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Many students are sure that paying off a student loan is an impossible mission. Yes, it is difficult but fortunately, it is quite possible to cope with it. Hundreds of students are faced with this task every year, so today you can find practical advice powered by real-life experience.
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Student loan repayment can be an exhausting process. If you cannot find motivation why it is worth paying off the loan earlier, then let’s look at the benefits of early repayment with an example. Please note that this is just an example.
Let’s imagine that you received a $30,000 student loan at 5% per annum for 10 years. If you do not take into account the commission fees and make the approximate calculations, the final amount you pay will be $38,300. Accordingly, you will overpay $8,300.
Imagine that you will finish paying off your loans in 8 years. Then it turns out that you will pay $36,640. Accordingly, you can save $1,660. That is, instead of $8,300, you will overpay $6,640.
But how can you actually save when repaying your debt? Employ the following strategies and approaches.
- Pay More Every Month
Remember the example that was mentioned earlier. Of course, repaying the loan earlier is a good opportunity, but how to do it? The easiest but most effective way is to pay more each month than the established monthly fee.
To achieve repayment in 8 years, there is a need to increase your monthly payment by 20%. Take every chance to increase this amount, and then you will have the opportunity to repay the loan faster.
Let’s say, your monthly payment is $320. If you add 20% to this amount, then it turns out that you will need to pay $382. In total, you can pay off about $4595 in a year, instead of $3840. The difference of $62 each month will allow you to pay off the loan amount in just 8 years. Accordingly, if you further increase the amount of the monthly payment, you will shorten the repayment period.
- Explore All Repayment Features
To understand how much you have to pay every month and how you can reduce commission fees, you need to spend a little of your time studying all the nuances. The point is that if you carefully study all the terms of payment, you can find loopholes to reduce transaction fees.
Let’s say, there may be conditions that if you deposit the amount before a certain date, you can do it without additional fees. Check with the agent if there is an opportunity to avoid commissions and ask what are conditions you should be compliant with. Then you will be able to create a payout calendar and avoid overpaying fees.
- Find an Additional Source of Income
It is obvious that you will need money to pay off the loan. Therefore, it would be wise to find a part-time job that will bring you additional income. You can find a part-time job on the Internet, for example, become a freelance writer in one of the academic writing companies and have the to generate some money, however, you should be creative and hardworking. Participate in online tests that can bring you good income, walk your neighbor’s dogs on weekends, and so on.
Also, manage your time wisely so that you have the opportunity to combine study and work. Use the help of third-party writers with good to manage their finances and simply do not notice their spending and overspendings. Every time you spend money, write down the amount you spent. You canto help you realize where and how often you spend money.
Perhaps you buy too much coffee during the day when it would be more economical to go around with a thermos. You may be spending too much money on branded clothing while staying in debt isn’t the right time to afford luxuries. Understanding where you are spending your money will show you directions where you can save.
In order not to lose motivation in such a complex matter as loan repayment, you need motivation. Make it a rule to reward yourself for making timely payments every quarter or even every month. But try to make this reward budgetary. Think about what you love the most.
Could it be pizza or a cup of aromatic coffee in a nearby café? Perhaps this is a walk with friends? Maybe this is an interesting book? Determine for yourself what can cheer you up and turn it into encouragement. Let this be your energy reboot and motivation to move on.
The Bottom Line
With these strategies, you can keep your spirits up and deal with your student loan repayment. Remember that the sooner you can finish paying off your student loan, the less you will pay. Debt life should not last for 10 years, so try to get rid of the student debt issue as soon as possible.