At the beginning of the year I resolved to reduce my student loan debt. Three months later, Project Debt Down (as I named my loan repayment effort) is in full effect! With a totally new mindset about money management, I am excited to share the tricks that are helping me pay down my student loan debt.
You might be waiting for that rainbow that leads to a pot of gold. However, eliminating your student loan debt requires a realistic plan and steadfast commitment to reach your goal. The average student now owes as much as $29,400 coming out of college. What's more, the national loan default rate has skyrocketed to 14.7%.
While my debt reduction plan has not been without its setbacks (this lady loves to shop!), cutting back my spending has helped me lay a solid foundation of savings. For me, creating an air-tight budget and integrating fiscal responsibility into my lifestyle has been an intricate first step in Project Debt Down.
Aundrea's Tips From Project Debt Down Phase One
- Cut the emotional ties to spending: Coincidentally as I started Project Debt Down I was connected with a fellow Howard University alum who now works as a financial advisor. After helping me craft a budget based on my income and spending habits, he asked me about my life goals. As I considered my plans for the future, suddenly a closet of new shoes did not seem so important. Becoming debt-free is as much about self-discipline as it is about money. I cut down my impulsive spending and prioritized saving.
Find money-saving alternatives for the things you love: As I mentioned, I love to shop. This was one of my initial pitfalls while starting my savings routine--and going cold-turkey was not working. Browsing online, I found great alternatives to department store shopping such as hosting clothing swap parties with friends (which I tried and loved!). I let this trend of money-saving alternatives trickle into other areas of my life. I started cooking more meals at home and even eating meatless a few days of the week. As The Wise Latina Club documents in our Meatless Monday series, this has allowed me to not only save money, but also amp-up my healthy eating. Saving money does not have to end your social life. For more tips on how to save and still have fun check here.
- Avoid additional debt: While whittling away at your student loan debt, it is important not to take on any extra baggage. Credit cards, car loans, and other debt with interest can make paying down your student loans even more difficult. As an example of good debt-reducing behavior, recently, a colleague saved and paid for her new car in cash--all to avoid burdensome monthly payments. Like my friend, make the commitment to save up for the big-ticket items you need and stick with only necessary recurring bills such as groceries and utilities.
For students not yet in college, the best way to reduce student loan debt after school is to have a solid and realistic financial plan before starting. Many resources exist to help students avoid debt, much as I mention in Education Wednesday: Funding College with Grants and Scholarships.
Only an estimated 8% of people are successful in achieving their New Year's resolution. However, I plan to beat the odds by staying committed to my plan to reduce my student loan debt. As I enter phase two of Project Debt Down, look for more updates on my progress!
An education policy wonk at the Georgia Center of Opportunity, Aundrea Gregg holds a Master’s degree in Social Policy and Planning from the London School Of Economics and a Bachelor’s in Classical Civilizations and Political Science from Howard University. She also is a nail painting enthusiast and writer living in Atlanta, GA. Connect with Aundrea on Twitter or Google+.
Edited by: Viviana Hurtado, Ph.D.
How are you reducing your debt?