Most of us are usually expected to pay off our student loans by cutting down our expenses. Some who get married early, manage with one of the spouse’s salaries. And some are okay with cutting down expenses drastically and even don’t mind working for 70 hours per week to pay off debt. But how many of them will really work? Here are some creative strategies that millennials use to get out of debt and pay off their student loans.
Though many use a combination of repayment strategies to overcome debt, all of them have these basic ideas: cut down everything except essentials, increase financial literacy and be consistent.
Some millennials negotiated stocks as a part of their benefits package to pay back their student loans. After some years, the stocks increased in value. At the right time, they sold the stocks to get a significant return that was enough to pay off the student loans. You can use the snowball method. You will pay off the smallest balances first.
Easy ones first
You can use the snowball method that directs you to the easy balances first. Paying off low balances first will keep you motivated when you make visible progress. Moreover, you might make more progress if you receive workplace bonuses, benefits, tax refunds, or even gifts from family members.
One notable upside of the Covid-19 pandemic lockdown is remote working. Remote working gave people more time and the flexibility to take up part-time jobs. Thus, the total income almost doubled. Look for ways to earn extra cash by looking for flexible part-time jobs during the evenings or the weekends.
Some of these jobs are not that stressful. If you have a car, you can deliver packages and earn on an hourly basis. If you love pets, you can try petsitting which also pays on an hourly basis.
Pausing 401(k) contributions
401(k) contributions will take a certain percentage of your income. You can consider temporarily pausing your contributions until you pay off student loans. Research on the policies before making a decision.
The debt avalanche method
Using the debt avalanche method, you will make minimum payments on all debts by adding extra funds for the debt with the highest interest rate. You can also take advantage of the various extensions, pauses, and flexibility given by the federal government during the Covid-19 pandemic.
Cut down every expense
Some millennials decided to give up every leisure activity until they pay off their loans. Thus, they sacrifice fancy food, movie nights, or vacations until they pay off the debt.