Experts offer advice about paying off those dreaded student loans
But he and some other financially savvy folks offered these strategies for paying off student loans and getting out of any type of debt:
1. Be on top of it. Get in touch with your loan servicer or lender (whether your loans are federal, state, institutional or private) and make a plan. Don’t know who to call? Check with the federal government or call 1-800-4-FED-AID.
“I think a plan is really important,” Wells said. “It doesn’t have to be complicated, but it does have to have an overview of how you’re going to get out of debt, how you’re going to save up the money that you need to pay off this debt and then also to save above and beyond that. A plan makes it much more likely that you’re going to succeed.”
2. Learn about your payment options, including graduated repayment and income-based repayment. Then make a schedule and a budget. Setting up automatic payments will help you avoid missed payments, which will hurt your credit score and let you develop poor financial behaviors.
“Helping someone pay off debt isn’t just about the mathematics. It’s about the behavior control mechanisms they have. You just have to be disciplined,” said Patrick Brady, a financial adviser who has counseled millions of dollars of student loan debt for the Utah Medical Association.
3. Try following the 10 percent rule: “The idea is really to pay yourself first and set apart 10 percent of your income and have it earmarked toward going toward your student loan,” Zeberlein said.
Then after your loan is paid, you’ll be used to living without that 10 percent and you can put that toward other goals and your inevitably increasing future expenses, he said.
4. Have a balanced diet. Brady recommends paying off the debt as soon as possible, but not using a “Atkins debt payoff” system.
“Have some carbs on your plate, which is like investing in your 401(k). Have some protein, which is paying off your debt. And then have some fat, which tastes really good, and have a little fun,” Brady said.
5. Spend smartly and avoid incurring more debt. Interest accumulates quickly, so try to pay more than the required monthly payment. Increasing your income certainly won’t hurt either.
“Separate out wants from needs,” Wells said. “If you’ve graduated from college and have a fair amount of debt, really be careful before you add additional debt. There may be things you can’t avoid, like a car but make choices that make it easier to get to where you want to be in a few years.”
- What it takes to be middle class in each state
- Renovation Solutions: 5 signs it is time to...
- How one woman unplugged from technology for...
- It can cost you $12,000 a year to buy...
- Joseph Cramer, M.D.: A different view of the...
- Can a company really be altruistic?
- Dave Ramsey says: Don't be ashamed of...
- What could McDonald's do to fix its business?
- Dave Ramsey says: Don't be ashamed of... 17
- What could McDonald's do to fix its... 11
- Joseph Cramer, M.D.: A different view... 7
- How one woman unplugged from technology... 6
- It can cost you $12,000 a year to buy... 5
- US home sales bounced back in March,... 1
- Balancing act: Son's comment teaches a... 1
- Why college matters more today than 20... 1