Over 44 million Americans are saddled with student loan debt, and many are struggling to meet their monthly obligations. Managing your student loans takes discipline, commitment, and a strategic plan to pay down your debt. Here are some realistic budgeting tips to get you on track to a debt-free future.
1. Get a budgeting app
You can’t manage your finances properly if you have no idea where your money is going. Choose a good budgeting app that will help you track your spending and develop a plan of action to eliminate your student loans.
You Need a Budget (YNAB) charges a small monthly fee, but it’s one of the most comprehensive budgeting apps out there. It allows you to connect each of your student loan accounts and track details of your repayment terms all in one place, and you can sign up for a free trial.
If you aren’t quite ready to invest in a comprehensive service, there are free budgeting apps that will help you get the job done. Mint is the most popular free app due to its simplicity and user-friendly features.
2. Track your student loan repayment
Don’t blindly submit your minimum monthly payment. Instead, set a repayment deadline and track each of your student loan balances as you pay them off. This gives you a visual motivation to keep chipping away at your student loan debt as the number gets lower and lower.
To do this, you can create your own spreadsheet or use a student loan tracking service, like YNAB, Debt Payoff Assistant, or Debt Free. There are numerous debt payoff apps and trackers on the market, so play around and see which one fits your needs best.
3. Boost your disposable income
Look for ways to increase your disposable income so you can afford to pay off your student loans quickly. Saving an extra $100 each month could be as easy as taking a lunch to work or buying generic brands at the grocery store. If you’re happy with your current employer, consider asking for a raise. Arm yourself with market research based on your location, background, skill set, and proven results in order to present a salary range based on your worth. If you aren’t content in your current role, maybe it’s time to apply for a higher-paying job.
Get creative and keep an open mind. Maybe the answer is as simple as finding a roommate to help share the cost of living in your current space. Or maybe you need to make a more dramatic change by moving to an area with a lower cost of living.
4. Pick up a side gig
More and more people are making extra money in their off hours by picking up a side hustle. These include anything from driving for rideshare programs to working online as a virtual assistant to dog walking. Websites like Fiverr, Rover, and Craigslist can help you find short-term, temporary gigs.
If you really want to attack your debt, use your side-gig income solely for paying off your student loans. With a side gig, you can dedicate hundreds of dollars to your loan payments each month without feeling like that money is missing from your account.
5. Put extra money toward paying down your student loans
Tackle your debt head-on by putting all extra money directly toward your student loans each month. This should include any money that isn’t dedicated to a specific expense as well as windfalls such as annual bonuses or inheritance money. This will help you pay off your loans earlier and save you money in interest fees.
6. Hold off on investing
Paying off student loan debt will almost always get you a better return than investing your money elsewhere. For example, if you’re paying a 10% interest rate on your student loans, then paying them off is a guaranteed 10% return. Finding that level of return with investments is next to impossible.
However, you should contribute to a 401(k) if your employer offers a matching program. You’ll be saving for your future while taking advantage of free money from your employer that you wouldn’t otherwise have access to.
7. Pay your student loans first before you have a chance to spend your paycheck
Not everyone is a master at managing their finances. And even if you are, you can still fall victim to the occasional financial slip-up. Make your student loan payment your priority by submitting your payment as soon as you receive each paycheck. This prevents you from spending your money elsewhere and helps avoid coming up short when your student loan due date arrives.
With intentional budgeting strategies, you can prioritize repaying your student loans and get them out of the way faster. Commit to cutting back on expenses and get creative with increasing your income, and you’ll set yourself up for financial freedom in the future.