Friday, February 19, 2016

Millennial Matters: 4 Strategies for Attacking Your Student Loans

It's no secret that the average student loan dollar amount continues to rise, despite continued job market lows. In fact, the average 2015 graduate will have to pay back just over $35,000, nearly triple the $12,000 their 1995 counterparts had to pay.

With that amount of debt assigned to your name, it might be hard to see the light at the end of the tunnel. Well, I have good news: it might be more attainable than you think. Here are four strategies to consider when it's time to start paying off your loans.

  1. Cut the extras.
    That expensive gym membership you have? Nix it. That cable television you sometimes watch (or watch all the time)? Get rid of it. There are less expensive - or free - alternatives, like working out in the great outdoors or subscribing to Netflix, that can help you redirect some of your hard earned money to paying off your loans.

  2. Make more than the minimum payment.
    I know, I know, this is easier said than done. However, paying more than the minimum amount due is one of the easiest ways to reduce your debt quicker than planned. You can accomplish this feat in a variety of ways, such as allocating any raises and bonuses to your loans, redirecting the money from your savings on gym memberships and cable as discussed above or putting in overtime, freelancing or working side jobs to earn additional money. Even if all you can afford is $20 extra each payment, it's a start, and you can work your way up from there.

  3. Opt for a less ideal situation.
    Thinking about buying a new car? Or, moving to that brand new apartment complex with all the bells and whistles? Sure, those things might bring happiness in the short term, but opting to keep what you have for a couple more years will be more beneficial to your finances in the long term. By keeping these expenses low (or non-existent if you're really resourceful), you'll be able to stash away more money to put towards your student loans.

  4. Have fun… on a budget!
    Just because you have a debt repayment goal in mind doesn't mean you can't still have fun - you just have to get creative. For example, rather than meeting your friends out for dinner and drinks, why not invite them over for a potluck dinner? If you really want to meet a friend out, consider making it happen over coffee - a much less expensive outing - instead. Additionally, consider free (or lower cost) activities for entertainment, such as hiking, visiting a beach or lake, playing a sport, reading a book, cooking or doing a DIY project. These activities will still provide enjoyment and allow you to spend time with friends while empowering you to focus on your goals at the same time.

No matter which strategy (or strategies) you choose to pursue, the most important thing you can do is develop a specific payment plan that aligns with your needs and your ultimate goal. It's up to you to decide whether that includes a payment calendar, a separate savings account for stashing away extra money or an automatic payment transfer.

After adopting a plan, all that's left to do is adhere to it and visualize your future without student loan debt. With hard work and dedication, this vision can become your reality!