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Money Management

Should I Invest While Paying Off Debt?

Should I Invest While Paying Off Debt_This post may contain affiliate links. Check out my Disclosure Policy for more information.

Whether or not you should invest while paying off debt is a hot topic in personal finance. There are many different ideas surrounding this topic.

The short answer is that it depends on your long term goals and if your employer offers a match.

I have always stood by the idea that if your employer offers a match, contribute up to the match. Most companies this means a small percentage of your check, it’s usually not much.

If your company has some amazing match, then it’s up to you to decide how much to contribute. I wouldn’t leave all the free money on the table though.

This is especially true if you’re a twenty something. Time is absolutely on your side and you have compound interest working wonders for you right now. Take advantage of it!

Once you are contributing up to the match, I would sit tight while you pay off your debt. Once you have made a dent there are some things to consider before upping your retirement contributions.

1. Are you contributing at least up to the match, if your company offers this?

When you’re first starting to budget and getting your finances together, it is very possible that you are living paycheck to paycheck. This happens when we don’t keep track of our finances and we don’t know where our money is going.

If this is you, don’t contribute to your retirement when you can’t get through a month with some wiggle room. It doesn’t make sense.

If you are contributing to retirement, I would recommend stopping your contributions and using this money to build an emergency fund and then pay down your debt.

Once you have a handle on your monthly budget and have some leftover cash, with an emergency fund of one month of expenses, then start contributing up to the match again.

2. Are the interest rates on your debts higher than 5%?

If your interest rates are above 5%, I would sit tight on contributing anything over the match. When you have interest rates higher than 5% on your debt, you’re playing a losing game by contributing to any investments.

You need to keep in mind your net worth. A good rule of thumb I use is asking myself, will this increase my net worth? Yes, investing will increase your net worth usually, but if you’re losing out on high debt interest rates, you’re not making any positive movement.

Once your high interest rate debts are paid off, then you can start to consider some investment options. Mathematically, it doesn’t make sense to do so before your high rate debt is paid off.

3. Do you have a fully funded emergency fund of at least 3 months of expenses?

If you still have debt with rates lower than 5%, then you can consider investing more, if you want. But, do you have an emergency fund with at least 3 months of expenses?

I would suggest first working on beefing up your emergency fund before contributing more to investments.

The reason being that in the event of job loss or other emergency, you’re going to need some money to fall back on. Your investments are not something you want to use in these situations.

Get your emergency fund up to 3 months of expenses and then consider other investment options.

4. What are your long term goals?

Once you have contributed up to your employer’s match, paid down your high interest debt, and have 3 months of expenses set aside in an emergency fund, it’s completely up to you what you want to do!

That’s the great part of personal finance, it’s totally up to you to design your finances to get you the life you want.

Some people hate the idea of debt and will pay off all of their debt ASAP and not even consider investing until it’s gone. Others aren’t as bothered by it and think more mathematically about the returns that they can get in their investments.

The important thing is to consider your long term goals and what feels right for you, your family, and your life. Personal finance is meant to be personal, so make it all about you!

If you hate your debt and would rather pay it off than invest, do it! You’re still making positive moves in regards to your net worth, so it’s a good idea!

Consider the big picture of your finances rather than the small details, will it increase your net worth? Moves that will increase your net worth are good moves!

Ask yourself: If I invest, will this increase my net worth?

This is the question I am constantly asking myself when considering new money moves. Your finances are meant to be personal and you need to consider that when deciding to pay off debt or invest.

I’m a numbers gal through and through. It’s why I used the avalanche method to pay off my debt. So, that’s why I consider my net worth when I make any decisions regarding my finances.

Right now, I am still chipping away at some higher interest debt (6% student loans), I have an emergency fund with 1 month of expenses, and am contributing up to the match with my company.

This is where I will stay until my debts are under 5% interest. Once I cross into paying off my debts with lower rates, I’ll probably consider upping my emergency fund and then upping my investments.

Of course, I will have to see where I am in my life and if my long term goals are the same at that time. Do you invest while paying off debt?

Financial Freedom

How to Accomplish Big Goals

How to accomplish big goals

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I am the first to admit that big goals can be scary. When you look at something all at once, it can be very intimidating.

Like, paying off $201k in student loans. That was a huge goal for me and very intimidating when I first started.

So, I didn’t think about that number at all.

As a matter of fact, I didn’t really consider my total number until recently. I only thought about my current debt I was working on paying off.

That was manageable to me. I couldn’t think about the massive goal, but I could focus on paying off chunks at a time. It made it easier and made me more motivated to start.

You can do this with any big goal that you have by following these steps.

1. Create your big goal.

Obviously, you need to have a goal you want to reach. I’m not talking about some small goal you have, those are important, but I’m talking big goals.

Like, reaching financial independence, or creating your own business.

These are big goals and will take time to reach. But, they can be done.

So, what are your big goals you want to accomplish?

