3 Tips on Tackling Student Loan Debt
Its FINANCIAL FREEDOM FRIDAY again & today I want to discuss the elephant on my credit report … STUDENT LOAN DEBT.
But first I want to reiterate that I am NOT a Financial Adviser, I’m just sharing what I have learned in my quest to get my finances out of distress.
Often I’m overwhelmed comparing student loan debt to income & faced with the horrifying fact that I will likely be paying Evil Aunt Sallie until I’m well over 50! For the past year I’ve been focusing on getting closer to the Land of the Debt Free.
The first thing I did to tackle my student loans debt was decrease my retirement savings account contribution, then I increased my payments to my student loan servicers and finally I focused on the loan with the smallest balance first. Now, now, now I know very scary very bold moves but hear me out.
Why would I decrease my contribution to my retirement savings account?
The point of having a retirement savings account is to ensure life post retirement is comfortable. What other way to improve post retirement life than becoming debt free sooner? When it comes to saving for retirement, TIME IS ON YOUR SIDE. I’ve been working and contributing to a 401(k) plan for the past 5 years, I’ve decided to momentarily decrease the contributions to my 401(k) in hopes to increase my contributions to my student loan payments.
Why increase monthly payments?
I feel like this one is self explanatory. But in the case that it is not. The more paid now the less that needs to be paid later. I literally have nothing else to share here except again stressing the importance of making timely payments.
Why pay off the loan with the lowest amount first?
I have chosen to focus on my lowest balance loan first for 3 reasons.
1) All my loans are pretty much the same interest rate.
2) I feel like focusing on paying off my loan with the lowest balance first will make managing my payments easier.
3) It makes me feel accomplished the closer I get to paying off an account.
I sincerely hope that I’ve helped you in some way with this post.
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No Distress Ladies!