So how do you pay off your student loans early? It is very common to graduate with student loans. Many people carry the student loan debt with them, even when they do not have any other debt. But that student loan debt may be hurting you.
How will you feel when you finally pay off all your student loans? Imagine the relief of seeing your student loan balance hit zero!
If you’re strategic about student loan repayment, that glorious day could be sooner than you think. By paying off your debt early, you could save thousands of rands in interest.
Pay more than the minimum amount
One of the best ways to pay down your student loan debt fast is by making more than the minimum payments. Of course, “pay more” isn’t realistic advice for most people. But hear me out on this one: Even a few one-off extra payments can have a significant impact on your student loan balance.
You could take part in a challenge like zero-spend month to come up with the extra cash. It might feel painful to put something fun like a cash windfall toward your student loan debt, but the results can be dramatic.
Don’t believe it? Say you have a R50,000 loan at 10.5% percent interest and 5 years left to pay it off. If you made an extra payment of R100 each month, you’d pay off your loan six months sooner and save R 1,658.17 in interest.
Slash your cost of living
Reducing your cost of living will free up more money for your student loans. Start by creating a budget. That will help you track your spending so that you can pay off your loans earlier. A budget and a debt payment plan can help you focus and make it easier to work toward your financial goals. The sooner you get out of debt, the sooner you can begin to work on your other life goals. A budget can help you identify areas where you can cut back. Worth noting: it’s easier to cut back on expenses when you first graduate and you are used to living frugally.
Along similar lines, be mindful of your student loans if you land a higher salary. It’s all too easy to increase your cost of living when you raise your income. But if you can maintain your frugal habits, you can use the difference to pay off your student loans as early as possible.
Set Up Automatic Payments
If you have decided to pay extra, the most effective method is to set up an automatic payment. So you don’t have to think about it every month. Even if you don’t increase your monthly payment, you may be able to get a 0.25% interest rate deduction. This isn’t much, but every little bit counts. The bigger advantage is that it keeps you on track, so you don’t miss payments and hurt your credit.
Keep working toward your financial goals
Paying off student loans as early as possible is a worthy goal. Not only will you get out from under the shadow of debt, but you’ll also save money on interest.
Be sure to weigh the pros and cons of paying off your student loans early. If you have high-interest credit card debt, that should likely be your top priority. Contributing to a retirement plan is also an important financial step.
As with most money moves, the best approach depends on your specific circumstances. By making thoughtful choices about your student loans, you can free yourself from student loan debt once and for all ahead of schedule.