How To Quickly Pay Off Student Loans

Sometimes the best way to accomplish something is to follow in the footsteps of someone who has done it already. When it comes to paying off student debt, Squawkfox is definitely a great role model. After reading about how she paid off all of her student debt in six months, I was a bit envious. It’s an awesome accomplishment, and she shares some wonderful tips on how she did it. I’m almost 100% sure I won’t be able to pay off all of my loans in six months (unless I win the lottery, which I don’t play), but I’d still like to pay off my student loans as quickly as possible. Therefore, I’m going to take Squawkfox’s advice and evaluate how closely I’m following in her footsteps to a student loan free life.

1. Negotiate your first job offer

If I could turn back time a few months, I would follow this advice. Although I’m not sure if it would have worked for my job, it would have been good experience regardless of the outcome. I am definitely going to follow this advice on my next “first job offer”.

2. Keep living like a student

Sometimes I wonder if I’m ever going to grow out of living like a student. I’m currently renting a room in a house to save on rent. Occasionally, I stay late at work to take advantage of free leftovers for dinner. I also carpool with a friend when our schedules work out. My spending habits haven’t changed since I started my job. However, I now live in a city with an extremely higher cost of living than the college town I lived in before, which eats into how much I save by continuing to live like a college student.

3. Use all available tax credits

In the U.S., there are a few tax breaks available for college students. While it would take an entire post to go through the details of each one, here’s a list of the available tax breaks: Tuition and Fees Deduction, Student Loan Interest Deduction, Hope Scholarship and Lifetime Learning Tax Credits. If you’re a grad student, be sure to look into these tax breaks, because they can save you thousands of dollars if you qualify for them. I’m looking forward to getting a tax refund thanks to the Tuition and Fees and Student Loan Interest deductions, and guess where it’s going? Straight into paying off my student loans.

4. Save for retirement

You’re probably wondering how saving for retirement helps you pay off student loans. Well, in Squawkfox’s words, “You contribute to retirement, you get tax breaks, you get tax refunds, you then feed the refund to your debt. You win the ‘get outta student debt game!’” This is brilliant. The more you pay yourself first, the faster you’ll get out of debt. With that being said, I’m currently saving for retirement in a Roth IRA and Roth 401(k), which means I’m not getting any immediate tax breaks. However, I do enjoy the satisfaction of growing a nest egg.

5. Delay buying stuff

This one is probably what most recent graduates struggle to do. After getting their first “real” job, a lot of people want to live in the nicest place they can find and start buying new stuff — car, furniture, electronics, etc. I’ve been tempted to buy new toys that I don’t really need. Sure, a flat panel HDTV would look pretty sweet in my room, but after asking myself if I really need it right now, I’ve been able to resist the temptation. The same magic of compounding interest that works for you when it comes to saving money works against you when it comes to debt. By buying things you don’t need before paying off your debt, you could end up exponentially increasing the amount of time and money it takes to pay off your debt. The question I asked myself is, “In two years, would I rather have an outdated HDTV or be completely free of my student loans?” I think you know the answer to that one.

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