Real tips for repaying student loan debt don’t come any clearer than from a firsthand account of a recent graduate. Michael Ruderman left Stanford with a degree in hand, but no job on the horizon. After making drastic changes to his living situation and acquiring a job, this is how he got on track to repay his student loan debt:
1. Got a job — In order to pay down a debt you need money, so he recommends finding a job as the first step. If the job doesn’t pay enough, use your debt obligations to negotiate a higher salary or find additional employment.
2. Organized his money — To better manage money budgeting is key. He suggests outlining how much you owe and costs of your living expenses, compared to your income. Understanding your cash flow is crucial for staying on track.
3. Created an emergency fund– Depending on who you ask having anywhere from $1000 to several months worth of living expenses saved for the unexpected is important. Evaluate how much you would realistically need to sustain yourself for 3-to-6 months in the event you lost a job or suffered a financial setback.
4. Set up auto-payments — Staying out of default is simple; pay on time. An easy way to do that is to set up automatic payments on your loan. Not only is it less effort on your part, but some lenders offer incentives like a reduced interest rate for automatic payments.
5. Looked into lower interest rates — There are ways to lower your interest rate, thereby saving you money in the long run. Look into refinancing your loan or negotiating a lower interest rate with your lender.
6. Struck a balance –Obviously the quickest way to get out of debt is to pay as much as possible towards your balance. While you may not be able to sell assets or use inheritance money to do so, you can still evaluate adding some additional money to your monthly payments. Live within your means, but don’t let debt drag you down to the point of unhappiness.
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