If you are like millions of Americans, you might have tons of outstanding student loan debt that you aren’t sure if you’ll ever pay off. In fact, many studies and surveys indicate that people are delaying life events like homeownership, marriage and having kids because of student loans.
Welcome to my first guest post. I am delighted to feature Aja McClanahan. She is a blogger who focuses on finance and getting out of debt. Finances are a big part of our lives. Most people have their share of student loan debt. I hope you find this post helpful in eliminating it and be on your way to obtaining the goals that you have placed on the side for the moment.
I know that story all too well because my husband and I were in that very situation. After getting married, we eventually figured out that we both owed more than $60,000 in student loan debt.
When we had our first child, we decided that I would stay home with her. After having a second child, we decided that we wanted to homeschool our children. The only problem? Debt…and lots of it.
So you can imagine how torn we felt when we had to figure out how I could stay home but also make sure that we were able to meet our basic needs while paying off debt (which grew to over $120,000 at one point.) To tell you the truth, it felt hopeless just thinking about it.
We had one income and so many other debts including our student loans. For a long time, we were tempted to think that this student loan debt was just something that we would live with for the rest of our lives — or at least while we were trying to raise our children. It didn’t look good for us at all.
One day, I stumbled across a man by the name of Dave Ramsey. I started listening to his radio show about living a debt-free life. Though I felt kind of bad listening to him at first, I soon realized this was exactly what we needed.
After a few months of listening to the show, I picked up a copy of his book The Total Money Makeover. I read it from cover to cover in just a few hours.
Though it would ultimately take us another couple of years to get started with paying off our debt, we did get started with the process. That is where many people fail — just committing to getting started.
It took us a long time and we had a few setbacks and major purchases that we decided to use cash for (such as a renovation on a home) but eventually, we got there. At the end of 2013, we paid every single last dime on all our debt.
It was very hard, no doubt, but I’m glad we did it. Once we paid off our debt, I started my blog Principles of Increase to talk about our story plus tips on how to live a more financially responsible life.
I had so many friends and family members who asked us about the process of getting out of over $120,000 that I thought it would be a good idea to “mass mentor” people through this medium. I guess the point that I’m trying to make is that if you decide to tackle your student loans, you never know who you might be inspiring. For this reason, it’s a worthwhile endeavor.
Resources for Student Loan Repayment
Sofi (Social Finance Inc): makes it easy to borrow, invest, and save. You can sign up for Student refinance loans, personal loans, and mortgage loans in minutes. They have approved over $30 billion in loans.
They have saved borrowers millions, by getting people into lower interest rate loans. If you are struggling to pay your loans, this company can save you hundreds or thousands.
Elfi (Education Loan Finance): Is another that offers low rates and easy approvals.
Now that our debt is paid off, I’m able to remain at home with my kids and we travel a lot as a family. I even get to support my kids in their acting and entertainment career — something I couldn’t do if we had a lot of debt that forced me to work a traditional job. We recently began investing in real estate as property owners and Airbnb entrepreneurs — business ventures that would be incredibly difficult with mountains of debt.
Now, you might be thinking, “This story sounds great, but I could ever eliminate all of my student loan debt!” I’d like to propose that you absolutely can. It’s not easy, but it is simple. If you are looking for a plan to help you get started here’s what I recommend.
Tally up all your student loan debt
You can’t kill any of the monsters that you can’t see. This is why you need to get an accurate number regarding what you owe for student loans. You can do this by getting a free copy of your credit report from someplace like Credit Sesame or Annual Credit Report.
You can also check the National Student Loan Database. This database will show you all of the federal student loans that are outstanding in your name.
Explore your options
If you’ve got other debts, you may not think that you can prioritize the repayment of your student loan debt. If you are overwhelmed with debt (i.e. barely surviving,) then you might need some immediate remediation when it comes to your money situation.
This may include forbearance, deferment, consolidation for a lower interest rate, or even bankruptcy. (It’s important to note that bankruptcy almost never discharges student loan debt but it can be a strategy to free up money from other debts to apply to student loans.)
You should also find out if you have older debts that cannot be recovered due to the statute of limitations on debt. This doesn’t apply to federal loans, however. Only debt private loans from financial institutions or learning institutions are covered by this statue.
Create a budget
Once you’ve found out how to organize your bills, payments, and student loan debt in a way that you can pay it down faster, you need to create a budget. It may seem like the worst thing in the world to have such restrictions in place on your life, but there are several benefits to budgeting.
Download a Monthly budgeting worksheet here!
A budget is a spending plan that directs your money according to your goals. If your goal is to pay off debt, then you’ll want a spending plan that prioritizes that activity and de-prioritizes others.
Once you create a spending plan, the name of the game is spending less than you earn and using the difference to make extra payments on your debt. There are several ways you can accomplish this:
- Find ways to earn extra money or create additional streams of income
- Eliminate or reduce nonessential expenses like cable, eating out, gym memberships, etc.
- Look for ways to get things free or at reduced costs (i.e. free clothes, free travel, free money, etc.)
- Look for unclaimed money in your name
Basically, what can you do cheaper, smarter or more efficient to uncover more money? Once you can figure that out and scale it — you can pay off your student loans faster than you ever thought possible. I hope this was helpful and just know that I am rooting for your success.
About the Author:
Aja McClanahan is a blogger, writer and author of the new book, Manage Your Money to Become Debt Free: A Guide on Dumping Debt for Good. Aja writes on her blog, Principles of Increase, as well as for various other web outlets. She majored in Economics and has a personal story of getting out of over $120,000 in debt which has been featured in Yahoo Finance!, Market Watch, NerdWallet and others.
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