You took our quiz, and you’ve finally admitted that you’ve been afraid of managing your money. But now that you’ve ripped off the Band-Aid and got a better sense of your personal finances, you’re in much better shape. You’ve collected all your financial information in one place, and you’re working on cutting down unnecessary spending. What you’d really love to do is put extra cash toward your student loans each month so you can get rid of that debt even faster.
Come up with a reasonable number.
Have another hard look at your spending and figure out where you can cut down even more. Don’t get too ambitious — the idea is to create a sustainable habit that doesn’t leave you broke and miserable. But putting an extra $100 each month toward student loans could save you thousands in interest. Even better, it could reduce the amount of time it will take to pay back your loans by years. One way to motivate yourself: Look at what you’re spending monthly on your loans, and think about how great life will be when you can dedicate those dollars to something else. Would you get a bigger apartment? Would you travel more? Donate more to the causes you’re passionate about? The possibilities are endless.
Calculate how much interest you could be saving.
This will help you stick to your plan, even when you’d really rather not. Say you owe $10,000 in student loans at 6% interest. Paying $100 per month would see you paying off the loan in 11 years. But if you could pay $200 a month, you’d be done in 4.8 years and save over $2,000 in interest. The difference is staggering. This calculator can help you see what you’re spending in interest.
Break down intimidating goals into manageable pieces.
Coming up with a goal is really the hardest part. Work backwards and figure out how much you need to save on a weekly or even daily basis to meet your goal. If $200 a month seems steep, think about it as $50 a week or around $6.45 a day (the cost of coffee and a croissant on your way to work). By focusing on the small, incremental numbers, you’ll shift from thinking, That’s not possible to, That’s totally doable.
Know you’re not alone.
Millions of other people have student debt they are working to pay off. According to the Institute for College Access & Success (TICAS)’ Project on Student Debt, 68% of people who received a bachelor’s degree in 2015 graduated with student loan debt. The average amount was $30,100 for each borrower. Yes, paying down loans is a complete slog, and it sucks. But you’re not alone in facing this particular obstacle. If you’re really fed up but don’t feel comfortable talking to friends about money, turn to online forums like Ask The Money Doctor or Reddit’s r/personalfinance for anonymous support, tips, and a safe place to vent.