Student loan debt is a tremendous financial burden for young adults to carry. Here are 11 practical methods to pay off student debt faster.
After making payments for the better part of a decade, the end of my student loan debt is finally in sight.
Based on the current balance, I anticipate that I will have it paid off by the end of the year.
In other words, I only have 6 months of student loan debt payments left!
Now that I’m close to paying it off, I wanted to discuss the methods I’ve used to eliminate student loan debt.
Hopefully these methods will help save you money on interest and shorten the timeframe that you are required to make payments.
Let’s dive into my student loan story first.
Student Loan Debt: (11) Practical Ways To Quickly Pay It Off
Student Loan Debt Balance: $2,781.92
At present, my student loan balance sits at $2,781.82.
That number isn’t looking so bad anymore, to tell you the truth. In fact, it’s low enough that I could just pay it off in a lump sum now.
But back when I began making payments, the value of my student loan was over $23,000.
So, that’s why it’s such an exciting accomplishment to be only 6 months away from paying it off.
As I projected back in my financial goals for January 2020, I expect to have the remaining balance finished by December 2020.
How I Paid Down My Student Loan Debt
First off, I just want to say that I’ve been paying off my student loan completely by myself without any financial support.
I don’t live at home with my parents, nor do I receive any financial assistance. I haven’t received help with a car, downpayment, or anything else.
Also worth noting, I paid it off while paying myself first.
Related: Pay Yourself First – How To Pay Yourself First
The point is: if I can pay off my student loan, you can too.
Now that I got that out of the way, the method I used to pay off my student loan debt is bi-weekly payments.
By making bi-weekly payments instead of monthly payments, I automatically put more money towards student loan debt.
For example, my student loan payment is currently $118.74 bi-weekly. This means I pay 26 times during the course of a year, which works out to $3,087.24 annually.
Alternatively, if I were to make monthly payments, I would pay $237.48 per month. This works out to $2,849.76 annually.
So just by switching to bi-weekly payments, you can effortlessly make an extra month’s payment per year.
This adds up over time and could shave years off your payment schedule.
In addition, I have occasionally and randomly made extra payments to speed up the process. To meet my December 2020 target, I may need to make a small lump sum payment.
How Paying Off My Student Loan Debt Will Improve My Life
As a financial independence seeker, the last thing I want is debt subtracting from cash flow.
Therefore, the main benefit from paying off my student loan debt will be more free cash flow.
At the very least, I will have an extra $3,087.24 per year worth of free cash flow.
It’s an expense that I no longer have to work to pay for.
Now, I can spend or reinvest the money instead of putting it towards my student loan.
Because of the extra $3,087.24 per year, I expect a spike in monthly dividend income updates in 2021.
Further to my plans for the extra cash, I will likely save half of the money to buy a condo, and the other half will go towards my investment portfolio.
Otherwise, budgeting will be easier and I will have more freedom with how I choose to spend money once my remaining balance is paid off.
Why You Should Pay Off Student Loan Debt
There are a number of reasons why you should pay off your student loan:
- To avoid paying interest
- More free cash flow
- More money for a mortgage payment
- To save more and invest more
- To be able to work less
- Because it’s personally satisfying
- So you can travel more
- Or to have more spending money
- To reach financial independence
- Slow FI
Ways To Pay It Faster
As mentioned, I use a combination of bi-weekly payments and extra payments to pay down my student loan. But there are certainly more options than that:
1. Bi-weekly Payments
Bi-weekly is the most commonly used pay period for employers.
Essentially, bi-weekly payments means making payments to your student loan each time you are paid.
In comparison to monthly payments, 26 payments are made per year instead of making 12 monthly payments.
The end result is an extra month’s payment per year.
2. Make Extra Payments
If you live at home with your parents, you should be grateful.
If you have a student loan while you live with your parents, you should make as many extra payments as possible.
Simply put, an extra payment is a payment that is in addition to what is required.
Making extra payments will help speed up the process of paying off your student loan, and it will also help you avoid the cost of interest.
3. Seek Lower Interest Rate Options
Since I qualified for OSAP, I was never forced to take on a high interest loan.
But in some cases, alternative options, such as bank loans, must be considered to finance an education.
If you find yourself struggling to pay down your student loan debt, it could be that the interest rate is too high.
Anything over 4 to 6% is too high in my opinion.
So if you find that you’re paying a high interest rate on your student loan debt, seek alternative financing options to obtain a lower interest rate.
