Debt. Ugh, what a horrible word. Can we just erase this word from the dictionary completely?
If you carry around debt with you, then you know exactly how the sound of that word feels. It is stressful, it causes frustration, and it makes you want to curl up and not face reality.
But, before you panic, consider these strategies (especially for college students) to help you start paying down your debt, whether it is from student loans, personal missteps, or both.
1. Don’t Just Pay the Minimum
Whether you are paying your student loan or a credit card bill, do not simply just pay the minimum. Of course, if you are short one month, the minimum is all that is required to keep your account in good standing, but the more you pay, the quicker you can pay down your debt.
To ensure financial efficiency, try to send in additional money that you have instead of pulling from your savings account or your other funds. For example, if you plan to spend $200 on groceries, but you only spend $150, then send the extra $50 to your debt.
While you may be rolling your eyes at the thought of couponing, you can actually save quite a bit of extra money and send that money to your loan.
Coupons come out on a regular basis and if you take the time to match up the current coupons with store sales, you can get the items you need for next to nothing. This is a great way to shop and you will be able to send money to pay off your debts without actually dipping into your account.
3. Utilize Savings Features
Some banks offer a feature where they will deposit the change from your previous purchase into your savings account to help you save up money.
For example, if you have a checking account and you spend $4.01 on a transaction, the bank will charge you $5.00 and then deposit the 99 cents into your savings account.
This is a great feature because you will never really miss your money and your hands will never be on the money, so you will not feel like you are being burdened to save. Once you have saved enough change, you can cash it in and send it to your loan servicer or credit card company to help pay off some of your debt.
4. Skip the Entertainment
While going out on the town is fun, you can equally have a good night in your home as well. Not sure how you could save extra money? Let’s break it down.
One Night Out
Dinner: $50 for two people
Movies: $10 to $15 per ticket, plus snacks
Alcoholic Drinks: $3 to $10 per drink
Total: One expensive night
One Night at Home
Dinner: $20 for two people
Movies: $1 at Redbox
Drinks: $10 for an entire bottle
As you can see, going out is more expensive and you can save yourself the expense and all you need to do is sacrifice some of your time to actually cook and mix your own drinks.
5. Utilize Scholarships
Student loans are a great, and often necessary, resource to pay for college. However, there are also many grants and scholarships out there for students to tap into. You can apply for these resources prior to applying for a loan, but you may find the need to utilize a combination of both to cover tuition, room, and boarding fees.
Believe it or not, there are actually tons of scholarships out there for students currently in college, not just those who are about to start their freshmen years. Before you take on additional student loans, consider applying for scholarships to try to fund your education.
Try looking for scholarships that are more specific to your interests. For example, if you are an Environmental Science major, look for scholarships that are specifically for Environmental Science majors!
6. Consider a Budget Plan for Utilities
If you are currently paying an unpredictable amount each month for your utilities, you can call your utility company and find out if there is a budget plan that you can be added to. For example, some power companies will take an average of the amount you spend and then charge you the same amount each month. If you go over the allotted amount, the total overage is deferred.
A budget plan is ideal because you can then pay one amount each month and you will always know how much you are actually paying.
When it comes time to pay off your debt, whether personal debt or student loan debt, you will need to make some sacrifices, but once the debt is gone from over your head, you will no longer have to worry about it and you can enjoy the things you love once again.