Student loans can be a real drag. But like anything else, having your cake now but paying for it later can get you into a lot of trouble. Large amounts of student debt can haunt you for decades, affecting your credit score and ability to buy a house or car, and they also take a sizable chunk of your monthly income, meaning you probably need to cut back in order to make ends meet.
Sometimes, this can lead to more credit card debt, and possibly even some fiscal decisions that can affect the rest of your life.
But you are an adult now, and complaining that it's ‘not fair', or that you ‘didn't think about it' will not help you pay off your student loans any faster.
It's time to buckle down, and ‘man up' (even if you are woman).
Though it wasn't to pay off loans, I was able to save a large amount of money, in short amount of time. Basically, enough to pay my way through university, so I imagine the same strategy could work for you. It won't be for everyone, but you can of course tweak it as you need.
How to Save a Lot of Money in 2-3 Years
1) Mentally Prepare Yourself
Saving is a mental game as much it is a numbers game. If you sit down and have a talk with yourself about what the next period of time is going to be like, you are more likely to follow through. Where many people fail at meeting their goals is in the long game.
Everyone starts out with perfect ideals about how much weight they're going to lose, how much money they're going to save, or how awesome they are going to be at whatever new skill they're learning. Two weeks in, there's no problem. 8 months in, fatigue and apathy start to take hold and it might leave you back at square one.
Paying off debt interest will ABSOLUTELY KILL you financially. Prepare to tighten the belt for 2 or 3 years, and you'll be free. Would you rather deal with debt for 3 years or 20?
2) Leave Your Home Country
This is the crazy part, and totally not for everyone, but this was a crucial part of my own success. It mostly applies to people living in the US, but could also work for Europe, depending on where you're from.
I taught English in China for 5 years. Though I worked for peanuts because I don't have a University degree, degree holders made much more. If you had a specialty that was in demand, you got paid even more. Regardless of your pay, if you're working in SE Asia you likely won't be making much – just enough to cover expenses and make a little travel money.
But I was also running an online business that paid me in US dollars, which if you make under $96k you pay no federal or state taxes on. You still have to social security/medicare, but because the business was technically outside the US, none of the money I made those years was taxed.
If your a citizen of another country, you might not have to pay any taxes at all (the US in notorious for having a long arm with regards to collecting from it citizens). This means all of your daily expenses are covered by a chill teaching position in a new, exciting place, and everything your business makes is profit!
b) Deferring Loan Payment
This will depend on where you got your loan and the specifics of your particular loan. But I knew a few people with student loans while overseas, and one of them was able to defer payment for 3 years because he was outside the country. He actually did eventually start paying a US loan while making a Chinese wage (about $1000 per month). His daily expenses amounted to about $5 per day so saving 90% of his income was possible.
Check into the rules about going abroad. You might be able to do some kind of charity work which could qualify you to at least postpone interest, or start paying later if you work ‘under the table' while abroad and say that you are unemployed. Hey, I'm not a tax consultant, I'm just saying that you have options.
*Consider Your Career Options*
Students that take on loans come in all shapes and majors. Job markets and career prospects will vary greatly depending on the industry you're in. The great news is that there are a huge number of resources available online.
Spicing up your resume, making yourself stand out, and other tactics are only a Google search away. Leaving the country made sense for me. But living abroad isn't for everyone, socially, mentally, or financially. It's AN option, but not the only one. Let's get back to my plan.
3) Start an Affiliate Marketing Website or Freelance
Two completely viable options for making extra money are affiliate marketing and freelancing. I've done both, and had success in both arenas.
Sites like oDesk, Elance, and Freelancer are filled with hungry business owners looking for responsible, skilled, and enthusiastic workers in a variety of industries. Design, writing, translation, management, and consultants are just some of the things I can think of off the top of my head. There are much more.
Freelancing is great because it allows you to choose your own projects, set your own schedule, and can be a way to make money as a full time job, or as a side-gig on top of a day job. Spending 2-3 hours each night just typing out articles in an area of your expertise could earn you hundreds of dollars more per month. Add in a weekend and you might be pulling in another couple grand over the course of a year.
Sound like hard work? No one said paying off your loans will be easy
b) Affiliate Marketing
This is what I did while in China, and it's what I do today. Affiliate marketing basically works like this:
Find group of people that have a problem or need → Find a product or service to solve that problem → Make a website about that ‘niche' or ‘topic' → Help people find your website.
Watch this video below to learn more about affiliate marketing
I wasn't always an affiliate marketer. A couple years ago, I was just a guy who wanted more money. There are many scams online purporting to teach you how to make money on the internet, but many are confusing, expensive, hyped, or downright wrong. Thousands of people get scammed every year. Wealthy Affiliate is an online business community that offers training on how to start a sustainable online business. It's where I received my initial training, so I recommend it for those looking to get started.
4) Budget Budget Budget
It sucks to have to always buy the cheapest, always be on the lookout for deals, and never splurging. But that stuff can add up over time.
If you can save only $100 more per month, that's $1200 per year. Remember that a cappuccino from Starbucks is $4. If you go to Starbucks and treat yourself just a few times a week, that's $100 on coffee you are spending when you could be spending 20 cents a cup making it on a drip machine at home.
Going out to eat is another budget killer. Sure, a hamburger is only a few dollars, but who actually ONLY gets a hamburger. Add a drink, fries, and gas to get there, and you're looking at almost $10. Even Chipotle burritos plus a drink are more than $10.
Watch your budget like a hawk. No one likes to feel poor, but if I had to choose between feeling poor for a few years or actually being poor (but looking rich) for a decade, I'd choose the former.
This strategy isn't for everyone, but it worked for me! Even if some parts (especially the ‘leave your home country' part) don't work for you, it doesn't mean you can't implement some of the strategies I introduced here. Paying off student loans doesn't have to last decades. If you work hard for a few years, your debt-free future-self will surely thank your bootstrapping past-self.
Usually, the number one hangup that stops people from taking action is thinking that they don't know how to make a website. Starting a website is faster and easier than it was 10 years ago, in fact you can build one in 45 seconds. Watch me do it below!