Top 5 Ways To Pay Off Student Loans
I just interviewed Aline for my Manage Your Money Yogically podcast, and she shared how she paid off $85k worth of student loans in 2.5 years.
Take a listen: ( Apple | Spotify )
This is how she did it:
Refinance
Google “refinance student loans” to find the cheapest rates. Aline reduced her 10 year loan with 7% interest to a 5 year 3.5% loan. That psychologically made the debt feel more bearable.
She also recommends setting up auto-pay (most loan processors will give you a better deal if you do this) but actually pay the debt earlier in the month so you don’t have to pay for the extra days of interest.
2. Save up an Emergency Fund
Standard personal advice says you need at least $1000 and up to 1 year of your budget (so if you spend $40k in a year, you need to have $40k in a liquid savings account). Aline saved up some money to give herself a cushion.
3. Invest to Pay off Your Debt
But don’t invest in what you don’t understand! Aline bet that should would make more than 3.5% off her investments, and she won that bet and used her gains to pay down her student loans.
4. Make More Money
Aline got a new job making more money - that’s the quickest way to give yourself a raise.
5. Negotiate Your Static Expenses
Aline negotiated with her landlord to get $500 off her rent because of the pandemic conditions.
Check out the episode to hear more details about Aline’s story!
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