It doesn’t have to hang over your personal finances for years.
“How can I clear my debt quickly?” is quite a common question these days. When it comes to student debt there is even more motivation – at such an early stage in life there is so much more to do with your money than see it disappear into loan repayments. So, if you really want to wipe out your student debt quickly how do you do it?
Don’t wait to start making repayments.
Whether you’re clearing student credit cards or a Student Loans Company loan, start making those repayments as soon as possible. You will adjust to the loss of the repayment money from your salary pretty quickly and soon you won’t notice it. If you’re keen to be debt free then the sooner you start, the sooner you’ll reach your goal.
Avoid any additional debt.
Don’t add to the debt that you graduate with so that you can focus all your resources on making sure that gets repaid. It can be tempting to seek some sort of personal loan when you are starting out in a new career and probably a new home. Many recently graduated young adults will turn to their parents for guarantor loans for the deposit on a home, for instance. But there are alternatives to borrowing more – budget, cut back or earn more instead.
Overpay wherever you can.
Got a pay rise? Consider using some – or all – of it to clear a portion of what you owe. Inherited some cash? Making yourself debt free is a great way to spend it.
Make some lifestyle adjustments.
If there are no lump sums coming your way then you may have to make some lifestyle adjustments to be able to clear your student debt faster. Try cutting back on the luxuries you spend out on every month, whether that’s shopping or eating out. Put the extra cash towards your loans and clear your student debt faster.
Clear the debt with the highest interest rate first.
If you got through university with a combination of different loans, overdrafts and credit cards then focus on the debt with the highest rate of interest first. Typically for students with no credit history you may have to have taken out bad credit loans and these will have high interest rates so focus on paying those off first. Clear the expensive debt and you’ll instantly make it easier to shift the rest, as you’ll reduce the overall total that you pay.
Consider consolidating your debts.
This isn’t a technique that works for everyone but it can be useful to consider debt consolidation if you’re dealing with a number of different debts. This will enable you to borrow one single loan with which to repay all the different student debts that you have. The advantage is that you then only have one repayment to make and one interest rate to consider. Consolidation only really works if you get a good interest rate and favourable early repayment options.
Double your earnings.
Double your income and you can double the repayments you make on that debt. Whether you ask for a pay rise at work, take on another job or become a freelance driver, babysitter or dog walker there are plenty of options to help increase what’s coming in.
So, if you want to wipe out your student debt quickly then consider:
- What budget adjustments you can make to bring in more money for repayments
- How additional cash might be generated to overpay the loan
- Which debts need to be repaid first
- How quickly you can start making repayments
- How to live without taking on any additional debt