Student loans can be a cumbersome obstacle when trying to save for a major milestone. Saving money while simultaneously paying off debt is never easy, especially when it’s for something as rigid as student loans. The good news is that if you’re focused on paying off your debt as soon as possible, student loan refinancing is a great solution. You can refinance some or all of your federal student loans, and you can even refinance federal and private student loans together if you have both.
Whether you’re saving up for a home, a new car, or a business investment, there are several ways to save money while paying off debt. The tips below emphasize a goal to pay off debt, while still making student loan debt your priority:
- Prioritize High-Interest Debts
If you’re one of many people who have student debt across various providers, make a spreadsheet of your debts and note the interest rate for each. Establish a plan to pay your highest interest rate debts ahead of the others. Also, prioritize these for negotiating refinancing or consolidating. Many credit card companies offer 0% interest rate for the first 12 to 18 months if you’re a new member, so feel free to work offers like these into your debt payoff plan.
- Visualize Your Debt
If you have debt, it can be hard to stay motivated to make payments. This is why a lot of people say it’s a mental game to stay motivated and keep your momentum when it comes to debt repayment. The best way you can avoid getting side tracked with your debt repayment plan is by visualizing your debt. Use an online debt calculator or a similar financial tool to turn your debt into something concrete. This will not only help you stay motivated, but will also show you your progress and how much you can save.
- Pay More Than the Minimum
If you can fit it into your budget, it’s a good idea to pay more than the minimum owed on your debts. Even if it’s only $30 or so, paying off a little extra whenever you can will help you reach financial goals quicker. Alternatively, you can also pay two or three times a month. Either method ensures that you will never encounter fees related to not paying the minimum, while also aiding toward your financial goals.
- Use a Support System
Emotional support while paying off your debt is fantastic for getting over imminent humps when you feel as if you will never pay off your debts. Chances are, you have some friends who are also paying off student loan debt. Consider having fun get-togethers or parties with this group whenever you pay off a certain goal. A “student debt pay-off” party can be a fun, rewarding way to track your goals and look forward to something more than paying it off.
- Prioritize Goals by Importance and Timeframe
Certain financial goals take much longer to reach. For example, purchasing a home will take longer than purchasing a new car. They also vary in priority. For example, if purchasing a new vehicle and a house is contingent on an increase in income, set savings goals for the vehicle first and the house second. Organizing your goals based on importance and timeframe can help when organizing which you should pay off first.
Combining this method of organization with a plan to pay off your student debt can help ensure you prioritize your student debt, and also spread out your remaining funds prudently.
- Use Multiple Savings Accounts to Track Progress
Multiple savings accounts are a great way to track and pay off various financial goals. For example, having three savings accounts entitled “Student Debt,” “Home Purchase” and “New Car” will help organize your available funds. If possible, also feel free to set up automatic payments. Even if it’s just $10 each month going to each savings account, the gradual progress helps relieve stressful thoughts of not reaching a particular financial goal while simultaneously paying off student debt.
- Increase Your Earnings
Easier said than done, but increasing your earnings is a great way to alleviate some of the pressure off paying student debt. Even a part-time job at a local business can make a big difference regarding paying off debt. Taking on a few hours of overtime, starting your own side business or acquiring a side gig can provide more cash flow, which makes paying down debts more feasible. Plus, you can boost your resume, which is always a plus.
- Take Advantage of Employer and Credit Opportunities
Some jobs offer a 401(k) match or investment opportunities that can help you save money. Look into this, as well as potential savings opportunities from your financial institutions. Some provide a discount if you set up automatic payments or have a minimum amount in the account. Make sure to always leverage your savings opportunities as best as possible, while considering any offers provided.
A variety of prudent planning, organization, seizing savings opportunities and increasing your earnings can contribute significantly to saving effectively while still paying off your student loans.
Anum Yoon is the blogger behind Current on Currency. She writes about personal finance in a way that is more approachable and inclusive to fellow millennials.