While school tuition is on the rise in Canada, there is no doubt that more students will be in debt. A great number of young adults overlook the importance of education because paying for their tuition seems impossible. On the contrary, others will still consider taking out a student loan. This gives them the opportunity to pursue their studies and eventually obtain their dream career. If you are one of these students and you want to get rid of that burden of taking out a student loan, here are 4 essential tips on how you can pay off your loans faster!
TIP #1) GET A PART-TIME JOB
Many students rely on their student loans to go to school and avoid working. This is a problem because on top of their student loan they are also using it to pay for their everyday necessities, along with other nonessential items like a morning coffee or a night out with friends.
Of course, this doesn’t mean that you should work too much and let it interfere with your studies, however, a few shifts can keep you from pinning your hopes on your student loan. Also, having a part-time job means that you’ll surely have a summer job. Working full time in the summer will help you make some extra money, which could be used to make monthly payments to your debt. Making payments while you are still in school is a great way to lower the interest you will have to pay later on—you’ll thank yourself later.
TIP #2) INCREASE YOUR MONTHLY PAYMENTS
Now, if you are someone who works part-time and pays your student loan on a monthly basis, you should increase your monthly payments whenever you can. The extra cash you sacrifice to your debt will be effective in the long-run. An extra $50.00 a month can reduce your loan by $600.00 per year. When you make a lower than average income, you must remember that bigger is not always better, but even the smallest contributions can lead to greater outcomes. Always pay what you can, when you can.
TIP #3) LIVE SPARINGLY, NOT LAVISHLY
As you may have heard before, balance is key in all areas of life— even financially. Budgeting yourself may seem like an arduous task, but your years as a student is the perfect time to learn how to manage money. There are several apps that can help you track your expenses, especially in the digital world that we live in. Your bank application will also show you where all your money is going. Little do you know that most of your money is going towards eating out or to your fifth pair of designer sneakers. Instead, think twice before buying, since that discretionary spending can cover part of your loan.
TIP #4) CONSOLIDATE YOUR DEBT
If you are head over heels in debt because you financed your schooling, you can see if it’s worthwhile to refinance and consolidate your debt. By merging your debts, you put your mind to paying a single debt and your interest rate will also decrease. When you have more than one loan, you are paying interest on all, but if you consolidate them, you will only pay interest on one amount.
A student loan doesn’t need to scare you. There are numerous ways that you can reduce your debts before finding your future career, or perhaps even pay them off. Your student loan will be beneficial after your degree. But remember, pay the most you can before you graduate—let your imagination run riot to find ways to do a good turn for yourself!
As always, check out our blog for the best advice on money management and savings!