Tips To Get Out Of Student Debt Intelligently
College life is an illusion for most students – a time when you make yourself believe you have a bright future with absolutely no worries. You look upon graduation as a major stepping stone to financial stability and freedom. Making money seems ridiculously easy as you constantly fool yourself how businesses “out there” are dying to hire you!
It is only when you graduate that the bitter reality sets in. Getting good jobs isn’t easy and those that you end up taking are insufficient to pay off that hefty debt you took during the academic career. Maybe those loans don’t look as enticing or lucrative now when it’s time to pay it back. But you need to get through somehow in order to become debt-free.
It isn’t easy but it isn’t quite impossible either. You need determination and will power – the most that you can muster. Here are a few tips that will come in handy as you try to pursue the difficult path to real financial freedom!
Planning Your Success
You need to know how much you owe and to whom. This also includes the repayment schedule and grace periods for all loans. If you’ve really been as reckless as most students are, the possibility is you have multiple debts to pay off with a single source of income that you have. Do your research thoroughly and get in touch with the lender to discuss further possibilities to make repayment easier. Plan your freedom and stick to it. The “cheat meal” is no longer tolerable – it is what got you into trouble in the first place!
Prioritizing
The general rule of thumb says pay off the highest interest incurring loans first – contrary to what most students feel inclined to do. Interest is what makes repayment infinitely more difficult. So get the worst off your shoulders before tackling little ones. The higher the interest rate and the longer the indebted period, the bigger hole it makes in your savings/income!
Student loan consolidation is also a good option – especially if you are not good with keeping records or deadlines. You get to merge all loans into one so you need to remember a single date and make a single payment. You might even be able to get a better deal with the interest rates. Make sure you’ve done your research well to make the most of this opportunity.
Keep Your Repayment Aligned With Your Income
Whatever you earn does not go entirely in debt repayments. And if you try doing that, you will eventually end up taking more debt to pay for your lifestyle. Be wise in formulating the pay plan according to your income.
The IBR (Income Based Repayment) and PAYE (Pay As You Earn) are life saviors if you know how to use them well. It is based on your income – so when and if it increases, the payments will also increase. Try making larger payments and have them targeted at the principal amount – liberation will be just around the corner!
References
http://financesonline.com/debt-repayment-tips-that-work-from-real-life-debt-winners/
http://credit.about.com/od/debttips/tp/Tips-To-Make-Debt-Repayment-Easier.htm
http://projectonstudentdebt.org/recent_grads.vp.html
http://wallstcheatsheet.com/stocks/8-tips-to-get-out-of-student-loan-debt.html/?a=viewall