Student Loan Debt Elimination
by Paul Smith
There are a lot of ways to pay off debt. By far though, student loan debt elimination is the most difficult to accomplish, usually because it's also the largest. It's a mountain that can seem insurmountable.
First the bad news. You can not wipe out federal student loan debt. Neither debt negotiators nor bankruptcy will take away your obligation to re-pay.
Now the good news! It CAN be eliminated. Follow the three steps below and you can have complete student loan debt elimination.
STEP 1: DETERMINE THE MONTHLY PAYMENT
The first step towards finding relief of your student loan debt is figuring out how much you can pay each month; preferably more than the minimum payment. If you only feel comfortable in paying the minimum payment right now, that'll do, but you need to know what that number is.
Obviously having a budget of some sort already set up so that you know what you can afford and what you can't will be very helpful to completing this first step.
You need to carefully consider what you can contribute to this eliminating this debt.
Don't worry right now about how much you want to pay. Instead, just be concerned with what you know, right now, that you can afford to pay EVERY month, consistently.
First things first though
If you don't have a budget or have no idea how much you really have in the bank then I'd strongly recommend you tackle those issues before trying to take on your student loan.
How will you know how much of a monthly payment you can make if you don't know how much money you have in the bank?
In steps two and three below, knowing exactly how much money you have to spend will be critical. In reality though, knowing what you have to spend is critical with ANY debt elimination plan.
The lack of knowing how much money you have or the lack of a budget, are major road blocks to getting out of debt. These HAVE To be take care of FIRST. Once you know what you can afford to do on a monthly basis, move on to step two.
Step 2: AUTOMATIC PAYMENTS
The second thing you need to do right away to be successfully eliminate student loan debt is take advantage of modern technology and make this debt payment an AUTOMATIC event.
However, I only recommend this if you have gotten your spending under control and have some sort of budget established so you are sure not to be overdrawn when the payment happens.
If this is true for you, great!
Setting up automatic payment really helps relieve the burden of; 1) having to constantly remember to pay the bill and 2) having to see that monstrous balance each month. Simplicity is a major key to successfully student loan debt elimination.
Let's face it, remembering to pay the student loan bill probably isn't at the top of the list of "most favorite things to do on a Saturday." Am I right? Also, who wants to be reminded every month of the "bill that keeps on billing?"
Now I would never advocate putting one's head in the sand and trying to make a bad thing go away, but I do like to make debt reduction as painless as possible.
After all, it's going to take a while to pay this student loan debt, so why not just make it easier on yourself. Besides, with automatic payments, you'll be sure never to be late again!
If you just dismiss all the above, that's your choice for sure but consider this: try it out and see how it goes. If you don't like it, you can always go back to writing a check each month.
Step 3: MAKE ADDITIONAL PAYMENTS
The third step to student loan debt elimination is saving as much as you can each month to contribute in addition to the auto payment you set up previously.
If you've never done something like this before, I understand it might make you a little nervous about setting extra money aside for a payment above and beyond the minimum required so here's my recipe for success:
1) At the end of each month, take a withdrawal from your checking account for the amount of money you've saved to contribute to the student loan debt, in addition to the amount being paid automatically.
2) Stash this money in an envelope and save it till the end of the following month. If you were able to pay your bills and there were no emergencies requiring the use of this extra money, great!
3) Now deposit the cash back into your checking account and immediately write a check to the student loan company for the amount. Now that's some serious debt elimination!
If your savvy enough, you may be able to do all this online electronically by moving the money from Checking to Savings and then back again.
Further, many student loan companies will let you make payments online so you may never need to visit the bank or write a check anyway. But getting rid of student loan debt, and doing so quickly, requires you pay MORE than the minimum payment.
How to gain peace of mind
If the thought of making extra payments leaves you wanting some peace of mind, maybe you need an emergency fund. Stash away the first few months of extra savings for an emergency fund in an envelope. Seal it. Write on it, "Emergency Fund."
A foundation to making student loan debt elimination happen as quickly as possible is being sure that you have money set aside for life's little surprises.
But more than that, let me reassure you that having a mind at ease is essential to any successful debt elimination plan. Stressing out about making extra payments will only serve to PREVENT you from getting out of debt.
Don't make this mistake.
Follow the three steps above and you will be on your way to knocking out that student loan debt much quicker than you think. Especially if you get the emergency fund together.
Just don't let your student loan become a part of your family. Kick it out of the house, starting today.
Sure it'll take a while. I'm a realist just as much as you are, but I'm also a believer in getting things done and doing so with as little anxiety as possible. Done right, a good student loan debt elimination plan will just make life way more enjoyable than it would be otherwise.
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