by Donny Gamble Jr., founder of Personalincome.org
Tax season is upon us, and as we patiently wait for that glorious refund to arrive in our accounts we can’t help but think about the financial battle that over 40 million college graduates are facing: student load debt. Approximately $1.2 trillion of it. That’s right – Trillion. This handy video will give some perspective to the magnitude of that “little” word.
Sure, to a wide-eyed 18-year-old it may feel like “free money” as they scribble their name on a loan agreement, but the fact of the matter is that student loan debt is crippling our nation and there’s no end in sight. Unfortunately for us, there is no class offered in high school or college called “How to Get Out of Unimaginable Debt 101,” so many are left making the minimum payments and hoping the problem will go away on its own. Well, it won’t.
Here are 7 key steps to help you tackle your debt and find financial freedom:
1. Use your tax refund.
When you’re in debt, there’s no such thing as free money. Sure, it may be tempting to book a flight to the Caribbean (because…weather) or get a bigger TV, but you must resist that urge with every fiber of your being. Take the whole refund and apply it directly to your debt. The Caribbean will always be there – your student loan debt doesn’t have to be.
2. Track your spending like the NSA.
If you’re in debt, you should know where every single penny you’re spending is going. That means spreadsheets. Columns. Rows. Accountability. If you know where your money trail leads, you’ll get more clarity as to which leaks need to be plugged and where you may have a little more wiggle room. Additionally, you can track your debt here as well. Trust me, it’s encouraging to come back every month and see that big red number get smaller and smaller as you make smarter and smarter money decisions.
3. Get some roommates.
If you live in any major city in the world, you know rent is expensive. Like, reeeally expensive. Yes, you’re officially a adult now with a degree and a job (hopefully), but that doesn’t mean you must have that nice one bedroom apartment you’ve been dreaming of after years of slumming in with college roommates. Here are the facts: roommates cut rent costs – bigtime. Roommates cut utilities in half. Roommates will help you buy food in bulk and share the cost, versus throwing away all the expensive chicken you promised yourself you’d eat. Suck it up and find someone to share your costs, then put the money you save directly towards your student loan debt.
4. Live simple.
You know for $7.99/month and an internet connection you’ll have access to more movies than you could ever possibly watch? While it’s not a luxury to some, cable TV can cost you well over $1,000/yr and you’ll probably barely use it. Cut the cord. Get Netflix. Buy some bunny ears and just live with the free basic programming. Eliminate wasteful spending on luxuries you can’t afford and put the dollars you save monthly directly towards paying down your debt.
5. Stay put.
I don’t mean like, never move… I mean vacations are a no-no. Weekly restaurant outings should be reduced to a monthly treat. If you need a getaway, borrow a tent from someone and drive an hour or two to a camping ground. Book a campsite online in advance to make things easier on yourself.
You get the picture – vacations and fine dining are for people who have expendable income. When you’re in debt, all you have is money that should be going towards reducing your debt.
6. Find any and every deal.
There will inevitably be a time where you need to spend money that you wish you didn’t: something will break, something will wear out or something will just come up. Welcome to life. What you don’t have to do is become a sucker and buy the first shiny new thing you see. First, do your research and find out when and where the deals are going on. Next, price match – most big retailers will at least try to beat their lowest competitor’s prices. Lastly, clip those coupons. Your mom did it when you were growing up and it’s time to pick up the reins. You can save big on groceries and necessities by collecting coupons and then be smart and put the savings toward repaying your debt.
7. Become a DIY expert.
First, start sewing your own jeans… kidding. But there are plenty of things you pay others to do that you’re perfectly capable of doing yourself. For starters, spend 30 minutes washing your car yourself instead of paying/tipping someone else to do it. For everything else, get on YouTube and learn how to become the expert – there is a tutorial for everything on there, seriously. Not only will you pick up a few new skills along the way, you’ll save a bundle that you can allocate towards loan repayment.
Some of this may seem harsh, but it’s not as harsh as the interest you’re accumulating on your debt. That’s the truth.
Donny Gamble Jr. is founder of Personalincome.org, a published author, entrepreneur, and investor. He graduated from The Ohio State University and has a passion for teaching others about alternative investment and retirement strategies. He is a contributor for Huffington Post and has been featured on Black Enterprise as one of the top 5 money experts for Millennials to follow.
