If you went to university, then chances are that you have a crippling student loan debt; even more so if you went after 2012 when the fee cap was hiked up to £9,000.
Although technically classed as ‘good’ debt, as it raises your earning potential and comes with low interest rates, your monthly student loan repayments still sap any extra income you could potentially put towards savings or your first investments, and it’s best to be without it.
1. Pay more than the minimum
In the UK your minimum payment is calculated according to your salary. In some cases this minimum payment may not even be paying off the interest. If you can, pay back more than the minimum amount so that you are paying back more than just the interest. It means you will also pay your loan back more quickly.
2. Put any unexpected money towards your loan
You may want to take that £100 you got for your birthday and put towards a Spanish holiday or new pair of boots, but put it toward your loan instead. Every time you do this you’ll reduce your loan balance substantially and therefore cut down the amount of time you have left until you’re ‘loan free’.
3. Ignore your raise
If you get a raise at work then instead of raising your standard of living to match it, take the extra money you make monthly and put it toward your loan instead. It takes a little discipline but it’s a sure fire way of paying off your loan in a shorter amount of time without feeling the pinch too much. You can’t miss what you never had.
4. Don’t put pressure on yourself to save
It’s always best to try and save money. Having a financial safety net means you are covered for any large surprise expenses. However, don’t put too much pressure on yourself. If you can only afford to make small savings whilst you are paying off your loan then that’s not a problem. Using a money saving app like Oval Money allows you to round up the pennies from each spend you make on your card and put them in a savings wallet. Even just making these small savings will help.
5. Pay when the money hits in your account
Look at what you can afford to pay at the start of each month and then pay it straight away. Don’t wait until the end of month when you may have already spent it, or feel slightly more panicky at the sight of an empty bank account.
6. Don’t delay
The longer you delay paying off your loan, the more interest will pile up. Start paying it off as soon as possible to avoid paying more interest. You don’t want to spend years paying off money that you didn’t even borrow in the first place.