1. Know Your Student Loan Debt
You may think you know the exact amount you owe, but many underestimate exactly how much they have in student loans. The first step to paying off your student loans is knowing how much you owe. We know, that can be frightening; but remember this is a debt that is helping to better your future.
3. Know Your Payments
You need to know when your payments are due, how much the minimum payment is, and how much you plan to pay each month. Also, be aware of any payment plan change in terms, any increases and the dates when your payments will change. Set reminders in your calendar.
Set a budget of your income and expenses. Cut back on your wants v. needs. Do you need a $5 Starbucks drink everyday and to go out to lunch three times per week? Only you know your wants and needs, and only you can stick to your budget.
4. Pay Every Two Weeks
Make a student loan payment every two weeks. You don’t need to pay double the amount of your monthly payment. Here is an example for multiple payments:
Split your monthly payment in half.
Make a payment of that amount every two weeks.
Two smaller payments can seem more manageable than one large monthly payment.
5. Set A Cash Or Gift Card Budget
There are templates on Excel, Numbers and Quickbooks, as well as apps/websites like Mint.com to manage your budget. You can even use your Notes app on your iPhone. Give yourself an exact amount to spend in cash each month, or purchase gift cards to places like Target so you can spend exactly and only what you already put on the gift card.
Knowing how to negotiate salaries, sign on bonuses, relocation, or lower interest rates, cell phone plans, cable plans, etc. can help you in every aspect of budgeting including student loans.
7. Pay Off High Interest Rate Loans First
You're paying the most money on these loans and your payment is being applied to the interest not the principal of the loan. If you can focus on paying more towards these loans you will save money in the long run.
8. Set Goals and Reward Yourself.
You can start with goals like paying your student loans on time for one year. That then leads to your desired reward. You can set small rewards when you reach milestones and larger rewards once you've paid off a large loan. Celebrate the goal to keep your motivation going.
9. Take Advantage of Tax Deductions and Credits
If you’re paying off student loans, you’re likely eligible for the student loan interest deduction on your federal taxes. You may deduct up to $2,500 on your taxes each year for the interest you pay on student loans.
While you must meet other requirements, generally a lot of student loan holders starting in their 20s will be eligible.
Tax credits can be even more valuable than tax deductions. Typically, a $2,500 tax credit will save you more money than a $2,500 deduction will.
10. Visualize A Student Loan-Free Life
This isn't a repayment strategy. However, paying off debt and sticking to a plan can definitely be a mind game. Visualization can help you find and keep the motivation to get rid of your debt.
Think of the one thing you really don't like about having student loans. Maybe it’s that you can’t afford to go on a vacation, maybe you can't go out to dinner or you barely have enough money to pay your other bills.
Now close your eyes and imagine what your life would be like if those things you don't like were no longer a problem because your student loans have been paid off.
How would your life be better? Are you now happier? Do you have more money to spend on things you enjoy in life? Visualize your life student loan free and it can help you stick to paying off your student loans faster.