Almost all university students take out a loan, heading into their professional lives after graduation with a debt that’s going to be around for a few decades. But if you’re looking to get out from under your debt as soon as possible, there are a few ways to go about it. Keep reading to discover the 6 hacks you can use to pay off your student debts faster.
1. Make Extra Payments
It’s obvious, right? The number one way to pay off student debts faster is to pay more than the minimum monthly contribution. Even just a little bit extra every month could end up cutting down your student debt by a few years – saving you money in the long run.
But where does this extra money come from? It’s all about cutting back on your day-to-day expenses (get some tips on how to do that here) and putting it all toward your loan. Keep reading for more details.
2. Create a Budget
The easiest way to scrounge together a few extra dollars each month is by creating a budget. For many, it’s an intimidating thought. But if you’re serious about paying off your student loan as quickly as possible, then you should probably spend some time investigating where your money goes each month, and how you can better save.
It can be surprising to see where your money goes each month. Small, daily costs (the most popular example is a cup of coffee from that café near your work) can quickly add up, costing you thousands each year. Of course, we’re not asking you to stop drinking coffee. Instead, creating a budget is all about finding out where your money goes each month and cutting back on the things that aren’t necessary.
3. Start a Side Hustle
Another popular way to start earning some extra bucks to put towards your loan is with a side hustle. Do you paint landscapes, or take photographs? Perhaps consider trying to sell some things on Etsy. There are also plenty of opportunities to get into freelance writing, voice acting, or English teaching.
The bottom line is that by putting in a little bit of effort somewhere, you could potentially start earning a nice little bundle of extra cash each month. And of course, it can all go toward your student loan, cutting it down much more quickly.
4. Refinance your Loan
Now that you’ve started to investigate the two most popular ways to find some extra money, it’s time to look at your loan itself. When you originally took it out, you were assessed as a young student and the credit score that goes with that. However, if you’ve been in the workforce for a few years after graduating and have been working on building your credit since university, then it’s worth refinancing your loan.
When you get your loan refinanced, you can potentially leverage your improved credit to work out a better deal for yourself. It could lead to a lower interest rate for your loan and lower monthly contributions, leading to an overall shorter repayment schedule that saves you money.
5. Take Advantage of Tax Deductions
Wherever you’ve got a student loan, it’s very likely that you can declare your repayments on your tax return. Countries like the UK, Australia, and the US all offer schemes where your loan contributions lead to a tax deduction, meaning that you’ll have a bit of extra money in your pocket to put towards paying off your loan faster.
If you’re preparing your tax returns yourself, make sure you’ve done all the necessary research into the rules surrounding tax deductions on student loan repayments. Otherwise, professional tax accountants can help you navigate these murky waters.
6. Stay Committed!
At first, it can be hard to see the light at the end of the tunnel. How can such insignificant amounts of money really help pay off a large student loan? But if you stick with it for a long time, the payments continue to chip away at the loan, compounding into bigger and bigger savings. Even an extra $100 a month could help you become debt-free years earlier than if you’d stuck with the regular payment schedule.
That’s why it’s important to stay committed to the cause. It can be tempting to give in, use the extra money you’re saving to buy some things, but stick with it and you’ll have paid off your student debt in no time.
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