Feel like there’s no hope of ever getting out of debt? You worked hard in school, and all you have to show for it is a pile of bills, payable to Miss Sallie Mae.
You are not alone. According to Student Loan Hero. “Americans owe nearly $1.3 trillion in student loan debt, spread out among about 43 million borrowers. In fact, the average Class of 2016 graduate has $37,172 in student loan debt, up six percent from last year.” So what can you do?
Understand your debt
Don’t freak out. Face your debt head on by calculating your debt ratio. There are several ways to calculate this, but basically it is your total debt compared to your annual income. Take the time to review the terms and details of each loan. Pay attention to the interest rate for each loan. This information will help you decide whether you should try to get a lower interest rate, pay down certain loans faster, or consolidate your debts.
It is so tempting to start living the lifestyle you’ve dreamed of after you’ve graduated. But if you can live like a student for a few more years, and put the extra money you are earning towards your debt, the payoff can be worth it. This is true no matter your debt or income level. It is simply a matter of spending significantly less than you earn and aggressively paying off debt. To do this successfully, you have to assess your own lifestyle. You have to permanently change behaviors that got you into trouble in the past, or your debt will continue to grow.
Make a budget and stick to it
Find cheaper housing. Mow the lawn or do maintenance jobs to add to your income. Find roommates. Live in a smaller space. Walk, bike, carpool, or use public transportation as much as possible. Take a good look at your cable and phone bills and find ways to downgrade. Take advantage of free entertainment. Leave your credit card home and use cash. Sticking to a budget requires paying close attention to your spending and not justifying unnecessary purchases.
Make enough money to repay the debt. Sounds obvious doesn’t it? But the truth is, in today’s job market, you might need a side job to help pay down your debt faster. Look for something seasonal so you can give yourself a break during the year, while still making extra cash in a few busy months.
Some jobs (and even volunteer work) offer student loan forgiveness as an incentive. Sell things you don’t need. Put all the extra money towards debt.
Getting out of debt debt is not easy. Track your progress and celebrate your victories. And remember, your self-discipline now will definitely pay off in the future.