off the larger student loans fast!
Apply Every Raise and Tax Refund Toward Paying Off Your Student Loans
What do most people do when they get a raise? They spend it all. And then they wonder why it felt like they didn’t get a raise. As you move up in your career and get promotions along the way, put your additional income toward paying off student loans. Don’t move to a bigger house. Don’t buy a new car. Don’t get a fancy wardrobe upgrade. Use your income boost to make major progress!
The same goes for getting your tax refund. How many people do you know who take that "free money" and use it to buy new furniture, a big screen television, or a new gadget? Here’s a tip: Your tax refund isn’t free money from the government. They’re simply giving you back the money you already paid them because you gave too much money. Take the refund and put it directly toward paying off your student loans quickly!
Stay Motivated and You’ll Be Paying Off Student Loans Fast
Look, we’re not here to beat you up over taking out student loans in the past. But we do want you to realize the power of living debt-free. There’s no need to drag out your student loan payments for the next 25 years. When your money doesn’t have Sallie Mae’s name on it every month, you can do so much more with it!
If you’re looking for a way out of debt, get Dave’s #1 New York Times best seller The Total Money Makeover. It can give you the steps to getting rid of debt once and for all.