4. Start making payments as soon as possible
One simple way to make progress with your student loan is just to get started.
As soon as you have the financial means to begin making payments, start making student loan payments. Don’t delay it!
Delaying your payments is only going to make your future more difficult.
Once you start making payments, don’t stop until it’s paid off.
In the past, I’ve overheard people brag about avoiding student loan payments.
Believe me, there is no pride in avoiding your student loan payments down the road.
Just pay it off, you’ll be happy you did later on.
5. Borrow from family/friends at no interest
If you know a family member or friend that would lend you the money without interest, take advantage.
Although this option was not available to me, I would’ve considered it if it was offered, because that would’ve saved me a lot of interest.
In all honesty, though, I personally try not to mix family, friends, and money.
There’s more pride in doing it on your own. Plus, you learn more and become a more independent, self-sufficient adult.
6. Get a parent to pay it for you
You know what is better than borrowing from a family member?
Getting them to pay for your student loan debt entirely.
If you are spoiled fortunate enough to have your education paid for you, and if you have no other debt, you can move on to building income streams.
7. Work an extra job
If you don’t have a parent to pay your student loan debt for you, and if you want to make significant progress with paying it off, you can temporarily work an extra job.
You could consider a high paying part-time job, or you could even work a low paying job to gain an extra skill set.
If you were able to live off only one job prior to obtaining a second job, all the extra money can go towards eliminating student loan debt.
8. Work Overtime
If your current job isn’t flexible enough to be able to work an extra job, work overtime at your current job.
There could be multiple benefits to this approach, too.
In addition to earning more income, you could appear eager and willing-to-work to your employer.
A helpful attitude may put you in a position to become a linchpin for the organization or business.
In turn, it may lead to even more income to pay off your student loan.
9. Cut-out other expenses
Any expense you eliminate can go directly towards paying down debt.
Cutting out useless expenses like cable and home phone is a surefire way to fast track your financial situation, as long as the money is put to good use.
So, analyze your subscriptions and recurring costs that you don’t need. If they don’t bring enough value to your life, cut them out and pay down your student loan faster.
Eventually, you’ll have the money to comfortably afford all the luxuries you want.
Related: 5 Expenses To Cut-Out To Increase Cash Flow
10. Live at home rent free
Obviously, the lower you can keep your expenses, the more you can put towards your student loan.
One of the best ways to keep your expenses low is avoiding the cost of rent or a mortgage.
Along with food and transportation, shelter is an expense that can not be avoided.
If you are fortunate enough to live rent free with your parents, you f*$@ing better pay off your student loan while you’re there.
11. Make more Money
Like I said before, the more money you can put towards your student loan, the faster it will be paid off.
So, if you can’t lower your expenses, you will need to increase your income to pay it off faster.
That might be selling your soul to climb the ladder, or it could be something cool like side hustling on an online business or investing.
Wherever the extra money comes from — I don’t care… Just put it all towards your student loan and pretend it doesn’t exist until it’s paid off.
You already proved you can live without extra income.
Concluding Thoughts on Student Loan Debt
I can hardly believe my student loan debt is nearly paid off. It’s almost surreal.
For years, I could only imagine life without student loan debt, as if it was some mythical time in the future.
But the end of my student loan is finally in sight because I consistently made bi-weekly payments, and because I periodically made extra payments.
In 2021, I will be able to use the extra $3,087.24 to acquire more income generating assets.
Although some sacrifices must be made to pay off student debt, once you are free, options open up.
It’s like receiving a raise from work, because you were so used to that extra money going to your student loan debt.
In conclusion, it’s possible to pay student loan debt off faster to increase cash flow through the following methods:
- Bi-weekly payments
- Make Extra Payments
- Seek Lower Interest Rate Options
- Start paying your student loan immediately
- Borrow from a family member at no interest
- Get a parent to pay for your education
- Work an extra job
- Work Overtime
- Cut-out expenses
- Live rent free
- Make more money
I hope these 11 methods help you eliminate your student loan debt faster.
Related:
5 Expenses To Cut-Out To Increase Cash Flow
9 High Paying Part-time Jobs To Free Up More Time
I am not a licensed investment or tax adviser. All opinions are my own. This post may contain advertisements by Monumetric and Google Adsense. This post may also contains internal links, affiliate links to BizBudding, Amazon, Bluehost, and Questrade, links to trusted external sites, and links to RTC social media accounts.
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