If you are here, that means you also searched how to save money while paying student loans, and most probably looking for some practical ways to save money while paying off loans.
Well, I do not have any magic tricks to pay off your student loans within a fraction of seconds, but I do have some strategies that will work for you and help you finish your loans faster. Along with this, you’ll be able to save a significant amount every month.
So, without taking too much of your time, let’s jump into our main topic.
Categorise Saving Money And Paying Off Debt
Many people get confused here. See, there is a difference between paying off your student loans and saving money.
No doubt you have to spend monthly, but saving money is also there. Most people focus on paying debts and overlook saving.
So many people talk about how to pay off student loans fast, and that’s completely fine, but along with this, you must keep some amount as savings.
Personally, I’ve three accounts where I divide money as soon as I get a paycheck. Saving account, emergency account, and general account.
There is an interesting story behind this. Back in 2015, when I got my very first job, I was on cloud nine. I was like, now I don't have to ask anyone for money, and I can handle everything on my own. All these kinds of stuff.
As soon as the first month ended, I got my first paycheck, and the sooner it came, the sooner it went out. A few months passed like this. But then I realised I’m doing something wrong and need to figure this out.
Honestly speaking, at that time I was not that careful in terms of money, but when I realised something was wrong with my spendings, I analysed the past months and what I did wrong. And this is when I divided my monthly income into these three accounts.
Let me tell you how I divide my money in these three accounts;
General account - this is the account where I receive my monthly paycheck. So in this account, I keep the money that I’ll be needing for daily or monthly expenses like groceries, fuel, etc. It is the same account where I keep monthly loan payments if I’ve any. Touchwood, now I do not have any debt. In short, in this account, I put all my spending money. I forgot to mention, this account also includes the money that I invest on a monthly or yearly basis, which I’ll talk about in another article.
Saving account - As soon as I receive my paycheck, I keep almost 20% in this account. This is the account I rarely use. Basically, it is an account where I put money for my short-term and long-term goals, and as needed, use the amount.
Emergency account - This account is similar to a touch-me-not plant. But just like this plant possesses medical properties and is useful in medical conditions. Similarly, when an emergency comes like medical conditions, car repair, etc., only at that time I touch this account. This account also holds 20% of my income.
So here what I wanted to explain is saving money is also important, regardless of the debt you have. In the first place, try to avoid loans as much as possible. However, if there is an extreme situation, only that time go for it.
If you are a student and reading this article, you should know how to save money as a student.
Paying Off debt
In the first place, let me talk about how to pay off student loans fast. I know you might be thinking that at the start of the article, I talked about saving money, and now I’m talking about paying off debt fast.
The reason behind this is that I want to give you a clear-cut idea of how you can pay off your debt fast. Once I cover this, I’ll get back to our savings topic.
Be Sure About Your Total Loan Amount
Do you know how much loan amount you have to pay?
The answer will be yes. But here I’m not talking about a single student loan. There might be a possibility that you have taken more than one loan. So sit in a quiet place, take pen and paper, and note down all the debt that you have to pay.
Don’t get afraid if the loan amount is too big. Anyhow, you have to pay them back. So being nervous will not work here.
Your Monthly Income
How much do you earn monthly? How many income sources do you have?
Don’t get me wrong here! I do not want to know how much you earn. Ask this question to yourself.
The scenario I’m about to reveal here had happened to me earlier. I had (now also I’ve) more than one income source. Along with the job, I was freelancing.
But what happened here? Income from the job was fixed, so some portion of it I was using for monthly loan payments, and the rest of the money was coming and going. (earlier days that I discussed in the category of saving money and paying off debt ).
Similarly, when I used to freelance, the money from that was not fixed, so I was using that money randomly without thinking twice. This is where I made the biggest mistake.
However, later on I realised my mistake.
So what I started doing here is I was waiting for my salary, and till that time, I was not touching the money that I was getting from freelance work. This helped me get a clear picture of my total income. At that moment, I realised how much exactly I was earning. To my surprise, that amount was quite big.
If you also have different sources of income, don’t spend them in the middle of the month. Wait for all the money to gather and know how much you earn monthly.
If you have only one source of income, you do not have to worry though you must have a side hustle that I’m going to talk about below.
Know The Total Monthly Installments
If you have taken more than one loan and need to pay more than one installment monthly, first of all, calculate the total installments amount and see how much it is.
If it is 20, 40% of your income, you are on the safer side. You have enough money left after making payments, and you are good to save a significant amount.
