12 Ways to Get Out of Student Debt
This post originally appeared on The Budgeting Wife.
The average college graduate ends up with over $37,000 of student loan debt, and as a nation, we are $1.3 trillion dollars in debt to Sallie Mae! How insane is that?
I’ve met several people who believe that student loans are a way of life. And they believe that they will die with their student loans by their side. They have no hope in paying them off early, but instead pay their monthly minimums and continue on with their lives.
But I’m here to show you that paying off student loan debt is possible. And no longer having student loan debt will truly change your life.
My husband, Jacob and I paid off a combined $87,000 of student loan debt in 2.5 years. So by the ages of 23 and 26, we were officially debt-free! Now we get to live our lives the way we truly want to live. We get to travel more, save for driving nicer cars, and get to dream about our future together without debt getting in the way.
If you are feeling hopeless when it comes to student loan debt, know that there is a light at the end of the tunnel. That is, if you’re willing to put in some extra work!
Here are 12 ways to get out of student loan debt:
1. Use The Debt Snowball
Made famous by Dave Ramsey, the debt snowball gives you momentum to pay off your debt with small psychological wins. You list your debts smallest to largest and attack your debts in that order. Paying minimums to all debts and anything extra to that smallest debt to pay it off as soon as possible. This method keeps you motivated as you pay off a large amount of student loan debt.
2. Move Back Home
I know many people who would never want to do this… But we did, and I can tell you, it was an amazing game changer. We moved in with my parents for a year to really attack our debt. We paid $200 of rent instead of $1,300, which freed up so much cash that we could put straight to our student loans every month. If your parents are cool with it, I would definitely suggest considering moving back home for a short time to get that debt taken care of!
3. Use The Debt Avalanche
The debt avalanche is another method used to pay off debt. But this debt-kicking method has its differences. Use the debt avalanche if you’re motivated by math. The debt avalanche has you list your debts largest interest rate to smallest interest rate, and pay them off in that order. You’ll knock out those debts with a higher rate first, which will save you money in the long run.
4. Start A Budget
A budget is truly the backbone of paying off debt. So if you’re wanting to tackle those student loans, get on a budget ASAP! A budget gives you a plan for your money. And from there, you can track your spending, saving, and debt repayment. Check your budget to see what you could possibly cut to put more to your debt each month. [Want some free budgeting tools? I love Charlie and Status. ]
5. Take On A Side Hustle
Paying off debt will go by faster when you cut expenses and increase your income. And an easy way to increase your income is with a side hustle. A side hustle is extra work that you take on outside of your normal job that brings in some extra income. This may mean driving for Uber, babysitting more, doing freelance work, teaching online with VIPKid, or delivering pizzas. There are many side hustles out there that you can do to bring home a little extra income.
6. Cook Meals At Home
As millennials, we love to eat out with friends. But it’s killing our budgets! Eating out just twice a week is probably costing a single person $30 a week or about $120 a month! Imagine how much sooner you’d be debt-free if you put that money to your student loans. Learn to meal prep and cook your food at home to save hundreds and become debt-free months sooner than expected.
7. Negotiate A Raise
Another way to generate more income so you can pay off more debt is by negotiating a raise at your day job. And to do that, you need to be a diligent and hard worker. Go above and beyond your boss’ expectations of you. Volunteer to take the lead on new projects, push up deadlines. Then go to your boss and prove that all the extra work you’re doing is adding value to the company, and with that, ask for a raise! The worst they can say is “no.”
8. Join The #DebtFreeCommunity
It’s important to stay encouraged when on your debt-free journey, and one way to do so is through social media. Follow the hashtag #debtfreecommunity on instagram and twitter to hear from others who are going through the same thing as you. I even started a blog to share our journey for encouragement and you can start a blog too!
9. Take On Overtime
If you get paid hourly and your boss approves, take on as much overtime as possible! You get paid time and a half when doing overtime so it’s well worth it. Taking on overtime isn’t long term work. Just for this season while you’re serious about paying off your student loan debt!
10. Get A Roommate
For most of us, our biggest necessary expense is rent. If you are single and living in your our place, consider taking on a roommate. This will reduce your rent by half, freeing up a large amount of extra cash to put to your student debt.
11. Sell Something
Are you serious about paying off your student loan debt? One way to get a serious amount of cash is by selling something. Driving a newer car? Sell it and trade in for something cheap that you can use while paying off debt. Check out places like Craigslist, and Let Go for selling some of your belongings for straight cash!
12. Put A Pause On Vacations
Millennials love experiences and traveling, but it’s not always cheap! While getting out of debt, put a pause on traveling. Some think that this is the only time that they’ll be able to travel, but that’s so not true. Imagine when you’re debt free, have a handle on your finances and are able to enjoy a vacation with a bigger budget. You’ll get to travel in your lifetime if this is something important to you, but put a pause on it now to throw a couple thousand extra dollars to your loans each year.
I get asked all the time: what are your favorite money management tools?
Charlie: My go-to (free!) budgeting tool that tracks your spending and progress towards goals.
Ebates: Gives you free cash back on almost all your favorite stores via a desktop plug-in.
Trim: You remember that time where I talked about how you should be negotiating all of your bills? (You should.) I know it's scary — that's where Trim comes in. Trim will negotiate cable and phone bills FOR YOU.
Status: Wanna see if you’re on track when it comes to your monthly spending and total savings? This (again, free) tool compares your financial numbers to others in your age group, city, etc.
Personal Capital: The tool I check daily, Personal Capital is the best tool for tracking your net worth and your progress towards goals like saving, debt payoff, and (yes!) $100K.
The $100K Club Facebook Group: Need some honest money conversations in your life? Join my free community to get your burning questions answered.