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I bet that title caught your attention, and although there is no definite miracle-working strategy that will get your student financial loans paid off by graduation, you can still follow a few steps to make that goal possible and pay off your student debt early. Pending on how well you follow the steps below, and a little help from your karma, you may find yourself sitting in your graduation gown, debt free.
1. Save Money
This is the most important step, and it should be obvious why. You can’t spend what you don’t have, and what you do have should be spent wisely. Whether you have an income, money left over from financial aid, or spare cash after budgeting, you can be smart about that extra dough and put it to good use. This is the first step to paying off student loans. Save up about $500, open up a savings account with your bank of choice, and then the real saving begins. Do some research though to find which bank has the best deals and interest rate to insure your account will build over time.
2. Make some Money
You’re going to have a lot more free time than you think during your first few years of college, and not all of that time has to go into partying. Trust me, partying night-after-night gets old and wears you down. Be smarter than the average student and go out and get a job to help pay off your federal student loans. Moreover, there are a few reasons why getting a job is important for students: (1) On the days you do want to go out and party, or go on a date, it’s nice to have some money you can freely spend; (2) The money you’re already saving has one purpose—to build up in savings, so don’t even think about using it for a rainy day fund; (3) The more money you make, the more you can save; just think about how much money you can save in a year by putting as little as 10% of every pay check into your savings account.
3. Manage your Spending
Learn to build a student budget and stick to it. Let’s just be real for a second here: you don’t need to eat out several times a week, you don’t need those new shoes or jacket, and believe it or not, a lot of people grow their hair out in college. Ever hear of No-Shave-November? Look it up. If you’re a party animal, join a sorority/fraternity and drink for free. So here’s how to start managing your finances: get a pen and paper, write down all the things you spend money on weekly or monthly, and figure out the things you can cut out. The money you have left over is yours to do with what you wish. You can use it to help pay off student loans, spend it on yourself, or invest it.
4. Investing your Money
No one said investing money was easy; it’s actually a very tricky trade. You don’t have to invest if you don’t want to take this kind of chance. The stock market can get a little crazy and your money is definitely not monopoly money, so if you think about making some investments, be sure to do some research on investing and the company or companies you’re looking into. If you don’t want to play with your money, you can always invest the money left over from financial aid, although it’s still a gamble. If you want a suggestion, I’d say look into mutual funds—In a nutshell, you invest in multiple companies at once. That way, if one or two go under, you still have several companies making you money to help pay off student debt.
Just like in football, you need a game plan to win this thing. Earlier I told you to write down your usual expenses and cross out what you don’t need to necessarily spend. That is step one to budgeting yourself. If you have an income, figure out how much you make a month, how much you spend, cut out the junk, and bingo! You have savings left over. Now you can use that money for a rainy day, or add some more into that savings account. Plus, you can continue to save by looking for student deals, coupons, BOGOs—there are many ways to save money other than penny pinching.
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6. Give yourself deadlines
Having deadlines is an important step in paying off student loans early. Set up a time bi-monthly (or whatever time span you’re comfortable with) to check out your progress. How much are you making? Saving? How much has your savings account grown since you first started? This is the time to sit down with yourself and make some adjustments to your game plan if necessary, or just find ways to improve. Plus, another nice tip—set yourself a goal, whether that is to save X amount of money by Y date, or even if you’re saving up for something you’d like to buy. Put the goal somewhere you’ll see it every day so you’re constantly reminded of what you’re working towards.
7. What if you don’t pay off your student debt by graduation?
No problem. No one is expecting you to be debt free by the time you get your degree. Plus, most of the time, you don’t have to pay off your student loans for some time after graduation; this is known as a grace period. So whether you just need a couple hundred dollars more, or a couple thousand, you still have time to hit your goal. If anything, there are other options to help you pay back your college student loans. You could join an organization for volunteer work, many will offer to help you out with student debt; if you’re feeling patriotic, the army will most likely completely pay off your student loans for a few years of service. If worse comes to worse, you can consolidate your federal student loans and make things a little easier.
You. Can. Do it.