The “Magic” Formula for Paying Off Student Loans

Michael Lux Blog, Strategy 0 Comments

It seems that every month or two, the national media will pick up a story of someone who paid off their student loans fast. These titles normally read “this teacher who paid off $40,000 of student loans in one year”, or “One doctor’s secrets to eliminate $200,000 in student debt in less than three years.”

For many people, the tactics used are not realistic. Living 18 months in your 1992 Honda Civic would allow you to pay a ton of money towards student loans, but that option just isn’t possible for most people.

However, there are a few approaches in the “eliminate student debt fast” stories that are conceivably possible for many borrowers. Today we will take a look at the three best, most realistic ways to eliminate student loans rapidly.

Find Really Cheap Living Arrangements

For most borrowers, this means living with mom and dad. To an average twenty-something, this is a nightmare scenario, but the student loan benefits are undeniable, especially if it means eliminating rent payments in an expensive city.

If you live under mom and dad’s roof again, it likely means hundreds or even thousands of dollars each month that can be used as extra student loan payments.

It is a desperate act, but one that is a possible option for many and one that would quickly put a serious dent in any mountain of student loan debt.

Eliminate Car Payments

This is one that most borrowers should seriously consider. Cars are an expensive depreciating asset.

Most people avoid the cheap car route because “I need something reliable for work.” This issue is easily avoided.

The key is to find that individual in your life that is car savvy. Have them help you to find a low-cost car that will be good for many more miles. Paying attention to regular maintenance is a great way to help ensure that your low-cost car keeps running.

If you are really worried about reliable transportation to work, have a backup plan in place. If you always leave for work 30 minutes early, you will have time to come up with a Plan B if your clunker stops working. In many areas, Uber or public transportation can be a decent backup option.

Leather seats and satellite navigation may be nice, but the $400 per month that you are saving on car payments can make a huge difference in student debt.

Make More Money

This is the obvious way to pay off student loan debt faster. It is also something that everyone can do. More money can be made by getting a better job or picking up another job. Earning more money isn’t easy, but it certainly isn’t impossible.

If you are fortunate enough to get a boost in income, the trick is not to allow it to change how you live. A raise does not mean a nicer apartment; it means bigger student loan payments.

As income goes up, student loan payments go up. Everything else stays the same. Going this route will help you eliminate absurd amounts of student debt very quickly.

The Bottom Line

The overnight success stories of student debt elimination are not exactly simple formulas, but these three tried and true tricks can quickly make large amounts of student debt disappear.