The Constant Search for Cash

Over the past several weeks, I have perused dozens of articles regarding the age-old question “how to get rid of debt quickly.” So many of these articles assume a few things:

  • I got a degree that makes me a lot of money. I was a teacher (a very low professional career … and don’t even try denying that one). Now I am at the lower end of the marketing spectrum (better, but not there yet).
  • I went to a relatively expensive university. It was no Harvard, but definitely not a state college.
  • Mommy and daddy helped, but not enough to let me waltz through college without debt.

So, the question remains: how do I pay off debt quickly.

// LET’S  GET  SOME  CONTEXT //

I’m not shy about how much I owe. When I left college, I had about $40,000 worth in debt. For repayment, I chose a graduation rate, which would make my initial payments small and would gradually increase. To pay off these loans within the 10-year time period they wanted, I would of had to pay in increments of $500~ per month ($6k/year). To many college graduates with really great jobs, that seems incredibly doable, however, it was not in my deck of cards (and still isn’t). There’s rent, car payment, car insurance, utilities, medical, taxes, and a long list of other bills that have to be paid at the end of the month.

// THE  BIGGER  PROBLEM //

While paying for loans is great, it’s the interest that truly makes things worse. Future college graduates: interest adds up. Think about it: you have $10,000 in debt that compounds monthly at 6.5% interest. I don’t do math … but that adds up relatively quickly. For me (after some mathematical sorcery that I conducted), this would add up to $10,000~ added to my total repayment … just for interest alone. So, while I would love to take my sweet time paying these loans back, the ideas of losing over $10k just because does not sit well with me.

// THE  PLAN //

As someone who touts to be mathematically deficient, I actually do love creating budgets and planning long-term. I don’t claim to be a financial expert — lord knows … I’m gay … I have very expensive tastes — but I do have a plan to pay off these loans:

  1. Continue to make regularly scheduled payments: this is obvious. Don’t don’t … won’t stop. Besides, I kind of have to continue to make the monthly payments because law and debt police.
  2. Stick to a monthly budget. Excess becomes extra payments: To expedite the repayment process, I’m trying to stick to a very strict budget. Let me explain:
    1. I get paid twice a month (generally around the 15th and the 30th … like most salaried people do). My budget, then, is restarted per month with the last paycheck.
    2. Whatever money is left in my account before the second paycheck of the month is transferred to a different savings account. Let’s call it: Loan Payment Folder.
    3. Budget the heck out of life: I’m gay … I like spending money … and I definitely have a champaign taste. I’m also 25 and like to go out with friends every now and then. By attempting to cut down on spending (like not going out to eat all the time and basically cooking in bulk) I am able to make a little extra cash each month.
  3. Quarterly (or bi-annually) make extra payments: Using this new ‘savings account,’ I will make additional payments. Also realize that savings accounts give me (some) interest … so the money actually get’s to grow. The reason why this won’t be a monthly thing is because there are some events in life that happen (car breaks down, leg breaks, etc.) that I might need to have extra cash for. Granted I have an emergency fund (which I highly recommend for literally anyone who is out of college) and a Health Savings Plan (which basically covers all of my deductible if and when I should have to use it), it doesn’t hurt to be on the safe side with my income.
  4. Credit Card Cash Back: This is not an immediate aide, but will definitely help long term. First of all, if you are not financially savvy, a credit card should not be an option for you. Ever. I’ve waited until now (I’m 25) to actually get a credit card, so I have definitely taken the time to weigh my options. But credit cards can actually help pay off student loans.
    1. All Payments In One Card: My problem lately is that I have online payments coming from all over the place: savings account, checking account, etc., and it becomes increasingly difficult to track these expenses. The credit card brings these transactions under one roof, which I like … a lot.
    2. Cash Back: Probably the biggest draw to a credit card is the cash-back opportunity. It took me a while to decide between this (cash back) and travel rewards but, in the end, money is better than travel. I chose to get a card which gives me over 1% cash-back on all purchases. Theoretically, then, I will receive 1% cash-back on rent, student loans, coffee, electricity — literally everything I do in life will provide me with some money back. Additionally, I also get a bonus if I spend (which I easily will) a certain amount. Basically free money.
  5. Finding other sources of income: this is actually very difficult for me to find/do because I’m really not sure how to do it. I have a gig that happens between January and April which gives me some great additional income, but that’s only for a few months of the year. I’d love to find something a little more long term that makes me extra without taking up a ridiculous amount of time.

I know that I didn’t include promotions, tax returns or other variable sources of income, but the above is what I can see as easy-to-do tasks that can instantly make more money. You don’t need to be making six-figures to do what I discussed above. You can have a teacher’s salary and still do alright.

If you have suggestions for how to pay off student loans quicker, write in the comments below. I’d love to hear them.

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