How To Pay Off My Student Loan

How To Pay Off My Student Loan – In case you haven’t heard the news yet: I am finally 100% debt free! Yes, student loans are the last to go and as of spring 2020…they are GONE! In about half the time I expected.

The big solution I found there? I faced my “number” and reduced my monthly payments to less scary and more manageable.

How To Pay Off My Student Loan

I know you may be wondering: if you pay less, how did you pay it off faster? Let’s dive into my journey and see.

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When I graduated from college, I had no idea how many student loans I had left. I knew I was on some sort of automatic payment that took about $500 out of my bank account every month and I dreamed of the day I would get a letter in the mail saying I was done. Out of sight, out of mind? Spoiler: it didn’t quite work.

I really resented the amount of money it took, I had no savings, quickly went into credit card debt and didn’t take responsibility for my finances. One day I decided to open a dusty online student loan account for options. As my credit card bills piled up, I looked for ways to try to save money on my student loans and found the path to income-driven repayment.

This allowed me to reduce my monthly payments by several hundred dollars during that period. I used this extra money each month to get rid of my credit card debt and eventually open a healthy savings account. It really helped change my financial picture to have more money on hand when I needed it most.

As it became easier for me to understand my student loans and repayment options, I also became more confident about applying and working

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During this time. If I had a strong monthly income, I could use money over my budget for my student loans and I almost started to “gamify” my payment. For example: If I have my account at $21,239… I would earn an extra $230 just to increase it to $21,000.

I did this many times during my repayment period – still keeping my automatic payment at the lowest possible amount based on income – until one day I was down to less than $10,000. Now, because reduced payments have helped me save money in recent years, I have almost a year of “emergency savings!” Knowing that I could save some of that, I decided to make a big payment: paid in full!

In short, I wish I had someone like Chipper in my life to guide me through this.

Although it doesn’t take a financial expert to understand how to find repayment options and help you understand the big picture of student loans, there is usually a lot of complicated and hard-to-find information that creates an obstacle that we face and pay. of them. Chipper is the only online platform that guides you through repayment (and forgiveness!) options with ease.

I Was Able To Pay Off My Student Loans In 1 Year🎓

By linking your student loan account to the platform, you can see the bigger picture and decide on a repayment plan that fits your lifestyle and career. In addition, they encourage you to chip (pun intended) just like I did with the change rounds, increase the payouts of your choice and invite your friends and family to join the money pool.

Income-based repayment has helped me save thousands of dollars over the years, get my finances in order and bring more stability to other money areas of my life. With this new financial freedom, I was able to raise the additional funds I needed to reduce my student loans and become 100% debt free.

You can explore your options and get started for FREE by using this link to sign up for Chipper. Yes, it is completely safe and secure!

PS: I mentioned loan forgiveness, which is an option unique to some industries (such as teachers, nurses, and government employees) that allows you to work on a debt elimination plan. Chipper also supports you with these options and breaks them down so you can take advantage of them when you are qualified. The offers that appear on this page are from companies that receive compensation. This fee may affect how and where the products appear on this site (including, for example, the order in which they appear). it does not include every company or every offer available in the market.

Tips For Paying Off Student Loans

As student loan debt takes its toll on millennials across the United States, one of the most common questions I get is, “Should I save or pay off my student loans?” My answer is usually that it depends. Everyone needs to take a slightly different approach to paying off debt while meeting important financial goals.

So, if you’re at a fork in the road and aren’t sure which direction to take, let me help you figure it out. I will even explain what I would do if faced with this decision myself.

While it can be scary to start with a lot of education debt, you may want to resist the urge to pay off those student loans as quickly as possible.

I previously outlined a roadmap to financial success that provides six steps you can follow to prioritize your financial goals. This post builds on a real-life case study where I apply these steps (and go a little further). In response to a great question from reader Kaitlyn:

This 27 Year Old Has Managed To Finish Paying Off Her Student Loan Debt During The Pandemic Here’s How

“Should I focus on building an emergency fund and just pay off my student loan debt until my emergency fund is where it needs to be, or build my emergency fund more slowly and pay off my loans completely?”

In Kaitlyn’s case, she used her six-month student loan grace period to save an emergency fund equal to six months’ worth of expenses. (Nice work). She planned to pay her student loans twice a week to twice the scheduled minimum amount, but then her situation changed. Kaitlyn moved to take a new job. He paid more, but had to move to a more expensive city. Kaitlyn says:

“I make a lot more money now, but I have higher expenses than before (higher rent, higher car insurance, more savings, no more family insurance, higher pension contributions, etc.). I don’t have a comfortable window before my loans come in.

So her savings will no longer cover six months worth of expenses and, presumably, smaller fluctuations in expenses may affect her more because she has less room in her monthly budget.

How To Pay Off Student Loans Fast

Although I didn’t make it clear in the steps above, paying off so-called “good debt” mortgages and in many cases student loans would fall under step six. Debt, including student loans, is basically negative savings. By paying it, you are investing in your financial future as much as you are investing in stocks and bonds.

In Kaitlyn’s case, I could pay off student loans with interest rates of 7% or more, include savings for retirement and other shorter “life goals” and then focus on erasing the student loans.

After I graduate, the first thing I would do is make sure I have a small bank account in Cash™ and save a small amount for retirement. Then I would pay off all student loans with interest rates of 7% or more. If the interest rates are lower than that (as is often the case with federal student loans), I would just pay the minimum amount and focus on:

, so what I would do may not suit everyone. (I have many friends who want more than anything to get out of debt, to pay off their student loans as quickly as possible, regardless of the interest rate).

My Debt Story: How I Paid Off $125,181 Of Student Loan Debt

With smart investments and a little luck, the average annual returns of the stock market can match – and maybe even beat – the interest rates on your loans. And the earlier you start investing, the longer it can grow.

Paying interest is still no fun, but the tax deduction for student loan interest doesn’t add to the fact that your money can work harder for you when you invest it.

On paper, it doesn’t matter whether you pay off your student loans early or put cash in the bank: your net worth grows by the same amount month after month. But let’s assume the worst. God forbid you lose your job or need life-saving surgery? The more money you have on hand, the better prepared you are to face such a major financial crisis. If you pay off half of your student loans early, you’ll still have a down payment and won’t have as much cash on hand.

If you have a good credit history and steady income, consider refinancing your student loans. You can lower your interest rate, consolidate multiple student loans into one monthly payment, and lower your total monthly payments.

Saving Money And Paying Off Student Loans: A Simple Guide

That’s it

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