However, if you are unable to do so, you must know the ways to save money on a tight budget.
Think About The Loan You Can Finish Earlier
Having more than one loan makes people depressed, and saving along with it, kinda difficult job.
So, what you can do here is think about the debt you can finish earlier. If your total monthly installments is only 20%, you are definitely earning good. In this case, you left with enough money in your hands that you can use to finish debts earlier.
Start with the smallest debt, and finish it first. As a result, it won’t affect your budget, and you can save some amount every month.
Some people question how to pay off student loans fast with low income. I guess you just got the answer here.
Though you have a low income, with the above strategies, you can plan better and become debt-free sooner.
Do Not Rely On Loan Forgiveness
This is the most important one. If you are waiting for the government to forgive your loan, you are actually making the biggest mistake. It may happen, might not.
You never know, so it is better not to wait for it. There are so many applicants who apply for loan forgiveness, so just think for a moment about how many people can benefit from it.
I guess you just imagined the number.
See, there are no sure short ways to get rid of your debts, but the ways I mentioned above are practical and easy to follow.
Using Swagbucks and Inboxdollars won’t help you out. If you have seen these websites and thought that you could use them to make some extra income, please don’t go for them.
Hardly it will work for you. For instance, look for some better side hustle alternatives.
Saving Money While Paying Off Student Loans
I guess throughout this blog, I talked more or less about saving money. But in this section, I’m about to reveal some proven tactics that worked for me (still work for me). So be ready to get your answer on how to save money while paying student loans.
With Full Time Job, Do Side Hustle
If you already have any side hustle besides a job, you are on the right track.
I’m not saying this just because you are struggling with debt; nowadays, this has become crucial to have more than one side income source.
No matter how much you are earning from your job, having a side hustle is a must.
However, when you choose a side hustle, make sure that it is something that will serve you longer.
For instance, if you choose freelancing, all the time you have to look for clients. So going for freelancing is not something that will benefit you in the long run.
In contrast, if you start a blog or YouTube channel or something similar to this, it will give you a steady income.
Prioritise The Spendings
As soon as we receive a paycheck, we have a long list to spend on and we tend to spend mindlessly.
And this habit one has to change if you really want to manage your finances like a pro.
When you get your paycheck, create the essential item list, and before you start paying for those items, recheck the list. I’m sure by rechecking the list you can understand what’s crucial and what is not.
Divide your spendings in three stages; 1) Essential 2) Wants 3) Future Savings
Make A Goal For Savings
Saving without a goal is like a fish without water. Save with a purpose.
You may have long-term or short-term goals.
Let’s say you have a goal of buying a car; keep saving some portion from your monthly income for that. By doing so, you can quickly achieve your goal without making a hole in your pocket.
See, you may have a lot of dreams of buying this or that. But what I’ve seen in my life is that most people, even for small purchases like smartphones, take out a loan or buy the phone in installments.
If there is an urgency to buy a smartphone and take out a loan, it could be understandable. But if you are planning to buy a smartphone in the upcoming months, saving a small portion of your total income would be a better alternative.
Taking out a loan is not the only way.
Create Budget And Stick To It
Regardless of your income, you must create a budget and stick to it at any cost.
If you are living alone, creating a budget for yourself is quite an easy task to do. However, if you are living with a family, in the first place, you must calculate the whole family's income.
Obviously, when we live in a family, more than one person earns. In such cases, you must know the total income. Suppose you have a family of four, and two people earn, calculate those two people's earnings. After this, create a budget for everything (including the tiniest one) and try your best to stick to it.
There are some situations where we have to go out of the way, but not always. For those situations, you must have an emergency account where you can save for rainy days, or I can say for any uncertainties.
One more thing, creating a budget does not mean that you can not have fun. Well, you must pay for yourself in the first place. But the amount you decide should not disturb your monthly budget.
Related to - How to save money as a homemaker
Stay Motivated
This time will also pass just like every other good and bad time. I know how it feels having loans, whether it's student loans or other loans.
But the reality is you have to pay for it by yourself, and you have to deal with all this trauma.
So being depressed will not work here. You only need to find some practical ways to get rid of it.
I know so many people try to misguide us in such situations, and when the time is bad, we also fall for it.
My suggestions to all those people who have debt: don't get discouraged, don’t fall for shortcuts, don’t trust everything you listen to or read (including mine), and above all, stay strong, stay motivated.
