For many students, taking out loans to pay for higher education is a necessity.
Even with the low interest rates and flexible repayment plans in place, most college students won’t see a zero balance on a student loan debt until they are almost 40 years old.
If you are serious about paying off your student loans much faster, then keep the following suggestions in mind.
Resist the Temptations
You graduate and get a job making $80,000 right out of the gate.
For you, there is no more living on a meager $15,000 a year, eating Ramen noodles and scrounging for the last bit of shampoo in the bottle.
Now, you can afford champagne and caviar. Immediately you go out and buy a new car, and possibly a house, right? That is the wrong answer.
Even though $15,000 a year is a paltry sum, requiring substantial personal sacrifice, remember that you still have that $120,000 student loan balance.
It’s time for a serious reality check. Do not give way to the seduction of what you want right here and right now. Make your student loan payment at the top of your priority list.
Live on Less
Give yourself an allowance of $25,000 to $30,000 a year, and live on that. Implementing this life allowance strategy frees up $50,000 of your salary, which is applied directly toward your student loan.
You hardly have to be a mathematician to figure out that paying $50,000 a year on a $120,000 balance, that the balance will be zeroed out in little more than 3 years. After that, the money you have leftover is your own.
There are no significant interest fees or payments to make, and you are free to start a life, buy a house, and buy a car, free of the burden of haunting student loan debt.
The Added Benefit
By training yourself to live on less in your early years while paying off a student loan, you are imparting an invaluable life lesson to yourself as well: the benefits of saving versus spending.
As the years progress, you will find that by living off of an allocation of less, allows you to save more, essentially giving you the opportunity to do more with your money.