According to the Huffington Post, the average college graduate is burdened with $25,000 in debt. If that student opts to attend graduate school, that debt will, on average, reach over $40,000. Compounded with interest, these loans can take upwards of a decade to repay; it was reported that President Barack Obama only recently finished repaying his student loans. Imagine that – the President of the United States himself taking over a 10 years to get his debts settled! With all that being said, there are definitely ways to pay back student loans very quickly, which is all the more important given that a reported $1 trillion in loans . Let’s get started, learn here how to pay back student loans quickly.
The Radical Route
Joe Mihalic graduated from Harvard Business School with $101,000 of debt. After making over $20,000 in payments, he realized that he still had over $90,000 to go – his debt had increased because of the interest on his loans. He made a drastic decision to pay his loans off as quickly as possible, and repaid the remaining $90,000 within 7 months.
How did he do it? Joe stopped making payments to his 401K, and made numerous other sacrifices in his life. Rather than buying drinks at bars, he’d bring his own alcohol poured into a flask; he’d only order a Coke at the bar. He stopped buying clothing, began living with roommates, repaired his car with duct tape, and even took to selling a car, motorcycle, and roadbike to generate revenue. He even started a landscaping business with his friend, which he worked on over during weekends. A large factor behind Joe’s success was the documentation of the process on his blog, which he cites as giving him a boost in support and the discipline to follow through with his plan.
A less radical route
Realistically, not that many of us can have the resolve to be like Joe – it takes a lot of determination. So what alternatives are there for you to pay back student loans quickly?
Let’s assume that you’ve graduated and have earned a college degree. Hopefully the degree has enabled you to attain a nice job as well. Here’s several steps that you can take in order to facilitate the process of repaying your loans.
Image from – 401(K) 2012
As a fresh graduate, it’s very easy to just take the first offer you get and be satisfied with it. However, negotiating helps. Don’t settle, and see if you can get a better offer from the company – be confident in your own abilities, and just see if the company is willing to budge. The extra money you negotiate could go a long way in reducing the financial burden of your loans.
Keep living frugally, like a student. Don’t increase your cost of living just because you’ve increased your income – at least until you’ve successfully paid off your loans.
Put money in your retirement fund
Retirement seems far away, but putting a portion of your salary into a retirement fund like a 401K can significantly reduce the amount of your income that gets eaten up by taxes.
Above all, be disciplined. Hold off on big (or any, really) purchases, that aren’t vital. Trust us – it’ll be worth it to get the weight of debt off your shoulders.