I think it’s super important to have big goals. It gives our everyday a purpose. Yes, I’m serious when I say everyday because everyday we are working towards our goals in small ways.

2. Think of smaller goals to get to that goal.

Every big goal has many small goal parts in order to reach them. Reaching financial independence would be having an emergency fund, paying off all debt, contributing to retirement accounts, etc. To me, it means living a life on my terms, not because I need enough money to pay my bills.

These are still big goals, but they’re smaller than the large goal of reaching financial independence.

For my big goal of paying off my student loans, I broke it down by each of my individual student loans.

This allowed me to experience some wins throughout my payoff.

3. Create monthly and weekly goals to reach the smaller goals.

Goals can be reached with consistent habits done over and over again. It may seem like a hefty goal, but by consistently repeating a good habit, you will reach your goal.

For a financial independence goal, I am currently focusing on paying off my debt. My monthly goal is to apply $1,000 extra to my student loans every month, or more. My weekly goal is to stay within budget and work my side hustles to increase my income.

It might not seem like much at the time to make $50 from a side hustle, but when this is done consistently, that income grows. $50 every week turns into $200/month and $1,200/year!

Remember, small, good habits done consistently over a long period of time accomplish goals.

4. Track everything.

I’m a huge lover of all kinds of trackers. I love data and love to see my progression towards a goal.

Personally, I track a lot of different numbers in my current goal of paying off my student loans and my bigger goal of financial independence. Have ways to track progress for both!

I track my debt payments and progress on a chart and in undebt.it and I track my net worth in my Mint app. Now, I have to admit. When I first started, tracking my net worth was seriously depressing.

I was SO far in the negatives, it made me want to give up. So, I stopped tracking it for awhile. It wasn’t worth it.

Now, I am getting closer to a positive net worth and I am motivated once again by seeing my net worth.

If something isn’t helping you to reach your goals, stop doing it. It’s not worth it.

Break down big goals into smaller ones.

The key is to break down those big goals into smaller ones that you feel confident you can accomplish. Once you have smaller goals, figure out what you need to do weekly and monthly to reach them.

Eventually your smaller goals will help you reach your big goals.

Financial independence is so important to me. But, when I started my journey, I knew it would be a long way off. When you have $201k in student loans as a teacher, it’s going to take some time to just become debt free.

But, I’m slowly getting there and now my momentum is moving fast. Don’t get intimidated by your big goals, break them down and start reaching them.

You can reach your big goals, you just haven’t broken them into manageable parts yet. How do you accomplish your big goals? 

Debt

The One Thing You Need to Do to Pay off Your Debt

The One Thing You Need to Do to Pay off Your Debt

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Paying off debt isn’t hard to do on paper. You increase your income and decrease your spending. Simple, right?

On paper, yeah, it is easy.

The problem is that it takes a ton of changes in behavior to actually get the job done. You can create the best plan in the world on paper, but executing that plan is what actually matters.

And that’s what is so hard. The actual execution of the plan is the hardest part. It takes a lot of diligence and desire to make the behavioral changes that are needed to get it done.

Trust me, I’ve been there and still find myself struggling with this at times. I started with $201k in student loans and a monthly payment of $2,000 while only making about $3,000. I had no choice but to change my behaviors to see results.

So here’s the one thing you absolutely need to do to pay off your debt.

Stick to your budget.

It’s not just about creating the budget. A planned budget is great. Having a plan for your money is absolutely important.

But, if you just let that plan sit around all month and don’t check in with it, it makes zero sense to even make it. A budget does nothing for you, if you don’t actually track your spending.

Depending on what method you use, you should be tracking the money coming in and going out. When we don’t do this step, the budget is just an idea, not a plan.

If you truly want to get out of debt, you absolutely need to stick to a budget.

Now, will you need to stick to one forever? Maybe not. I know for myself, I don’t check in as much as I once did. My spending habits have become pretty consistent, so I have money dates about once a week now.

If you’re just starting, get in the habit of tracking your spending as soon as it is done. This will make you realize where exactly your money is going and how much more money you have in a certain category.

Creating an accurate budget to pay off your debt.

The key to sticking to a budget is to create a realistic budget. You want to set yourself up for success when you first start budgeting. That’s why a realistic budget is so important.

If you fail to create a realistic budget and you aren’t tracking your spending, you won’t be as effective in your debt payoff.

Sure, we all want to have the picture perfect budget and only spend minimally. But, that’s just not realistic. Create a budget that actually reflects your spending.

This is especially true when you’re first getting started. If you’re annoyed by how much you spend in certain areas, make an effort to change that spending.

If you’re able to lower your spending by the end of the month, do something with that leftover money.

This is where zero based budgeting comes in.

Zero based budgeting is an amazing method of budgeting to reach your goals faster. When used correctly, it allows you to send more money to your big money goals every month.

How it works is by giving every single dollar that comes into your budget a job. This means that at the beginning of the month, you budget for every dollar that you have.

