In today’s world, student loans are simply a part of life for those who attend institutions of higher education in America. Loan debt has a way of hanging over students’ heads and making them feel stuck in less-than-ideal situations because of the money they owe. That moment when you make your last student loan payment feels like the ultimate freedom, and you may be able to experience that freedom sooner than you think.
Here are five tips for paying off student loans and living debt-free.
Don’t Ignore Your Debt or Repayment Guidelines
No one likes to think about or deal with student loans, but there’s no sense in ignoring that they exist. Acknowledge the fact that student loans will have an impact on your life for some time, but that they are temporary. Also pay attention to the fine print in your loan paperwork and make sure that you understand the repayment guidelines. If you skim over these important details, you could end up owing even more to the lenders than you anticipated.
Be Prepared to Cut Costs and Make Sacrifices
Although most people with student loan debt don’t need to completely deprive themselves of the things they want and need, this is a time when you should be prepared to cut some costs and make some sacrifices. Consider downgrading your cell phone plan, cooking more at home rather than eating out at restaurants, and keeping track of how much you spend on travel and entertainment costs.
Make More Than the Minimum Payment
It might be tempting to just pay the minimum payments on your loans and keep the rest for yourself, but this strategy is only going to prolong your indebtedness. Paying a little extra, even if it’s only $20 more per month, will help reduce your debt quicker. As long as you have enough money in the bank to pay a little extra, consider setting up automatic payments from your bank account so that you’re not tempted to change your mind later on.
Consolidate and Refinance Your Loans
An additional option to consider, is to pay off your student loans quicker by consolidating multiple loans or refinancing your loans. People with debt often choose to refinance their loans in order to decrease interest rates, which means that more of your payments will go towards your debt rather than accumulating interest. Make sure to check the current student loan refinancing rates before pursuing this option to make sure it is an advantageous one based upon the state of the economy.
Sell Structured Settlements
If you have been involved in a personal injury or product liability case and received a settlement, you likely received either a lump sum or a structured annuity settlement. If your settlement money is tied up in an annuity, you may be frustrated because you are unable to access all of your earnings while your debt continues to pile up.
Students with structured settlements may want to consider selling their structured settlement to receive a lump sum now and pay off a significant portion of their loan debt. At Novation, we’re experts at settlements and annuities and we can guide you through this process and turn your long-term assets into cash now. Contact us today for a free, no obligation quote to learn more and get one step closer to a debt-free life!
*Novation is not a financial advisor and/or consultant and strongly recommends that you speak to a lawyer and/or accountant before making any significant financial decisions.