It seems like everyone is talking about student loan debt in 2020 and it’s been a major discussion point for candidates as the upcoming election looms. With the national balance sitting at $1.5 trillion, it’s easy to see why some people are giving up on paying them back entirely, leaving the U.S. Department of Education shook.
The traditional higher education model is being disrupted, which gives us HOPE (in all caps), and many high school graduates are starting to consider college alternatives. But what about those who have already taken out student loans to pay for four-year universities?
If you’re struggling to get out from under your student loan debt, you don’t have to suffer in silence. When we’re open to talking about money with others, learning how to use it, and figuring out our money scripts, we set ourselves up to become financially fit.
Wondering how to get rid of student loans? Use these tips to kick yours to the curb in 2020. Bye, Sallie Mae!
Know your Money Scripts
Before you dive into strategizing your debt repayment, you’ve gotta take a good long look at your money story. Each of us has a money script we learned in childhood and this influences the way we interact with money as adults. Do you ever wonder why some people seem to be so good with money while others just can’t seem to get it right? This is why. Your money scripts are affected by things like:
How your parents handled and spoke about money
If you had an allowance growing up
How early you started working
Do you avoid money or find yourself conflating your self-worth with it? Bringing a level of consciousness to the way we handle money can help here. If you’re struggling to sort through your money story on your own, consider reaching out to a financial therapist like Bari Tessler. Bari helps people work through their money shame and introduce mindfulness into their money game. Getting to the bottom of your money mindset is the ultimate form of self-care.
Create a Budget
Ready to become a budgeting badass? Budgeting is the fast track to financial success and can improve your current financial life by leaps and bounds. You can create a budget using an Excel spreadsheet or through a site like Mint to track how much money comes in and out each month. From there, you can set boundaries for your spending depending on your values, goals, and lifestyle needs. Don’t stop there though! Log your spending each week to ensure you’re staying on top of things. See where you can cut costs and direct extra money to your debt so you’re not just paying the minimum each month.
Build Up a “F*** Off” Fund
In 2016, Paulette Perhach dropped a fire article about “F*** Off” Funds (usually referred to as emergency funds in the personal finance world). The viral article detailed a terrifying tale of a woman stuck in abusive romantic and workplace situations, unable to break free because of her lack of savings. The story was fictional but a wake-up call for many.
In the U.S., just 40 percent of people can afford a $1,000 unexpected expense. This is where an emergency fund comes into play. It’s there to be your buffer when stuff happens. It also keeps you from creating more debt if an emergency arises on your journey to debt freedom. Everyone’s needs are different but many financial advisors recommend saving 3-6 months of living expenses in your fund. Others recommend a minimum of $2k to start out.
Lean on Community
When you’re in the thick of making monthly payments and feel like you can’t see the end, you’re going to need some serious motivation. Let friends, family, or virtual buddies be your financial cheerleaders. Online communities like r/StudentLoans can help you get questions answered and encourage you when you’re sick of the repayment process. YouTuber Aja Dang relied on the power of community as she paid off $200k of student loan debt in 2 years. Get a peek into her journey for some major inspiration.
If you’re bogged down by high interest rates (anything over 5%), consider refinancing. This could save you money and shave off years of payments. Sites like earnest and SoFi will help you compare rates. Another way to cut down on interest is to enroll in auto-pay with your servicer. It’ll take your rate down by 0.25 percent.
Look into College Alternatives
If you haven’t yet decided the right higher ed path for yourself, give college alternatives a look. Many of them cost a lot less than traditional programs and they often offer a variety of financing options.
With these tips in mind, we’re confident you’ll ditch those student loans in no time. Here’s to kicking ass and taking names!