6 steps to paying off student debts as soon as possible

Student Loan Debt Advice – Pay It Off!

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Education is expensive in Canada. If you earned a degree or attended post-secondary learning of any kind, chances are, you’ve found yourself under a heavy student loan debt. It is fairly common for Canadians to feel a more relaxed attitude toward their student loans than they would any other form of borrowing. We’re here with some student loan debt advice about how paying close attention to your student loan is not just important for your credit score, but also for your overall financial future.

How High Student Loan Debt Can Affect Your Credit Rating

There are many ways in which your student loan debt can affect your credit rating. The most obvious being, if you’re missing payments, it’s going to get reported to the credit bureau. This will bring your overall credit score down and look bad on your credit report, leaving you unable to secure any future lending. Student loan debt can also increase your credit usage - the more credit you’ve used vs. what you have available, the lower your credit score is going to be. It’s because of this important point that paying down your student loan debt as fast as you can is good practice. You’re also going to save a ton in interest this way, which adds up to a great deal of money that could be spent on more important things.

It is important to make sure your student loan payments are being made on time and in full, every month and sometimes even more than the minimum payment - this will serve to keep your credit rating up and keep the amount you pay in interest down.

The Best Way To Pay Off Student Loans

If you start practicing the following student loan debt advice now, you will be off to a happier, debt-free future.

Step 1. Understand your debt.

When we owe money, we tend to just go through the motions, barely skimming our statements and just looking for the minimum payment and the due date. Often, we are unaware of how much we’re paying in interest and how long it’s going to take us to pay off our debts. These are things you need to know, though, to get a better picture of how to pay off your debts. If you can see and fully understand how much you’re paying in interest and then compare that to how much you will save if you try to pay off your debt a little faster, suddenly you'll find that making bigger payments is going to be a priority you take seriously. You need to know how long you’re going to be paying off this debt and how much it’s going to cost you and maybe you’ll find yourself some motivation in all of that data to pay it off faster.

Step 2. Make a debt repayment plan.

Once you understand your debt, you have to devise a repayment plan that can fit into your life and income. How much can you afford to pay each month? Can you make bigger payments than the minimum to save on interest? Devise a plan that you can live with and that will allow you to pay off your debts as fast as you can.

Step 3. Always make your payments.

Also, always make your payments on time. The best way to handle this is to set up automatic payments using your chequing account. This way, you will never forget a payment.

Step 4. Pay more than the minimum payment

By doing this, you will bring your principal down faster as well as save you on interest.

Step 5. Consolidate

Grab yourself a consolidation loan to pay off larger chunks of your student debt at once. A lower interest rate loan is going to save you a considerable amount in interest if you use the funds borrowed to pay off your student loan.

Step 6. Prioritize

You need to find where you can cut down your spending and how to save money every month. Our blog here at Refresh Financial is full of ways to save money, as well as ways to best use any extra money that comes in. Bonuses at work, tax refunds, inheritances… these all can be put towards your debts rather than spent frivolously on things we don’t need. In the long run, you’ll end up with more money in your pocket if you pay off your debts faster.

Taking our student loan debt advice could be the best decision you’ve ever made, as getting out from under that heavy debt load sooner than later is going to open up many more options for you and your money. Your credit score will go up and you’ll save yourself a tonne in interest.

Did you know that student loans can affect your credit score? Find out more helpful information in the Refresh Financial Dime Turner Blog!

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