# A Beginner’s Guide to Paying Off Student Loans
Are you one of the many people burdened with student loan debt after graduation? It can be overwhelming to stare down a mountain of debt and try to figure out how to pay it off. But don’t worry, we’ve compiled a list of realistic tips to help you pay off one of the world’s most expensive pieces of paper.
## Budgeting is Key
The first step in paying off student loans is to take a good, hard look at your finances. Take note of how much debt you have, what the term length is, and any other relevant details. By getting a feel for the boundaries of the space, you can begin to learn the realistic scope of what you are dealing with. Once you have made a legitimate assessment, begin crunching the numbers.
Budgeting is the most crucial aspect of paying off student loans as it allows you to understand how much money you can realistically afford to put towards your debt each month. It is essential to know precisely how much you need to pay and when, and then pay over that amount while balancing a modest lifestyle with your current income. By budgeting, you’ll have a clear understanding of your finances, enabling you to make informed decisions about your spending.
## Pay Over Your Minimum
Paying off student loans over your minimum payment works twofold. Not only does it get you closer to your endpoint faster, but it also lowers the interest you owe. While this is seemingly simple, it does come with one major downside – the ‘cost of living’ part of the budget shrinking substantially to accommodate the loan.
Keep in mind the targeted dates are set for realism, but any amount you can assuage gets you closer to being able to put 100% of your take-home pay back in your pocket. Consistent payment over an achievable period is always the most sound advice.
## Make Financial Sacrifices
Making financial sacrifices is about adhering to the budget and foregoing smaller luxuries to which you may otherwise be accustomed. There are as many types of people under the sun as there are hues in an evening sky, however, just as you must look upward to find the horizon’s full view, you may look to any given individual and know that they find something pleasurable that costs them money.
This is where sacrificing comes in. Sometimes, the sacrifice may be something small like making coffee at home instead of stopping at Starbucks every morning. Other times, it may be more significant, like forgoing a vacation or a new car. However, by prioritizing your debt, you can begin to see all those debts slip away and disappear over time.
## The Debt Snowball
In circumstances where the debt is spread over multiple loans, it is advised to utilize ‘the Debt Snowball.’ The Debt Snowball is a method of prioritizing paying off the smallest loan first, then the second smallest, then the third smallest, and so on.
While it’s essential to still be paying off your minimums on everything else, utilizing the Debt Snowball methodology allows for easier mental budgeting. Additionally, it gives you the idea of mental freedom and alleviation as you begin to see all those debts slip away and disappear.
## Refinance Your Student Loans
Refinancing your student loans isn’t always the right choice; it depends on your raw numbers. Whether the tax is federal or private, whittling it down can be extremely difficult. When looking to refinance, you are effectively allowing another interest group to buy your debt.
Refinancing is in essence having someone pay off your debt, thus giving you new terms of debt to pay off at new discretion. However, in cases where you are making the payments more accessible and realistic, working through the intricate process can be worth it.
## Apply Spare Income Toward Payment
Side hustles, raises, and tax returns are great ways to get an edge on each payment. While they are not blunt in ways of re-working the existing debt and serving to function as a business all their own, they do provide an influx of cash.
This additional income can assuage the cost of living. By adding these new sources of revenue to your finances, you will increase pay and decrease the time required to pay it off. Routinely applying these payments will reduce debt for the individual and get you back on track to paying off any remaining debt.
Paying off student loans can be daunting, but it’s not impossible. By budgeting, sacrificing, utilizing the Debt Snowball, refinancing, and applying spare income toward payment, you can work towards becoming debt-free.
It’s important to remember that there are no quick-fix solutions when it comes to paying off student loans, and it requires continuous effort to see results. It’s crucial to find a payment plan that works for you, stick to it, and be patient. With persistence, you can take control of your financial future and become debt-free.