So, people have been asking me lately if I have a strategy or tips that helped us pay off student loans faster. Honestly, there are no quick fix tips. Our $166,000 student loan bill didn’t just go away overnight. It took sacrifice and hard work. Saying no to ourselves, working overtime, and being patient was difficult. However, there are some real-life things we did that I believe helped us to pay off student loans fast. When I say faster, I mean before the 10 years they gave us. We paid off $166,000 in student loans in 4 years by doing these things. Hopefully they help you! Does anyone else have ideas on how to pay off debt faster?
Pay Off Student Loans Faster!
1: We Created A Budget!
Honestly, this might be the biggest thing that helped us stay on track and put 60% of our income towards loan payments. A budget doesn’t mean you have to live like you’re poor! B and I still took vacations during our loan payoff time. But, we only did this because we put it in the budget! Camping is a very cheap way to have a vacation. If you want ideas on cheap places to go, read these posts on how I find really cheap plane tickets! A budget is basically a plan where you tell your money where to go, instead of wondering later where it all went.
A “spending plan” helped us live within our means. People cannot keep living the same lifestyle that got them into debt if they are trying to pay off debt. There were definitely things we had to cut out of our lifestyle for a little while. At least until we paid off student loans. If you want a free budget template, I have copied the one that B and I used in this blog post on how to create a budget. You can download it there, and I explain everything in detail! The budget definitely helped us pay off loans fast!
2: Stuck To The Budget!
If you create a budget, it won’t be perfect at the beginning. There will be things you forgot to add and things to be adjusted. But, you need to stick with it! It is the only way B and I stayed on track. We literally lived by our budget the whole four years of paying off loans. And now that we are debt free! EEK! We still have our budget. Now, it just looks a lot different because we are saving money for ourselves and telling our money to go into fun envelopes and accounts! Helllooooo Hawaii! If you want to know how it feels to be debt free, read this post! If you can’t tell, it’s extremely exciting and soooo worth it!
3: The Debt Snowball
In order to actually pay extra on our loans, we used the debt snowball. If you want to find out more about what that is, read this blog post. When we paid off a loan, we took the minimum payment from that loan and added it to the next loan. We did not pocket the money or start using it for vacations. The only way to pay them off early was to keep that snowball growing and gaining more momentum. It also gave us momentum and excitement to see the huge loans start shrinking faster. The debt snowball gives people encouragement. Because encouragement is what we really all need to keep going for it!
4: Used Cash
The Envelope System is the best thing I have found to manage grocery and supply money. It also works well for other categories such as hair cuts, make-up, and things you don’t normally buy online. The envelope system is a way to use cash in a “sinking fund” to buy things and control your spending. We used cash for a lot of things, such as food, entertainment, supplies, etc. It was the only way for us to make sure we did not go over in the budget on these things. Once there is no more money in the envelope, we can’t spend anymore. Doing this helped me realize how much groceries actually cost. It also forced us to buy things on sale and be very intentional about our grocery shopping and our date nights for entertainment!
5: Used Our Savings $, But Not All Of It
When we got married, we had an extra $6,000 sitting in our savings. Most people say, when you are paying off loans, all you need is an emergency fund of at least $1,000. So, we figured taking 2-3 months off of our payments was worth it, so we put $5,000 extra into our loans. It helped us to pay off student loans at least 3 months faster! If you have a ton of money sitting in a savings account somewhere, see if there is a way to put some of it towards your debt. If we hadn’t done that, we would still be paying right now.
6: We Did Not Buy A Car While Paying Off Debt
We waited to buy a car until after we were debt free. AND we paid cash for it! However, we also did not go out and buy a brand new car. We bought a “new-to-us” car. I truly think used cars are the way to go so you can pay cash. We will never have a car payment if we can help it. We bought a used car from my grandpa. And, because we have no more debt, we paid cash for it! It’s such a good feeling to know you own your car free and clear! After knowing how it feels to be debt free, we will do everything in our power to never have a car payment.
7: No Cable TV
When we first got married, we didn’t even have money for cable. We have never had cable or any TV service besides Netflix since we have been married. I do miss watching my hockey games. However, we can get plenty of news online. And, I really don’t want to spend my time watching TV anyway. Netflix is enough for me. Plus, if you really need certain channels, they have so many ways now to just order the channels you want for a much cheaper price. Do your research! Cut out cable or Direct TV. How much money a month could you save from cutting it out? To me it’s worth it.
8: Cut Down On Eating Out
In order to pay off student loans, we really needed to save money. One way we saved a lot of money every month was cutting down on restaurants and eating out. When we wanted to have dinner with friends, we invited them over and cooked for everyone. Spaghetti games nights are awesome! We did not cut out restaurants completely. We gave ourselves $75 every paycheck for entertainment purposes. This would include date night movies, special dinners, or eating out with family and friends. We would use this envelope with our cash in it to go do fun things. And you know what? I don’t feel like we really missed out on anything.
How much money a month do you spend eating out? If you cut down on that, how much extra would you be able to put towards loans? For us, it was worth it.
9: Cut Down On Rent
Yes, we cut down our rent and utility payments significantly. The first thing we did was to rent an apartment that was cheaper. There were many apartments we could have rented that I would have loved. However, we needed to find the nicest one, but also the cheapest. This meant living in an area that I didn’t love. Yes we were closer to our jobs, but we were further away from friends, family and church. We lived here for 2 years and decided to cut down even more.
And yes, we did move in with my parents in order to do this. But you know what? It works! I love that we are able to live in a big house again instead of a tiny apartment. I am able to live with my puppy again! The best part is, my parents house has a pool and is big enough for all of us to have our own space. We cut off at least 6 months of payments by doing this. Our projected payoff date was supposed to be July 2018. And by throwing our savings at the loans, and moving in with my parents, we paid them off by December 20, 2017!
I know not everyone has the opportunity or desire to move back in with mom and dad. But, if you are single and have a mountain of debt, do whatever is possible. If you can share an apartment with people so your rent is cut in half, do it. If you know someone with a massive house, rent a room from them. It isn’t ideal, and sometimes it will be difficult. However, it’s worth it to save money and pay off student loans faster. Times are changing, and it seems more impossible (especially in California,) to be able to afford your own place and everything that comes with it! It is a sacrifice, but only for a short time.
10: Work Overtime Or Find Another Job
B and I are both Registered Nurses. This means we make a good amount of money. We still worked overtime during those 4 years to be able to make extra payments, or afford our vacations we wanted to take. Sometimes the problem with paying off loans early is that you just don’t make enough money. Income is obviously the most important piece of the equation. So if your dream job isn’t going to pay you well, you may need to wait for now. You may need to take whatever job you can get in order to make those payments. Three to four years really isn’t that long to wait for a dream job. Especially if that means you can take a pay cut for that dream job because you don’t have any debt!
B and I would love to move to Colorado! However, we graduated in California and found nursing jobs here right away. So, we have been waiting to move because we know moving to Colorado will be a pay cut. We couldn’t afford a pay cut if we wanted to pay off student loans early! California pays the most for registered nurses. It’s just a fact.
So if we were going to pay off loans early, we would have to stay. Now that we are debt free, we can afford a pay cut to live our dreams. We don’t owe anyone any money. Technically, we could live out of a van and do crazy side jobs if we wanted to. We only need money to buy food and live. That is so crazy to me! The amount of freedom you have when you become debt free is crazy!
Seriously, we did all of these things in order to get rid of our debt. If you could even implement one or two of them, do it! Being debt free is the best thing ever! Trust me. What were/are some crazy things you’ve done to get out of debt! Comment below!