The average person graduates with roughly $37,000 dollars in student loan debt. Add on interest rates and graduates can be expected to pay an additional $10,000, bringing the running total for an education to $47,000. That’s a steep price to pay for a degree!
Whether you are getting ready to graduate or are already staring at a mountain of debt, it’s important to make a solid repayment plan. From building a budget to utilizing sites like consolidatestudent.loan, here’s how to become debt free in just 5 years.
Build a Budget
The first and the most important step to paying off any debt is building a sensible budget. This allows you to track how much money is coming into your account and how much is going back out.
Make a list of all of your expenses. These could include rent, utilities, a car payment, groceries, and any other recurring costs. After you’ve tallied up your paychecks and expenses, it’s time to look at what else you spend your hard earned cash on.
Cutting Back
Things like gym memberships, eating out at restaurants, and Starbucks coffee can all add up fast in a month’s time. Jot down everything you spend extra on, then start looking at where you could save additional money.
Deciding to make your own coffee at home, packing lunch for work, or even meal planning throughout the week can save hundreds of dollars each month that can be used to pay down your student loans. It might not be easy, but cutting back your spending now is one of the best ways to become debt free as fast as possible.
Rethink Your Living Situation
The average cost of renting a one bedroom apartment is $1,231! Sure, having your own place is nice but you could easily save money by finding a cheaper place to live while paying off your debt.
Even if they charge rent, moving back in with your parents for a few years can save you an astronomical amount of money that can be put right back into your student loans. On the other hand, living with a roommate is a great way to stay independent while splitting the costs of rent, utilities, and groceries. Either way, this can save you an easy $400-500 a month.
Start a Side Hustle
The idea of working a 9 to 5 only to come home and start a second job used to be a horrible realization for hundreds of thousands of Americans. Today’s side hustles are a little easier than they used to be, especially being so flexible to your schedule.
Driving for Uber, starting a blog, walking dogs, or even doing someone else’s shopping can net you a few extra hundred each month. While it won’t double your income, it’s certainly worth considering.
If 5 Years Just Won’t Work: Consolidate
Many who face a surmountable amount of debt choose to consolidate their loans and you can do the same. Creating an account on StudentLoans.gov allows you to apply for an application. Once approved, you will be able to choose from a few options that can lower your monthly payments and can even help reduce some of the interest owed.
Consolidation loans might be tailored to your income, start with smaller payments then gradually advance to larger ones. Either way, choosing this route can help keep things within your budget while helping you to make your payments on time.
While lowering your monthly payments might extend your repayment schedule, it can ease the stress and burden of your monthly budget. This can also allow you to make larger payments when extra funds are available. If you ever find yourself in financial difficulty, debt advice is always available.
