Whether it’s a shackle left over from your roaring twenties or a leech that’s stuck with you through thick and thin, student loan debt can too often feel like an uninvited guest that simply doesn’t know when to leave. But what if we told you that you can show your student debt the exit door in just ten years without sleeping on a ramen diet or pawning your cherished possessions? Yes, you heard it right, 10 years! Let’s dive into the realm of possibilities, shall we?
Make it yours: Set a definitive payoff date
The first step to slaying your debt dragon is to set a deadline. Consider your current financial situation, your income, and expenses. Once you have a clear picture, determine how much you can feasibly spare each month towards your student loan. With this in mind, calculate your payoff date – the big X on your calendar that signals the end of your student loan journey.
Go double or nothing: Make bi-weekly payments
Making bi-weekly rather than monthly payments can shave off years from your loan term. How? Simply put, there are 52 weeks in a year, equating to 26 half-months – a sneaky extra payment compared to the standard 24 half-months. Pro-tip, though: check with your loan servicer to ensure there are no penalties for prepayment.
Step up the ladder: Utilize the step-up repayment plan
With a step-up repayment plan, the burden of loan repayment becomes less of a mountain to climb and more of a gentle stroll. This plan allows you to increase your loan payments gradually over the tenure of your loan term – perfect if you’re expecting an increase in your income over the next few years.
Frequently Asked Questions
Can I make prepayments on my student loan?
Yes, you can make prepayments on your student loan. However, do confirm with your loan service provider to ensure you’re not penalized for the same.
Do extra payments go towards the principal?
Usually, the extra money goes towards the principal balance. However, some service providers may apply it to the interest first. It’s always accomplished to confirm with them before making your move.
Never underestimate the power of $20
Think $20 can’t make a big difference? Think again. Every bit you pay above your minimum payment can make a significant dent in your principal amount. Remember, every dollar towards the principal is a dollar less you’ll need to pay interest on.
Round Up: Take advantage of rounding up your payments
Rounding up your payments is another creative way to fast-track your payoff date. You’d be surprised to see how much of an impact an additional few dollars monthly can make yearly. It’s the equivalent of picking up the loose change in your pocket but using it to pay off your student loan.
Summed up: Your decade to debt freedom
What sits between you and a debt-free life? It’s a combination of planning, dedication, and of course, our top X moves discussed above. Remember, paying student loan debt doesn’t have to feel like an eternal battle. Equip yourself with these strategies, and you’re well on your way to sending your student loan debt back to where it came from.
Is it an overnight miracle? Far from it. Does it require focus, commitment, and tenacity? Absolutely. But imagine that liberating moment when you finally get to say, “This student loan? Paid it!“. Now, isn’t that worth battling for?