If you’re among the majority of college degree holders that graduated in debt, the worry sets in after graduation that you’re probably going to be spending a good part of your adult life paying it off. But with a little creative, out of the box thinking, there are many ways to pay off student loans that can make the process easier and faster.
When paying off college debt, find ways to spend less (through budgeting) and earn more (with side income)
The two obvious ways to make paying off your student debt easier and less stressful are to spend less money and earn more money. What you want to aim for is to make more than the minimum payment each month, which will result in paying them off faster and spending a lot less money on interest. These two things will allow you to do that.
Spend Less – Make a budget
If you want to simply try spending less money, the best way is to follow a strict budget each month. Every little thing you spend money on really does add up by the end of the month, and you might be shocked at how much money you are unnecessarily spending.
Simply using a great budget software program can help tremendously, such as You Need A Budget. You can even try this software free for 34 days.
In addition, you should consider checking out Dave Ramsey’s book Total Money Makeover it can help you get a better handle on your debt and future finances.
That being said, your ability to save money on a budget is going to directly correlate to how much money you are making. If you’re bringing in $2,500 per month and your bare minimum expenses are $2,300 per month, you’re not going to be able to budget your way to paying for 10, 20 or even 30K in student debt easily.
Find ways to reduce your cost of living
If you can reduce your overall cost of living, you can free up room in your budget. Housing and car costs can make up the bulk of many peoples monthly expenses. If possible, find ways to cut the cost of these down.
Minimize your vehicle expenses
That is, assuming you have one. Cars are incredibly expensive to buy, insure and maintain so the more money you can save here the better. If you’re lucky, you don’t need a car.. But the majority of people do. So here are a few options for cutting down those costs:
Buy older, used cars – you can find well maintained cars that are used with some miles on them, and eliminate or reduce your monthly car payment. This also can reduce your insurance payments since you aren’t required to have the highest insurance coverage.
Try to go down to a one car household – many times you can work around having just one car, even though it isn’t as convenient. But this can seriously cut down on your monthly expenses.
Consider ditching the car altogether and using a service like Zipcar – this will depend on your location, but many places have these which is sort of like a modern hybrid version of car rentals. You pay a monthly membership fee and can find a car to use on occasion, which are parked in spots around your city. Gas and insurance are all included, so it’s a great option if you only need a sometimes car (if you live in a city where you can usually walk, bike or take public transportation).
Get a roommate, or occasionally rent out a room
This may not be ideal for everyone, but if you can have someone helping you pay the rent or mortgage it can save you tons of money each month.
An alternative option to this is if you have extra space, you can rent it out with a service like Airbnb. This would allow you to make some nice extra cash without the stress or burden of a long term roomie. This can be especially profitable if you live near somewhere that draws crowds for large events or tourism – people are always looking for a place to stay and often time hotels get booked up.
Saving the most money on rent is obviously living rent free somewhere, like with your parents, but that is not an option or an ideal situation for a lot of graduates.
Earn more money through side income
Budgeting and reducing your monthly costs can only get you so far. Not everyone is in a situation where they can take in roommates, move in with the parents or eliminate their cars.
Earning extra money is another way to increase your cash flow and pay off some college debt faster. Now I’m not going to tell you to go get a higher paying job, because if you could do that, you would.
This is where you have to think outside the box, just a little bit!
Sell stuff, especially if it’s valuable
Sort through your extra stuff and see what you have to work with. Jewelry? Sports equipment? Video game systems? Furniture? Name brand purses or shoes? Electronics? Wall art?
Just forget doing a garage sale, these days you can sell just about anything on eBay, or locally on Craigslist or other local buy and sell sites. This will get you some immediate extra cash to work with to jump start your goals.
Get a side gig
The gig economy is in full swing, and there are definitely plenty of opportunities within this market to earn some extra cash. Obviously you can go find part time employment anywhere, but the benefit here is you have the flexibility to create your own schedule and work as much or little as you need, so it’s way easier to work around a full time job or other obligations.
Here are some gigs to consider:
- Become a personal driver with Lyft or Uber
- Grocery shop for others with Shipt
- Get paid to do various side jobs for people with Task Rabbit
- Freelance on Upwork or Fiverr
- Rate search engine results with Lionbridge or Leapforce
Earn money with surveys and apps
There are lots of survey and app opportunities you can leverage to make money. Although it might not be that much, it can add up over time. Check out my list of recommended survey sites and apps here.
Turn your passion or hobby into your own online business and increase your income substantially
Creating your own business online is probably my top suggestion for those who are looking to seriously increase their earnings for the long term to help pay off debt and provide a more secure financial future for themselves.
While the other side gigs or extra income sources mentioned here can certainly help you earn (or save) some extra cash, your own business can be much more beneficial as it can create more stable, passive income for years to come. You also have total control and flexibility since you are your own boss, so you can still work around any other jobs you may have.
This is something you can do without any experience, and it is as simple with starting your own blog (website). The best part is you can really do this by creating a blog about something you are passionate about or enjoy, and turn that into a business by learning how to monetize it!
Read more about my top training resource for creating a blog.
If you’re really unable to make loan payments, you do have options
If you’re unemployed or in economic hardship, you do have options. If you have federal student loans they offer income based repayment plans, student loan forgiveness, as well as loan deferment.
Unfortunately if you have private loans, those options are not really available to you. Something you could consider in this case is refinancing. This can considerably lower your monthly payments by lowering interest rates and extending the length of the loan.
But this all depends on your situation – these aren’t the best options for everyone. If you do have some cash flow to work with, you’re better off paying them off as fast as possible.
The trick to paying off your student loans, and any other debts you may have, is learning how to properly budget and bringing in more income. These will help dramatically increase your monthly cash flow, help you pay off debts, and finally be able to save and invest in your future.
Do you have any other tips or advice for paying off student debt? How are you managing your loan payments?