College expenses are rising fast. And, they can’t keep up with all the costs they’re incurring just for an education. If you’re a student, and you’re struggling with ways to pay off your student debt, here are some tactics that can help.
Make a Commitment
Most students fail to pay off their debts in a timely manner because they fail to commit to a debt payoff strategy. Before you start, devote yourself to a cause of paying off your student debt. The best way to do this is to fully understand what your debt costs.
People who have student debt sometimes take jobs they otherwise wouldn’t. They also live in places that are very cheap (maybe not the greatest parts of town). They rent instead of buying. They find it more difficult to save, invest, and enjoy life. They don’t stop and look at the costs associated with their debt.
But, when you go through the list, it’s easy to see how expense student debt really is. Some students can’t dig themselves out of it and end up contacting a bankruptcy Attorney in Dayton Ohio for debt relief.
This should be a last resort because, in most cases, you should be able to get out of it without too much trouble.
Prioritizing Your Debts
List all your debts out on a spreadsheet. Then, sort them by interest rate. This is something that often gets overlooked. The highest rate loans should be on top, and the lowest interest loans on bottom. Next, set priorities. Try to reduce the cost of all the loans.
Once you do that, put as much money as you can against the highest interest rate loan, and then minimize payments to your lower cost loans. Keep working on paying off your debts by paying as much as you can toward the highest interest debt. You pay against the highest interest debt because this is the debt that is going to cost you the most.
If you start with the lowest balance first, you will end up paying more interest over time (unless it happens to be the highest interest debt).
Lower Your Interest Cost
Lowering your interest cost should be the first priority and the fastest way to get out of debt quickly. Remember, every dollar you pay toward interest won’t go toward paying your debt. If you can lower your debt cost, more of your payment goes toward principal, and that gets you out of debt.
How To Lower Your Debt
One way to lower your debt cost is to ask your family to help you refinance your debt with a lower interest debt. You can either have them cosign a loan with you, or borrow directly from them (their savings) and repay them with interest to show your gratitude.
Always offer to pay with interest when borrowing from a family member or friend, and do it without hesitation. Always.
In fact, you should insist on paying them interest on the loan because they are taking money from their savings to help you out. It’s the least you could do since they’re not able to invest it elsewhere when it’s being loaned out to you.
If your family can’t or won’t help you, consider a peer-to-peer lending arrangement. These companies help put people like you together with investors who have funds to invest. They want more interest than a bank pays, but they also want a reasonable return. So, they invest in a loan made to you (and others in the peer-to-peer network).
Once you have the money, pay off your debts and repay the loan. And, you’re set.
Kieran Pope is a Dad who works as a personal finance advisor. With his kids now in college, student loans have been on his mind a lot recently, and he just hopes his kids have been listening to him! Look out for his articles on personal finance blogs and groups around the web.