Student loan debt is more challenging than ever. As of 2019, more than 44 million Americans are carrying over $1.5 trillion of student loan debt. When you break it down to the individual level, the numbers are even more staggering: 69% of the graduating class of 2018 entered the workforce with student loan debt, carrying an average of nearly $30,000 in outstanding loans after completing their college educations.
Dealing with that kind of student loan debt on top of all your other bills can seem like an impossible task. However, it doesn’t have to be. Millions of people are just starting out too, and they’re keeping their outstanding student loan payments under control. Here are four easy ways to make student loan payments work on a budget.
1. Make a Plan
If you want to lower your stress level when it comes to paying back your student loans, you should start making a plan as soon as possible. First, determine exactly how much your student loan payments will be each month. Then, compile a list of all your other bills, along with your current sources of monthly income. Once you have those numbers, you’ll be ready to make a budget to manage your monthly finances.
Budgeting is one of the best ways to take the uncertainty out of your daily spending decisions and help you stay on track to reaching your financial goals. However, less than half of people actually bother to set any sort of personal budget at all. If you want to be one of the people who keep student loan repayment under control, gather all your financial information and set up a household budget today.
2. Avoid Additional Debt
If you’re entering the workforce with a high level of student loan debt, one of the worst things you can do is suddenly take on even more monthly payments. Strive to avoid additional debt, especially the revolving debt of high-interest credit cards. Credit card and other debts will burden you with more interest fees and a higher percentage of your monthly budget allocated to debt payments. All that debt can crowd out your ability to save and invest for your future. Instead, strive to keep your debt level low, and forego any big-ticket purchases that you’d have to finance, such as a new car. Doing so will enable you to focus more of your income on paying down those student loans faster.
If you do find yourself burdened with too much additional debt on top of your student loans, take action as soon as you can to address the problem. If you don’t, your financial situation could become untenable, and you could find yourself unable to cover all your monthly expenses.
3. Buckle Down
If you want to free yourself from your student loan debt as soon as possible, you should be prepared to tighten your belt and make some sacrifices. Besides avoiding the debts mentioned earlier, live on the tightest budget you can, and commit every extra penny you make or save toward paying down your debt. An economical rent, car, and grocery budget will give you the spending power to commit the maximum amount of income toward those monthly loan payments.
You should also be willing to commit every little windfall you receive toward repaying your student loans. That federal tax refund, for instance, would be a terrific way to boost a monthly loan payment. Any birthday money, gifts, or inheritance should be committed toward those loans as well. Your short-term thrift and sacrifices will pay off in the end, when you’ve paid off your student debts on time (or even a bit early) and can start saving, investing, and yes, spending your money on other things.
4. Get a Side Hustle
If you still find yourself struggling to cover your student loan payments and other bills on your current salary, perhaps you should get a part-time job or side hustle. If you do, you’ll be in good company: about 37% of Americans report earning some sort of income outside of their primary job. A side hustle can help you generate just enough cash to make repaying your student loans less of a financial burden so you can focus on other things.
Fortunately, thanks to technology, getting a side hustle that fits your schedule is easier than ever. Millions of people currently work part-time for driving services such as Uber or Lyft. Thousands more serve as freelancers by leveraging platforms such as Upwork to do part-time writing, editing, and graphic design work. Other Americans use services such as Airbnb to turn some extra space in their home into passive income. Find a side hustle you enjoy, and use the extra income you earn to make your student loan payments more manageable.
It can be tough to pay off your student loans, but you can do it, even if you’re on a tight budget. So, consider the tips here, and make a plan to start paying down your student loan debts right away!