Paying off student loans is a daunting task. What is worse? Nothing, because debt restricts your ability to invest, compound, and grow your net worth. Sadly, student loans have become a household name in America. Student loan payments now rival a home mortgage or car payment.
Most Americans fight daily to pay off their student loan debt, which is totally fine! You cannot put a price tag on your education. Furthering your education is needed to promote in the corporate world. Instead of worrying about how much you owe, start eliminating that student loan debt as fast as possible. Here at Broke-Millionaire we have cracked the student loan curse. We know how difficult it is, but today we are going to make sure you can execute a full court press on your student loan debt.
These 5 simple strategies are action oriented. They are designed for you to immediately implement, so you can start eliminating your student loan debt.
1. Make Bi-Weekly Payments
No one ever said you would spend time in the penalty box, receive a red card, or be benched if you made extra payments on your student debt. At Broke-Millionaire, we call this a power play. We all know student loans are traditionally paid off in single monthly payments. However, you are a Broke-Millionaire, which means you are savvier than most Americans. You will not fall into this status quo when it comes to paying off your student loan debt. We encourage you to immediately begin biweekly payments towards you student loan debt.
Instead of paying one single payment a month, a biweekly structured plan will allow you to make two payments a month. This allows you to pay off your student loan debt faster! More importantly, it allows you to pay less towards the interest accrued on your student loan.
Banks do not care if you make extra payments. They care about one thing and one thing only: that they are getting paid.
Let us break this down further. Traditional student loans require you to make one payment per month, which would equal 12 payments over the year. I know this is hard arithmetic, but I know you are capable. However, if you establish a bi-weekly plan, then you are paying one whole month extra towards your student loan debt over the course of a year. We all know there are 52 weeks in a year. Your bi-weekly payments would equate to 52weeks/2 = 26 payments. Since we approach investing and saving with a long-term mindset, this extra payment each year will save you money and reduce the interest you owe towards the outstanding student loan.
This strategy works best if you already have a personal budget. So, what are you waiting for? Take ownership of your situation and begin to pay off your student loan debt with a biweekly payment plan.
2. Refinance your Student Loan
Refinancing your student loan may be a great option, but their a few factors we need to consider. You should consider refinancing your loan if:
- You have a credit score that is greater than 650
- A Steady Paying Job
- Strong history of paying off your debt on time.
Refinancing allows you to consolidate your student loans into a single loan (if you have multiple) at a lower interest rate. This option also allows you to potentially shorten the overall length of your student loan. Now, shortening the length of your loan may increase your monthly payment, but it will save you time. And guess what? Time is your worst nightmare when it comes to paying off a student loan. If you give yourself a shorter time period to pay off your student loan, then you will significantly decrease the amount of interest you pay towards that loan.
Refinancing your student loan may seem confusing, but it can take as little as 5 minutes to receive a new quote from your bank. These 5 precious minutes could literally save you thousands of dollars, which we could then use our Dollar Cost Averaging strategy and invest more.
3. Immediately Set up Autopay
It does not get easier than this. Set up Autopay immediately for your student loan payments. Each month, the autopay function will automatically deduct money for your checking or savings account and will apply it to your outstanding student loan debt. This strategy keeps you disciplined and legitimately forces you to pay off your student loan debt. Undeniably, you will be thankful for making this money move once you are debt free.
Broke-Millionaire Tip of the Day – Most financial institutions or private lenders offer discounts to their members if they can automatically set up deductions from your bank account. All you have to do is pick up your phone and contact your institution/lender to see if this option is available.
4. Start a Side Hustle
You know the drill. As a Broke-Millionaire you need to get creative! Starting a successful side hustle is not hard. It requires up front time and effort, but it has the potential to increase (or even replace) your yearly income that you receive from your full-time job. There are members in this community who are successful with their freelance endeavors. We also have members who dog sit, walk dogs, mow lawns, baby sit, or have another part-time job. What do they do with this additional income? Invest it! Our members are no longer constrained by debt. Their side hustle income allowed them to pay off their debt.
Having additional income allows you to make more payments towards your debt. These extra payments shave time off the loan and decrease the amount you owe towards interest. If you have not noticed yet, there is a theme to this debt madness. The faster you pay off your debt, the more freedom you will have with your finances. So, get creative, step outside of your comfort zone, and start a side hustle.
5. Make as many Extra Payments as you can
If you receive money from your relatives for a holiday or it is your birthday, then use that money to help pay off your debt. Like we said earlier, there is no penalty for an extra payment. What if you get a raise at your job? Or encounter some financial situation where you receive money? Please use it towards your debt. As a Broke-Millionaire we hate debt! It restricts us from reaching our maximum earning potential. If you follow our personal budget strategy, then you are in luck. Tap into that 20% discretionary spending and use it towards your debt.
Tackling Student Loan Debt
There is only one rule we follow as a Broke-Millionaire: Pay off your debt as fast as possible. Trust me, once you come up with a game plan, and begin to pay off your debt, then you can truly begin marching towards financial freedom. Be proactive and talk to your financial institution. It doesn’t hurt to see what opportunities are available. If you want to learn more, then I strongly urge you to subscribe and join our community. Our team is motivated more than ever to help you compound your net-worth and achieve financial independence.