“Most people fail to realize that in life, it’s not how much money you make, it’s how much money you keep.” -Robert T. Kiyosaki
It’s time for us to have a heart to heart. One of my goals for this site is for it to become a complete resource for development. From career advice, to landing the job, to creating wealth. Today’s lesson: Debt. If you’re reading this I know you have some interest in getting out of debt but maybe aren’t sure how, or are so overcome with the balance of your debt that it might not even seem like it’s worth it. Just a little background, I was able to pay off all my student loans (about 45k) by 24 by just making $12.00/hr. I won’t lie, it was alot of hard work and strategy, but paying off student debt has put me in a really good position to accomplish my goal of financial freedom by 35. Today I’m going to share with you my top 5 tips on how you can manage your student debt today:
Start from the beginning – This might seem like an obvious place to start but it is oh so important. With student debt it’s really important to know and understand what you’re getting into. The issue is that you’re only 18 when you make one of the biggest financial decisions/investments of your life (#brokensystem). Student debt is incredibly interesting, many times what university or college you attend might not matter as much as you think it would when it comes time to start your career. If you are in the position where you are picking a college or thinking of going back to college, really weigh the return you might see from having a college degree with the debt you’ll be taking on. Furthermore think if you’d like to commute or dorm. I get the whole “college experience” thing and being away from home; but is it worth the extra 25k in tuition? Weigh your options carefully; you’ll be dealing with your decisions later in life.
Loan Consolidation – For many of us the “damage” is already done. I personally know I had a terrible return on my education first coming out of college. My debt was 45k and I came out making 12.00/hr or approximately 24k a year. For New Jersey, that really sucked. So how did I pay off those damn loans? First step, loan consolidation. After you graduate you might have 4-5 different loans floating around all with different interest rates. Take as many loans as you can and try to consolidate them under one interest rate. There are services such as So-Fi and Earnest that actually specialize in this; we have links to these sites on our resources page. By getting most of your loans under one interest rate you should save not only time, but a ton of money.
Get Aggressive – I have a really weird relationship with Money. I hate losing it, and spending it on stuff I won’t see a good return on; so college wasn’t exactly on my good side. I literally wanted to beat the proverbial snot out of my loans. How did I do this? Every month I’d get a statement, and every statement I’d give them a few hundred dollars more than what they asked for. Listen up, this is the big secret behind any debt: They get you with the interest rates. If you only make minimum payments you will be losing money every time you pay, even if your interest rate is low. The key is for you to feed that loan money until the interest rate no longer matters, and your payments are being applied solely to the principle of the loan. For example say your lender asks for $500/mo, give them $1,000.00 or $1500.00. Even if it’s $750 it’s still better than just paying the minimum balance.
Get Hustling – When I finally landed a fulltime job I remember being so relieved. I literally thought my work was done. I found a job, I spend 40 hours a week there, I then get to go home and play with my cat. I was crazy wrong. I’ve talked with so many graduates over the year whose salaries don’t justify their debt. (example 200k in debt vs 50k salary) Their full time jobs can’t support their debt never mind their lifestyle and cost of living. So what are they supposed to do? I honestly hate Math, but the one thing I like about it is that it’s very cut and dry. Sometimes there simply isn’t enough money, so you need to create money. How do you do that? You either pick up overtime at the current position you’re in, or you find a side hustle to make extra money to put towards your loans. In my instance I worked 50-60 hour weeks picking up any overtime I could for probably about a year and half to two full years; was it hard? Hell yea it was hard, but I was able to pay down my debt super fast and you learn to be grateful for the opportunity. So what are examples of some side hustles? You can pick up a part time job aside from your full time job, get your real estate license, give lessons on anything you are good at ex: guitar lessons, math tutoring, any bonuses you see from your full time job put towards your loans etc..,… If you get hustling you will be able to pay down your debt. no doubt about it
Saving Money Is The Same as Making Money – Often times when we feel there isn’t enough money in our lives we look for a higher paying job. We feel that if we only made more money than things would be so much easier. Sometimes that might be the case, but often times you can make lifestyle adjustments to accommodate your financial requests. If you ask me, it’s really important to track your finances and analyze what you are spending money on. When you have a loan payment coming up, did you really need to drop $300.00 on shoes? How about instead of going out to eat every day, try once a month? You see what I’m getting at. Luckily there are a plethora of tools out there to help track your spending and calculate your net worth. Probably the two best apps for calculating your networth is Mint, and Personal Capital. I personally use Mint. For me it gets the job done, it links to my accounts, tracks my spending, and calculates my networth. I can set personal goals for myself and make lifestyle adjustments around my goal. Both of these apps are incredible tools and I would certainly encourage anyone looking to advance their financial future to use them.
Conclusion – Student Debt can be an incredibly tough obstacle to tackle if you do not have a plan. I hope some of the above tips and strategies help you to eliminate your debt and start your journey to wealth accumulation! Remember that debt is completely controllable and might take some behavioral and lifestyle changes but can be managed. You got this! Do you have any tips, good sites, or apps that helped you with your student debt? Let us know in the comments below!