- Paying off student loans is daunting, but beginning with one spending area makes it easier for you.
- People who repaid their loans reduced their food expenses, housing costs and other savings.
- Some married people populated one income when using the other's salary to pay off the debt.
- This article belongs to the “Better, Smarter, Faster” series concentrating on effective choices you may make together with your money to achieve big life goals.
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When making resolutions about paying down student debt, it's easy to set unrealistic goals and focus only around the main issue. But instead of reviewing every dollar you spend, it may be simpler to consider the details: Cut spending in one section of your financial allowance at a time, working gradually towards your debt repayment goal.
We asked seven people who repaid their student education loans which changes made the biggest difference.
1. Focus on food expenses
“At some point, we were spending $1,000 on food,” says credit expert Jasmine McCall, who caused her husband Jay to repay $96,452 in student debt over 4 years, of her monthly expenses. Once they were given that reality check, the McCalls centered on cutting groceries and restaurants before tackling other areas where they could cut back.
The McCalls were also living off Jay's $85,000 salary while allocating all of Jasmine's $88,000 salary to their student loan debt. Living on a single partner's salary while using the other partner's salary to pay off debt is a typical strategy couples use to speed in the process of paying down debt.
2. Lessen the rent where possible
Imani Porter in Washington, DC, and Danielle Desir in Connecticut both moved along with their own families while paying off their student education loans. Not everyone has the privilege of relying on their loved ones to save on rent, but Porter and Desir say it's helped speed up their debt-paydown journey. Porter repaid $25,000 indebted in one year, while Desir paid off $61,823 in 4 years.
Software engineer Nickolas Natali moved right into a van for a year to drastically reduce his living expenses and repay $59,000 in one year. However, Natali doesn't recommend van life for everyone. He told Insider, “I was peeing inside a bottle and hiding under curtains organized with magnets so nobody could see me, and yeah, that wasn't sexy at all.”
3. Reassess insurance needs
After being fired from her job, debt repayment coach Ja'Net Adams took a hard take a look at her family's finances to determine where she could save money. Because Adams had worked in the pharmaceutical industry, free medical health insurance was usually a part of benefits. Once she lost her job, she had to look elsewhere for coverage. “Thank goodness that was when Obamacare was happening,” Adams told Insider.
She also known as her home and car insurance providers to ascertain if she qualified for a lower rate or if there was a less expensive package available. “We had an excessive amount of
and an excessive amount of property insurance,” says Adams. “We saved $300 to $400 a month simply by downsizing.
Once she found a brand new job, she could speed up the process of paying down her debt by preserve those same insurance budget cuts.
4. Take a look at 401(k) contributions
With a combined salary of $125,000 annually, Ashley Patrick and her husband were contributing 11% for their 401(k). A 401(k) plan's an employer-sponsored retirement account that lets you put a portion of your salary, before taxes, into an investment account that earns compound interest.
To prioritize paying off high-interest debt, Patrick and her husband take their 401(k) contributions on hold to pay attention to paying off $25,000 in student education loans in just 10 months.
This does not necessarily mean that it's necessarily recommended to prevent long-term pension contributions. Since retirement funds are a compound interest investment, saving as early as possible constitutes a massive difference. If you decide to place your retirement savings on hold to pay off the money you owe (or perhaps just reduce them temporarily), be sure you be sure to return them later on.
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