A plan for paying off your student loans early

There’s is nothing more annoying than taking advice from someone who has no personal experience with the issue at hand. So get ready to be annoyed because I’ve never had student loans, but I’m about to tell you how to pay yours off early. But really you shouldn’t be too annoyed because my job makes me privy to hundreds and thousands of financial lives, a good chunk of which have student loans. I’ve witnessed first hand the complacency most people have about their student loans. The attitude is usually something like, “well everyone has them and I really want to go on a vacation/buy a house/buy a car so I’ll just pay the minimum on my student loans for now.” This attitude can cause a lot of long lasting damage to your financial life. Unless you have consumer debt, paying off student loans should be your number one priority. It is a completely reasonable goal to be student loan debt free before you turn 30.

So how do you motivate yourself to do something you don’t want to do? Your best bet for accomplishing any goal is two-fold, get emotional and break it down.

I’ve written an entire post about getting angry about your student loans before, and I’ll repeat the same sentiment here. Get annoyed about those loans hanging over your head. Get angry that you will have to pay $300 a month for the next ten years. Work yourself up about it. Then turn that emotion into action.

It’s easy for pressing short term goals to knock a long term goal like paying off student loans from the forefront. Avoid this by breaking down your student loan payback goal. Are you currently on a ten year plan? Mentally switch to a five year plan. Now the goal is more pressing.

“If you still aren’t convinced you should make a plan to pay off your loans early, let’s get the math involved. If you have a $30,000 student loan at 4 percent interest, and you are making $300 monthly payments, then you can expect to pay $6,448.12 extra in interest over time. If you set a goal to pay off your loan in five years, then you’ll have to increase your monthly payment to $552.00, but you’ll only pay $3,149.71 in interest—saving you extra cash in the long run.” (courtesy of SmartyCents.com)

The real question, the question I get from every person I’ve encouraged to pay off their student loans early, is where will the extra money come from each month? Well, I don’t know, but you’ve got to make it happen. Cut expenses, downsize, get a second job, and work your ass off are just a few options. Where does an extra $200 or $300 a month come from? Hard work. Blood, sweat, and tears. Dramatic much? Sure. But paying off debt is kinda dramatic. Every day you have to make 10 little decisions which help you make your goal. It’s tough work, but thankfully your goal will be met at some time and then you can “relax” again.

I wouldn’t talk about student loans so much if it weren’t a serious issue. If you want a life lived without financial stress, then pay off your debts as soon as possible.

To read more about my plan for paying off student loans early read my column over on SmartyCents.com here.

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