Here's my issue: Student loan payment programs often use the bare minimum payment to lure you in. When I was working on paying off my loans, they would say "We can help lower your minimum monthly payment..." but that doesn't work. Why? Because you're paying off LESS each month and prolonging it being paid off.
The only way to handle loans like this is to be aggressive. Rebudget your finances. Get a part time job. (I had one full-time and two part-time jobs while paying them off...) My minimum was like 180 dollars and the loan people said it would take like 10 years to pay off. I calculated I'd spend THOUSANDS more than I borrowed.
Paying 40% of your monthly salary or wages seems ridiculous but I did it and paid them off after a little over a year---after dealing with minimum payments for years and earning way too much interest.
Seriously---Pay. Them. Off. Aggressively.
If you're only making minimum payments, I feel little sympathy. If you're tripling the minimum, then I say "Hey, now we're talking..."
People have stated that I'm ridiculous because "I could never afford to pay double or triple the loan amount..." Once again, I think it comes down to budgeting. If you prefer those loans hanging over your head, that's fine. I, personally, would rather see them gone.
So here's a proposal I say:
Work your main job. Let's say you earn 40,000 a year as a teacher or office worker or something. Use that money to pay your minimum student loan payment.
Find a part time or weekend job which pays something extra. Even if it means working late nights. If you're married, make sure both of you are working. I don't care if you have children since there are ways to schedule this out. Even if it means seeing each other less. Maybe one person is with the kids during the day and works the late afternoon and evening. Maybe one person works a full time job and a part time job while the other is at home raising the kids and providing day-care to other children to each an extra 100-200 a week.
Only use the main job's income for your life's expenses. Every other paycheck, even if its small, should go towards the student loans. The philosophy is: Every dollar paid towards the principal balance of the loan will LOWER your daily or monthly interest. If your wife is providing daycare while you're working, don't use that money for extra spending cash---use it towards the loan.
Don't eat out in restaurants. Don't overly spend on clothes. Avoid a lot of luxury items.
If both people in a couple work full-time and are paying off the loans, figure out a way to live on one income and use the other towards loans and debts.
Honestly, I think that it is much more possible for people to pay off loans than one thinks.
People then say "Well, we don't want to live like paupers for the 1-2 years we are paying off the loans..." However, what they're not realizing is that paying only minimum payments for 23 years makes them more like paupers since it will cost far more. I originally borrowed 21,000. In the end, I paid back something like 36,000 with interest but with the loan company's minimum payment plan, I'd still be paying it off and it would be somewhere around 40,000-50,000. No way. I'd rather go without McDonald's for a year and sacrifice to pay it off than deal with loan nightmares for an eternity.
The only way to handle loans like this is to be aggressive. Rebudget your finances. Get a part time job. (I had one full-time and two part-time jobs while paying them off...) My minimum was like 180 dollars and the loan people said it would take like 10 years to pay off. I calculated I'd spend THOUSANDS more than I borrowed.
Paying 40% of your monthly salary or wages seems ridiculous but I did it and paid them off after a little over a year---after dealing with minimum payments for years and earning way too much interest.
Seriously---Pay. Them. Off. Aggressively.
If you're only making minimum payments, I feel little sympathy. If you're tripling the minimum, then I say "Hey, now we're talking..."
People have stated that I'm ridiculous because "I could never afford to pay double or triple the loan amount..." Once again, I think it comes down to budgeting. If you prefer those loans hanging over your head, that's fine. I, personally, would rather see them gone.
So here's a proposal I say:
Work your main job. Let's say you earn 40,000 a year as a teacher or office worker or something. Use that money to pay your minimum student loan payment.
Find a part time or weekend job which pays something extra. Even if it means working late nights. If you're married, make sure both of you are working. I don't care if you have children since there are ways to schedule this out. Even if it means seeing each other less. Maybe one person is with the kids during the day and works the late afternoon and evening. Maybe one person works a full time job and a part time job while the other is at home raising the kids and providing day-care to other children to each an extra 100-200 a week.
Only use the main job's income for your life's expenses. Every other paycheck, even if its small, should go towards the student loans. The philosophy is: Every dollar paid towards the principal balance of the loan will LOWER your daily or monthly interest. If your wife is providing daycare while you're working, don't use that money for extra spending cash---use it towards the loan.
Don't eat out in restaurants. Don't overly spend on clothes. Avoid a lot of luxury items.
If both people in a couple work full-time and are paying off the loans, figure out a way to live on one income and use the other towards loans and debts.
Honestly, I think that it is much more possible for people to pay off loans than one thinks.
People then say "Well, we don't want to live like paupers for the 1-2 years we are paying off the loans..." However, what they're not realizing is that paying only minimum payments for 23 years makes them more like paupers since it will cost far more. I originally borrowed 21,000. In the end, I paid back something like 36,000 with interest but with the loan company's minimum payment plan, I'd still be paying it off and it would be somewhere around 40,000-50,000. No way. I'd rather go without McDonald's for a year and sacrifice to pay it off than deal with loan nightmares for an eternity.