Hey girl, hey!
When you hear or think about the words Student Loans, how does that make you feel?
Excited? Encouraged? Uplifted?… Doubt it!
If you ever went to college, whether a Community College or a 4-year University, chances are you’re like the 44 million other Americans who have student loan debt. And as of right now, Americans collectively owe over $1.48 trillion in student loan debt (yes, girl... trillion) with the average debt being a little under $40,000!
So when one begins thinking about the dark cloud of student loan debt hovering over their head, the thought can really put you in a negative emotional state... I mean, how does a girl journey her way to financial freedom with the weight of student loans holding her back?
Well don’t fret girlfriend, I gotchu... because today I’m sharing with you five steps you can begin taking right now to get that student loan debt off your back.
1. Master Your Cash Flow.
First things first, girlfriend… you absolutely, absolutely have to be aware of your household cash flow. If you’re not familiar with this term, cash flow is the total amount of money that flows into and out of your bank account… and the only way to truly be aware of this flow is to have and maintain a well planned out budget (there goes that “B” word again). RELATED: So What’s This Thing Called Budgeting Anyway? Listen girlfriend, a budget is nothing to be afraid of… if anything, it’s actually your best friend! A budget just simply allows you to see where your money is going, instead of wondering where the hell it went! Trust me, we’ve all been there... and we all know it’s not a good feeling when money seems to be leaving our bank account even faster than it’s entering. But if you haven’t started a budget yet, how can you really take control of your student loan debt (or any debt for that matter)? Do you know how much, in total, you currently owe? Do you know the interest rate for each loan? Do you know how much of your payment is going towards interest and how much is going towards the principle? You see… when you utilize a budget and make the choice to stay committed to it, you will - without a doubt - know all the answers to these questions and be able to make informed decisions on what your next steps should be. And speaking of next steps… see step #2
2. Minimize Your Expenses.
This is a big one. Listen Linda… If eliminating your student loan debt is a goal you’d like to achieve, you’ve got to start cutting back on your expenses. If you’re stressed about your budget being tight… it’s because your money is being spread way too thin - buying everything you want, taking on more unnecessary bills, and giving into bad habits - all while the debt just keeps piling up higher and higher. Girlfriend… that’s no way to live! So after you create your budget, find ways you can decrease or eliminate some expenses, then put that freed-up money towards your debt. RELATED: Your Spending’s Way Too High… You Need To Cut It! Is your home or apartment costing more than 35% of your net income? Consider downsizing or getting a roommate. Are you eating out way more than you should be? Try meal planning and cooking more at home. Are you taking on more bills than you should be (i.e. cable, netflix, hulu, music subscriptions, gym memberships, other people’s bills, etc.)? Then take a minute to think about the things you really need, and get rid of the other stuff asap, because whether you know it or not... little bills add up in major ways. RELATED: Dividing Your Paycheck... I just recently finished reading Oprah’s book, "What I Know For Sure", and girlfriend… if you haven’t read it, you need to - it’s life changing! But there is a quote from that book that I absolutely must share with you: She says, “What I know for sure: When you define yourself by the things you can acquire rather than see what you really need to be happy and fulfilled, you’re not just living beyond your means or overextending yourself. You’re living a lie. That’s why being burdened with bills feels so awful. You are being untrue to yourself. When you free yourself from debt, you create a space to purchase with purpose - to add to your life things that are meaningful.” Whew… powerful stuff! And that’s exactly why I rock with my girl ‘O’! RELATED: Wants versus Needs: Knowing the Difference.
3. Increase Your Income.
Remember we talked about cash flow at the beginning of this post? We all know it’s easy for money to flow out, but what about the money flowing in? Look girlfriend, I’m not naive in any way, and I know student loan payments (even the minimum) can be a b*tch on your budget, and the higher the payment is… the b*tchier it gets! But if your current income situation does not allow you to make the minimum payment on your student loans, plus a little extra to knock down the principle… then girlfriend - it’s time to get your hustle on. Believe it or not, there is so much money out there to be made - you just have to make the choice to go after it! RELATED: How I’m Manifesting Abundance Into My Life! Do you have a hobby you can turn into a side hustle (i.e. makeup, hair, tutoring, sewing, etc)? Can you babysit, dog-sit, or house-sit for neighbors or friends? Do you have items in your home or in storage that you can sell to make some extra cash? Lemme tell you something... when I was in graduate school at Texas Woman's University, not only was I taking a full course load... I worked a whole full-time job, and was a bartender on the weekends at a local night club. So girlfriend… where there’s a will, there’s a way. Stop making excuses, get creative, believe in yourself, and make it happen!
4. Research Loan Forgiveness.
So did you know that there are actually Student Loan Forgiveness Programs out there? There’s Public Service Loan Forgiveness Programs, Income Driven Forgiveness Programs, and even Forgiveness Programs for Teachers, Lawyers, Nurses, and other Healthcare Professionals. Of course you’ll have to do some research to see if you qualify for any of these programs, and if you do… they have repayment plans that can span from anywhere between 10 to 25 years. It’s a much slower process than just getting your hustle on and paying the sh*t off… but on the flip side, whatever isn’t paid at the end of your loan term, can ultimately qualify for 100% forgiveness. Sound too good to be true?! Well… not to be the bearer of bad news, buuuuut - it kinda is. The downside to loan forgiveness (that most people don’t want to talk about) is that any loans forgiven under these programs will be considered taxable income - according to the Internal Revenue Service, otherwise known as the IRS. So in other words, if you have - let’s say - $30,000 worth of loans forgiven at the end of your term, when tax time rolls around - your loan lender will send both you and the IRS a 1099-C form, basically stating that you’ve received an extra $30,000 of income on top of what you already made for the year. Then the IRS (being the IRS) taxes you on that extra $30,000 income - which could leave you with an $8,000+ tax bill that you now owe back to the IRS. So yeah… you didn’t have to pay the full student loan amount, but now you’re stuck with a pretty hefty tax bill! But on the brighter side of things (because there’s always a brighter side of things), if you’ve been budgeting and saving like GFB has taught you…. $8,000 dollars might be quite easy for you to pay off in 10 - 25 years from now. Right?! RELATED: Grow Your Stash… Stack That Cash! Saving Money The GFB Way!
5. Consider Consolidation or Refinancing.
Last, but certainly not least, loan consolidation or refinancing can really save you thousands of dollars in the long run - if you do it right. By consolidating, you’re combining all of your federal loans into one lump sum - giving you one fixed interest rate and one monthly payment. But here’s a tip, if you do decide to consolidate your loans do not (I repeat) do not extend the term of the loan. Doing this will inevitably make your monthly payments lower, but it’s going to cost you way more in interest by extending the time out longer. So only consolidate and/or refinance your student loans to reduce the interest rate and possibly lower the payments. Couple this strategy with your hustle mentality, and you can pay that thang off even faster than you ever thought possible! Make sense?!
So yes, student loans can be daunting… but they don’t have to control your life. Take your power back today girlfriend, and begin taking the necessary steps to get rid of those loans once and for all. Oh.. and as you’re learning through this process, be sure to pass the knowledge on to the young people you know in your life - like soon to be graduates or students that are fresh outta high school. Inform them that it’s okay to go to a community college to take their basics, rather than go straight to a 4 year university - and if it’s possible for them to work while in school… do it! There’s no greater feeling than receiving that degree without having to stress about student loans later in life. Let’s help the generation to come after us - be even better than us, because we’re all in this thang together. We got this! Drop a comment below and let me know how you liked this post! Until Next Time, Elle