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How Do I Pay Off My Student Loans?
The Student Loan Problem
For many years, student were told to go to college, graduate, and then retire after 30 years of hard work. This was the path that many Baby Boomers took to lead a fun life full of financial prosperity. Something changed in the economy, and the days of working at the same company your entire life are over. In addition, the cost of college increased faster than the rate of regular inflation. Students increasingly are burdened with student loans upon graduation due to the high cost of college.
Over 40 million Americans currently owe money on their student loans. That number is larger than the population of many countries in the world today. There are several reasons why this is a bad thing.
- Student loans are not eligible for bankruptcy
- Student loans hurt the housing market
- Student loans delay having children
It is vital that students today take drastic steps to start paying down their student loan debt.
Student Loan Poll
Do You Have Student Loan Debt?
Paying Off Your Debt
The good news is that there are many ways to start paying off your student loans. Paying off debt is a simple equation, income - expenses = money available to pay down debt. There are two things you can do to decrease your student loans more quickly; increase your income or decrease your expenses. Over time, small changes in either of these areas makes a big difference.
One of the biggest issues around the student loan crisis is the income earned by college graduates. There are a lot of students graduating college working in jobs that do not require a college degree. This is why over 7 million people are in default on their student loans. While the average earnings of college graduates have decreased, the cost of college has increased nearly 3 times since 1980.
Actions Steps for Paying Off Debt
Let's take some action steps so that we can start paying off student loan debt. Here are a couple of things that everyone can start doing today to build that debt payoff formula.
- Get a Good Job
- If you can't do 1, get a second job
- Stop Eating Out
- Share Housing
If you have $30,000 in student loans (this means you are average) it is going to be difficult to pay this off quickly making $10 an hour. Getting a good job in your field is essential to your long term growth. You may think that you have tried everything to land a job. Maybe you need to change career paths, or maybe you need to work more.
If you are in a field where the pay is always low, get a side hustle. This allows you to earn extra income on the side while still working your day job. Over ten million people out of college work an extra job to pay off their student loans. You can do this too!
If you spend hundreds of dollars per month eating and drinking at restaurants, you are not serious about paying off your debt. There are some expenses that are fixed, and there are some that are variable. Work diligently to decrease your variable expenses as much as possible.
Housing costs continue to increase in many areas. One of the best ways to decrease your expenses is to share housing costs with other people. A lot of people choose to live with their parents or friends. There is no shame in paying off your student loans.
How Much Do You Owe
How Much Do You Owe?
Paying off Debt and Building Wealth
One of the biggest reasons to pay off your student loans is that it helps to build wealth over time. There are a lot of people stuck financially because they have too much debt. Investing is really hard to do when you are paying hundreds or thousands of dollars per month in student loans.
The earlier you pay off your student loans, the wealthier you have the chance to be. Instead of waiting years to start paying off your debt, start with the steps outlined here. There are a lot of people who are glad they started when they did. After you pay off your student loans, you can start buying houses and investing in the stock market like a real adult!