Picking up from where we left off in Student Loan Debt: 6 Steps for Paying it Off (Pt. 1), below is some additional information regarding what you can do to pay off your student loan debt as soon as possible.
Step 3 – Put as much disposable income as possible towards paying down student loan debt.
With this step, you will first need to figure out how much disposable income you have available (with your disposable income being the money you have left over after you pay for all of your living expenses and other essential monthly bills). To do this:
- Make sure to add up your month-to-month vital costs, including your rent or mortgage, your cellphone and/or utilities bills, your credit card bills, food expenses, etc.
- Subtract this amount from your total monthly income.
- The remainder is your disposable income.
Once you know what your disposable income is per month, figure out how much you can reasonably put towards paying down your student debt. Ideally, the amount you have available should be more than the minimum monthly payment on the student loan debt.
Step 4 – Don’t sacrifice your investing in your savings.
This step is inherently part of the above-described step, as planning to invest in your savings each month should (ideally) be part of your monthly budgeting efforts. While you may be very motivated to pay your student loan debt down and eventually off, do NOT do so at the expense of your savings.
The reason for this is that investing in your savings is crucial to building up your financial safety net and having something to fall back on if (or, more likely, when) a sudden, essential expense pops up. For instance, if your car breaks down and you need to pay for an expensive repair or if you get hurt and need to pay for expensive medical care, having a savings to draw from can be critical to:
- Not having to charge such expenses and dig yourself into deeper debt
- Not putting yourself in a position where you may be unable to make a student loan payment in the future (because you don’t have any savings to draw from).
Be sure to check out our conclusion of this blog for some additional information regarding what you can do to pay off your student loan debts quickly.
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