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Kiss Sallie Mae Goodbye in Five Years or Less

Contrary to popular belief, your student debt need not follow you around for the next 20 years like an incurable rash. Rather than succumb to the lure of low monthly payments that last until you’re in your 40s, where you end up paying more interest than principal, consider paying off your student debt sooner. By following a few simple money management techniques, you may be able to gain financial freedom at a much younger age than you thought possible.

What’s the Rush?

The number one reason to take a more aggressive approach toward paying down your student debt is this: Your hard-earned dollars that you are squandering on interest payments to your friend, Sallie Mae, is money that could be going toward your home, your retirement plan, or even an indulgent vacation. Without the burden of that perpetual monthly payment, you may actually feel as though you have money to spend for the first time since you graduated from college.

Where Do I Begin?

The first step on the road to becoming debt-free is to make a conscious commitment to change your ways. It’s kind of like diet advice. If you want to lose weight—or lose debt—set a goal and focus relentlessly on achieving it. Make it realistic, write it down and hang it at your desk, on your bathroom mirror or wherever you will see it every day. Write something like: “I will pay off my student loan by December 31, 2021.”

Once you officially decide to stop giving the government any more of your money than you have to, here are a few tips to help you reach your goal:

  1. Pay off your credit cards first. The interest rate you are paying on your credit card balances likely far exceeds the rate on your student loan. So, pay off your most expensive debt first.
  2. Reduce housing expenses. It may seem extreme, but lowering or eliminating a rent payment is usually the best way to save money. If you are still single, consider moving back in with your parents or finding a roommate to cut costs.
  3. Cut out unnecessary expenses. Make your coffee at home, pack your lunch, do your own nails, jog in your neighborhood instead of at an expensive gym—and put the amount you save toward your loan.
  4. Shop around for a lower cell phone plan. Maybe it’s time to switch to that cheaper, pre-paid plan.
  5. Make a student loan payment more than once per month. The interest you save will astound you.
  6. Drive a used car. At least for now, avoid over-spending on that shiny, new model that depreciates by 20 percent as soon as you drive it off the showroom floor.
  7. Put unexpected income against your loan. Salary increases, bonuses—or even your tax refund—should go toward your debt before you get used to having the extra cash in your pocket.
  8. Create a strict budget. Once you’ve settled into your new, frugal lifestyle, create a budget, plugging in the maximum amount you can afford to pay on your student loan.

Imagine the freedom you’ll feel when you make that last loan payment. Depending on how firmly you stick to your budget, that day could come sooner than you think. If you need help putting together your debt-reducing plan, ask the experts at Jemma Financial. We’re here to help you take back control of your finances and kiss Sallie Mae goodbye for good.

 

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