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How to Pay Off Your Student Loans

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How to Pay Off Your Student Loans

At a time when the cost of education seems to be spiraling out of control, it is not lost on anyone that student loans can and do go a long way in helping many people finance their way through college. The downside to it is that this money has to be repaid after graduating, and this is the not-so-fun part.

Often the case, barely has the excitement of receiving that paycheck kicked in when you remember a huge part of it has to go towards servicing your student loan debt. It’s a sinking feeling, why lie; and it can feel like an albatross around the neck. But it doesn’t have to be this way. Here are some smart tips on how to pay off your student loans without letting it weigh heavily on you.

Create a Budget and Have a Solid Plan

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It may sound trite, but setting up a budget is always a tried and true method to get your finances in check. It’s no different when it comes to paying off student loans. Look, creating a budget doesn’t have to be about maintaining a meticulous spreadsheet, using a checkbook register or any of those other boring chores. It’s 2017 already, and there are plenty of apps to help you with just about any budgeting method out there.

Do some digging around to establish a strategy that works best for you. While you’re at it, come up with a plan to pare the debt and stick to it, knowing what exactly you need to pay each month. Having an end in sight as to when you finish the loan is more than just psychologically comforting: it will also help you in working towards moving the payoff date closer.

Establish a College Repayment Fund

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Set up an account that will be used for paying back the college debt. It should be different from the savings or checking account you use to avoid spending the money on anything other than your student loan.

The upside of this is that it forces you into saving at the cost of splashing on “luxuries” such as additional clothes and dining out. Those small things really do add up.

Scale back if you have to

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This golden nugget applies to almost everyone, not just those contending with student debt.

You see, one of the barriers that stop people from paying loans faster is that oh-so-human need for instant gratification. Try to live within your means even if that means going the extra mile – getting a smaller place, moving to a more affordable neighborhood, making sacrifices to your lifestyle and other such cost-cutting measures.

Having the discipline to save with an eye on future financial goals is not easy for many of us, true. But it will keep you from falling off the wagon.

Avoid Repayment Programs

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This may sound counterintuitive, but if your goal is to pay your student loan faster, you may be better off avoiding repayment programs.

Why?

Well, the reasoning behind this is that almost all the federal student loan repayment programs are aimed at decreasing payments. This may not sound bad, but there is a caveat: it takes longer to pay off the loan.

For example, the PAYE (Pay As You Earn) program more than doubles your loan repayment term from 10 years to 25 years. That’s an awfully long time to spend servicing a student loan for most people.

At the end of the day, it’s how you manage your finances that determines if student loans will drag you down. Or not.

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