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Guest Post: My Plan for Paying Down Student Loan Debt

Todays guest post comes to us from Taylor of PaperStackers.com. Taylor’s blogging partner reached to me over Twitter as someone from my home town.    Below is his plan for paying down student loan debt.    Give it a read and let Taylor know if you have any thoughts on his plan.  Also, as always, I’m sure he would appreciate if you stop by and check out his blog.

By now, I’m sure you’ve read quite a few different student debt pay down stories on the internet. After all, plenty of people on the internet are pretty young, and many young people out of college have a bit of student debt under their belts. Over a trillion in collective education debt is sure to get some people talking, so it’s natural to hear about it.

Well, I hope you aren’t bored with them because I’ve got another one for you: my story!

Here’s a quick breakdown of my personal situation. I graduated in the Class of 2016 from a public university with a solid $25,000 in federal student loans to my name. Throughout college, I didn’t think about my loans whatsoever; in fact, I didn’t want to! I was either having too much fun, working too much, or having too much fun again to spare a second thought.

Come graduation, it was time to grow up. So I did. I started by paying down my student debt. Here’s my game plan.

Establish the Game Plan… By Waiting

The first thing I did was wait on the payments. I might have prefaced this whole thing by saying I was about to grow up and make some payments, but it wasn’t that quick. Here’s why.

I didn’t have a job lined up at graduation, so I didn’t have the means to start making payments. I deferred my payments for the full six months starting in June of 2016, so I had until January to get it together. I was stressed out, but I had a mechanical engineering degree and was desperate. It had to work out or else.

I boomeranged back to my parents, then spent the first few months looking for employment which I eventually found. However, even then, I didn’t start making payments because I needed to get relocate and get settled near my new work. So I took the remaining months to find a place that I could afford, meaning a cheap apartment with strangers. Once I found a place (it took about a month and a half), I got settled in just in time for my work start date.

Since I wanted to build up some modest savings, I started making payments in January.

Get Moving Towards the Ultimate Goal

Well, I was working and making payments into 2017, chipping away at that 25k. I decided to stick with (and am currently enrolled in) the ten-year standard repayment plan. The payment amounted to about $250 a month, so I could afford it decently well.

I wasn’t quite happy with just one payment a month though, so I decided to start making two payments each month. For some people this might not be realistic, but in my case, it was totally plausible. I moved to a new area and knew nobody, so I completely eliminated my social expenses from my budget. On top of that, I started to actually grocery shop, and I actually shopped frugally which would astound the college me. I love snacks, but I found that I hate paying for them. Shopping for food smartly revolutionized my budget. I got healthier both financially and physically.

Long story short, I basically moved into an income and lifestyle that could support doubling my payments to roughly $500 a month. If anything really big cropped up along the way, I could always forgo my second payment that month, but my goal is to make it the full year without doing that (still going strong).

Switch It Up Much, Much Later

Right now, my interest rates are ok – 4.5 to 6.0 percent across multiple loans which certainly better than private loan rates. However, I learned about student loan refinancing and saw the potential an even lower rate… if I could muster up the credit.

With that being said, I don’t have the credit right now. I’ve only had a credit card for about a year and a half, so I figured I’m not established enough now. In order to be ready for a successful application for a rate that is worth it, I plan on chugging along with my double payments to establish my creditworthiness. A solid record of payments along with my established income should make it doable in the future. Who knows? I might even get a raise to help out, but that’s wishful thinking.

While things are going well, I’m still putting a refinancing application on my radar for down the road. Ten years of student loan payments is a long time, and I want to pay down this debt as fast as possible. I intend to make payments for at least five years, so that plan takes me into 2021. At that point, I’ll take a look at my financials and maybe take the jump. The objective is to get a rate lower than 4 percent on one consolidated loan and a short, aggressive repayment term. Hopefully, it could shave two or more years off my repayment.

Will It Work?

Of course, this plan ignores a few big potential factors like getting married, getting laid off, or getting my loans forgiven (haha). But like I said, I don’t know anyone in my area, so I’m not getting married anytime soon, and work is going well with no foreseeable problems.

At the moment, the plan looks like a good one to me. Besides, the whole point of student loans is to make payments which is what I’m doing. I just might try to shake it up later. Let me know what you think about the plan!

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