Dear reader – I can’t begin to express how long I’ve had this message rattling around in my brain – eager to share with you all the secrets to paying down your student loan debt quickly.
My husband and I left college with $71,000 in principle student loan debt. While paying this back, we paid for a wedding and honeymoon, bought a house, made a $9,000 repair on said house, moved twice (once cross country), switched jobs, gave and saved 15% of our income and still lived life!
In November 2015, we made our very last student loan payment. We didn’t know if we should high-five, celebrate, cry, or scream. We were so relieved.
I’m convinced there should be two college graduations: the one where you get your degree and the other where your student loan balance shows $0.
If you’re in the trenches right now, you’ve found the only guide to getting out of student loan debt that you need. Truly, I want the same financial freedom for you that we are now experiencing.
As a college student, my “budget” looked something like this.
- Money I have now: $2,000
- Money I need for the year (rent, food, transportation, tuition and books): $8,000
- Money I will make my college jobs: $1,000
- What I need to take out in student loans: $5,000
Very literally, I would do this every year. I usually added a grand or two onto my student loan “need” for necessities that would come up – like going out to eat, traveling and paying for golf tournaments. Good grief.
I wish someone had told me how to navigate finances in college.
My freshman year, I had to call my parents to put money in my bank account because the $20 I had left wasn’t enough to pay the gas for me to drive the twelve hours home.
When I graduated, I had $532 in my bank account, nothing in reserves, no full-time job in sight, and only a summer internship to scrape together the rent for a few months.
Maybe you’re there right now – wide-eyed and terrified. Wondering how to make your next rent payment or pay for your groceries. For starters, check out What You Need for Day 1 Post-College. Then read on.
Step 1 – Get the Full Picture
My first problem upon graduating college was that, despite my highly intricate and sophisticated “budget”, I had absolutely no idea how much money I owed, when it was due, how much the minimums were and how long it would take to repay them. Even if I did have a full-time job, I had no way of knowing how much money I needed to support my monthly expenses and debt payments.
So, here’s where we start. Get a full picture of your financial situation. This starts with debt. When you graduate, you usually get a 6-month grace period where you do not need to make payments on your loans.
Find out who your lenders are and how much you owe to each. The best way to do this is to visit the National Student Loan Data System and login in or create a new account.
Once you’ve determined who your lenders are, I strongly encourage you to set up an online account on their sites if you haven’t already. There you should be able to see the minimum payments. Some lenders will offer an interest rate reduction if you set up auto-pay for all of your loans. This can add up to a good chunk of money over the long run.
Compile all of your loans into a debt pay down spreadsheet. We used this one.
You should also add in any other debts you have to this spreadsheet and arrange them in the order you intend to pay them. Any credit cards you may have, if there’s a balance past due, is considered debt. Call the credit card company to find out what the interest rate and minimum payments are if it’s not listed online.
We’ll write a post about different types of debt and specifics on credit card debt, so make sure you’re subscribed to our email list. For now, you should put any additional money over minimums toward your credit card debts first, while paying minimums on all other debts each month.
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