College is an amazing period in our lives. Not only do we get an education that will set us up for our career, but it also gives us the chance to make friends for life.
It’s also the first time many of us will experience an independent life away from our parents. However, there is one big drawback. It can be very expensive.
So expensive, in fact, that most of us will have to take out a significant loan to pay for our studies. You will start paying back this debt once you start earning over a certain amount.
To help you pay off this debt as quickly as possible without letting it take over your life, here are five important strategies.
Estimate Your Repayments
You need to know how much you can realistically afford to pay back every month. Whenever possible, pay a little extra on top of this monthly repayment.
The more you pay, the quicker your loan will go down. And it also means you will be paying less interest, which can keep costs down. Use a loan payoff calculator to see how long you will have your loan for at your current repayment rate.
Keep playing with the calculator until you come up with an affordable rate that should quickly pay off your loan and interest.
Create A Plan
A payment plan will help you keep all your finances within budget. If you stick rigidly to this budget and are left with some extra money at the end of the month, put it towards your student loan.
If you create a plan, you will also get an idea of when your loan will end. This will not only motivate you to keep up payments, but it can also provide you with some comfort. There is an end in sight!
If you have any spare money during your time at college, put it to one side in a dedicated loan repayment fund. One great tip is to set up a direct debit from your current account into a savings account.
Even if it is just $100 a month, every little adds up and can be put towards your loan. This is then forcing you to save, which will help you out in the long run. If you want to be really clever, attach your savings account to mutual funds. This means you will also be investing the money, helping you to make a profit on it.
Don’t Fall Into A Trap
The best way to repay your student loan is to play the long game. Pay it back within your means, with a long-term goal in sight.
Don’t think there is a way for you to get instant gratification and pay it off sooner rather than later.
This mentality often leads people taking out other loans to repay their student one. And their debt will only be increased.
If you use your common sense and live within your means, repaying your student loan can be very straight forward!
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