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6 Ways to Make Student Loans Less Scary

the financial diet

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Duration: 03:32
Uploaded: April 19, 2016
Information as of 2017-01-07 01:30
https://youtube.com/watch?v=22SECeuGAzA
https://nerdfighteria.info/video/thefinancialdiet/22SECeuGAzA

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Debt Snowball vs. Debt Avalanche: How to Pay Off Your Debt:
https://www.creditkarma.com/article/how-to-pay-off-your-debt

Understanding Income-Driven Repayment Plans:
https://studentaid.ed.gov/sa/repay-loans/understand/plans/income-driven

Should I Refinance My Student Loan?:
http://www.consumerfinance.gov/blog/should-i-refinance-my-student-loan/

9 Student Loan Refinance Options: Compare And Apply To Save:
https://www.nerdwallet.com/blog/refinancing-student-loans/

The Financial Diet blog:
http://www.thefinancialdiet.com

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Lauren: Hi, I'm Lauren

Maya: And I'm Maya

Lauren: And we are 

Both: The Financial Diet!

Lauren: And today we are going to be talking about student loan debt and specifically how you can make the repayment process less painful by making the right choices.

Maya: Hopefully these tips will help you get organized and even save you money.

Lauren: So I actually graduated college with roughly $28,000 in debt, which is a lot of money, but it's actually lower than the national average.

Maya: Right! So the national average student debt is actually $35,000... yikes! So nearly 60 million Americans are currently carrying some student loan debt and then 70% of those graduating also have debt.

Lauren: So obviously this is a super relevant topic so let's jump right in with our 6 strategies to make student loans less scary

Maya: Our first strategy is to use your student loan grace period to your advantage. Most, but not all student loans come with a grace period, which essentially means you don't have to start paying your loans right away. It's important to note that during the grace period some loans still will accrue interest. If nothing else the grace period is a great time to start building your emergency fund. 

Lauren: Number 2, choose your repayment strategy. It's so important to have a strategy in place for debt repayment so that you have a concrete plan of action. So 2 examples of these strategies would be the snowball method and the avalanche method. So for the snowball method, it's actually focusing on the loan with the smallest balance first while making the minimum payments on all the other loans, while the avalanche method is meant to attack the loan with the highest interest payments first and once that's out of the way, then you move on to the other loans. So you can read more about those strategies by following the link below.

Maya: Our third strategy is to choose an income based payment plan. Income based repayment plans are designed to make your debt more manageable by reducing your monthly payment. There are several different income based repayment plans and we'll link to those in the description below. We'd recommend calling your student loan provider to see if you can either lower or adjust your monthly payments

Lauren: Number 4, consider a side-job that goes directly to your loan payments. So, when I graduated college even though I had a full-time job I still did things like babysitting and waitressing and all of that money that I made got directly funneled into making student loan payments. It was awesome because I was essentially getting my loans payed off while I was sitting on my couch watching Frozen and eating popcorn with 3 year olds so...

Maya: Obviously, we completely understand that it's so hard to motivate yourself to pick up another job, so something we really recommend is finding a buddy who's also paying down their student loans and then you can motivate each other and cheer each other on

Together: Woo!

Maya: This brings us perfectly into our fifth strategy, which is to set goals and then celebrate once you meet those goals. It's so easy to just go along, bit by bit without really acknowledging everything you're accomplishing by paying down your debt, which is why it's so important to share your success and celebrate! 

Lauren: Number 6, consider re-financing. So in certain cases, re-financing your student loan is a viable option, but there are a few considerations to keep in mind before you do it. 1) is that you should have a solid credit score 2) you should have a strong income in relation to your debt and 3) the interest rate on that loan should be relatively high. The biggest draw of re-financing your loan is that you save so much money over the long term by securing a lower interest rate.

Maya: No matter what strategy you choose in the end it's really important to remember that your debt payment is a floor and not a ceiling. So you always can make more than your minimum monthly payment, so that you can get through your debt faster.

Lauren: So, as always thanks for watching and don't forget to hit the subscribe button and go to thefinancialdiet.com for more

Together: Bye!
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