It is important that graduates who take out/took out student loans are aware of the costs involved and make sure they are informed about how to structure a repayment plan. The sooner you pay off your debt, the sooner you can be financially free and plan the rest of your life.
There isn’t a magic solution for paying off student loan debts, however here are a few tips to help you avoid the debt trap while you repay your student loans:
Before we dive in – you need to know that there is no magic plan to pay off your student loans. By implementing these steps, you can get on a fast track to dumping your student loan debt for good. Paying off your student loans is 100% doable, but it takes time, dedication and a whole lot of sacrifice.
1. Make a Budget:
Do you have a strict budget that you follow each month? A monthly budget will show you exactly where your money is going and where you can cut back. Sometimes you will find that you might have “extra” funds you didn’t know you had. You can throw that money on your student loans each month, and you will be making progress in no time.
2. Pay more than the Minimum:
We know that you have probably heard this one before, but if you are only paying the minimum each month, you’re not getting anywhere fast. You might not even be breaking even with the interest you are accruing! By making larger payments, you’ll be able to attack the principal at a quicker rate. Of course, if you are having trouble even making that minimum payment each month, you might find the idea of paying more money completely unreadable and if so…
3. Be ready to make Sacrifices:
We spoke about sacrifice earlier and here is where it comes into play. You need to look at your lifestyle. What “luxuries” have you been living with that you can do without? Yes, that DSTV package is one of them. Do you have a guest room not getting much use? Then cut your housing costs in half by finding a roommate – rent it out!
Do you have anything standing around that you could sell? Dig through your closet and comb through your garage and storage. And if your biggest problem is income, pick up a part-time job on the nights or weekends, and toss that extra cash directly at your student loan debt.
4. Apply Raise and Tax Refund towards paying off the student loans:
What do most people do when they get a raise? They spend it all. And then they wonder why it felt like they didn’t get a raise. As you move up in your career and get promotions along the way, put your additional income toward paying off student loans. Don’t move to a bigger house. Don’t buy a new car. Don’t get a fancy wardrobe upgrade. Use your extra income boost to make major progress!
The same goes for getting your tax refund. Don’t take your “free money” and use it to buy new furniture, big screen television, or a new gadget.
5. Stay motivated and you’ll be paying off student loans fast:
There is no need to drag out your student loan payments for the next 25 year. When your money doesn’t have a credit provider’s name on it every month, you can do so much more with it!
Be responsible with money and ensure that you are using it in the right ways, on the right things. Whether for yourself, your family or paying off old debt, there are many ways to earn extra cash. Plan ahead so that you can carry on without worrying about debt review or consolidation loans later. No matter where you are in South Africa, be wise with your finances.