As the month progresses you update your actual spending in your budget and keep track of what you have left.

At the end of the month, you zero out your budget. If you have money leftover, you apply that amount to whatever money goal you are working on.

This is how zero based budgeting is so effective. It doesn’t leave any money hanging out in your checking account.

There’s nothing bad about letting money hang out in your checking account. It just isn’t helping you in any kind of way.

Especially if you have debt. Your debt is increasing every day with interest, why not pay it off with that money that’s sitting around.

Even if you don’t have debt, you shouldn’t be leaving this money sitting around. Apply that money to some serious goals, invest it, move it to a high yield savings account, do something with it that helps you increase your wealth!

So, what’s stopping you from doing the one thing to pay off your debt?

Hearing you need to stick to a budget can be scary. It has such a negative rep when it really shouldn’t. Maybe calling it a money plan is better?

I don’t know. What I do know is that you need to get yourself a plan for your money and stick to the plan to pay off your debt.

Without this important tool, you’re going to be wondering where all your money has gone by the months end.

So, what’s stopping you from sticking to a budget? For me, it was hard to make the big changes I needed to make to really see a difference on my teaching salary. It took time, but I did it. Sometimes, all it takes is some accountability.

I’m here for ya! Let’s get you a money plan and see some major changes get made. I wanna know, what’s stopping you from sticking to a budget?

Debt

Paying Off 6 Figure Debt and Still Living Your Life

Paying Off 6 Figure Debt and Still Living Your Life

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The thing that I don’t like about some of the personal finance gurus out there is that they tell you to basically stop living your life to pay off your debt.

And I do get the reasoning, if you can get it done in a couple of months. If you can buckle down and be debt free in 2 months, absolutely do it!

But, what about if you have 6 figure debt and it’s going to take you years to get out debt? Do they seriously expect you to not live your life for years?

That would be crazy! And I can speak from experience (approaching the 4 year mark of my debt free journey and still have $66k to pay off) that you will burn out and be miserable if you do this.

I’m not saying spend all your money on fun things and have no money to go towards your debt. But, you should be doing things that are important to you on your longer journey.

Here’s how I have made it possible to still live my life while paying off $201k in student loans.

1. I am constantly trying to find ways to increase my income compared to my 6 figure debt.

As a teacher, my income isn’t exactly high. It’s just how it is in the US, teachers don’t make much money, even with a master’s degree. So, I found other streams of income to supplement my salary.

By increasing my income, it allowed me to still apply extra money to my debt, while doing the things I wanted to do.

When you have 6 figure debt, it helps a lot to increase your income. Whether you use the extra cash to pay off debt, or afford some of the things you want to keep in your budget.

2. I find ways to lower my expenses I don’t care about.

When I first started my debt free journey, I had to move home with my parents. The reality was that my minimum payments were $2,000 and my salary was roughly $3,000, 10 months of the year.

My salary was only this high because my parents live in New Jersey, where cost of living is high. In a lot of places in the US, my teacher salary wouldn’t have even covered my minimum payments.

This allowed me to slowly pay off my student loans. Eventually I could afford to move out, but I continued to live at home and put more money towards my student loans.

Find ways to lower the expenses that aren’t as important to you. For me, living at my parent’s house made sense because it allowed me to have a higher income and lower cost of living.

3. I have sinking funds.

Sinking funds are wonderful. They have helped me so much throughout my journey. I have sinking funds for expenses that I know will come up, like car maintenance or medical.

But, I also have used them to afford things I want to do in the future. For example, I created a moving out fund when I did decide it was time to move out of my parent’s house.

This allowed me to slowly save up money to afford a move. I was able to decorate and afford other moving expenses without it impacting my monthly budget when I did move.

Sinking funds also allowed me to go on trips and other experiences. I slowly saved for it in the months before and got to enjoy my time guilt free because the money was in my sinking fund.

4. I stick to a strict zero based budget.

Zero based budgets are a game changer when managing your finances. Basically what a zero based budget does is allow you to tell every single dollar where to go. If you need help creating your own zero based budget, you can get my template here that I use every month.

It gives you the control of where you spend your money. So, you can give yourself the money you need to do the things you love.

This is where lowering your expenses you don’t care about comes into play. You need to lower your expenses in those categories so that you can spend money in the places you want to.

Do these things at once to live your life and pay off 6 figure debt.

By doing these 4 things, I have been able to pay off $134k of debt in just under 4 years. I still have gone on vacations, experienced new things, and got a puppy.

You just need to decide where you want your money to go and make sure it goes there. Spend some time really figuring out what things make you happiest in your life.

Start saying no to the things that don’t bring you joy and start saying yes to more of the things that do. How have you still enjoyed life while paying off a lot of debt?

 

Debt

How a 6 Figure Debt Free Journey Is Different

How a 6 Figure Debt Free Journey Is Different

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I say it a lot, 6 figure debt is no joke. And I’m not including a mortgage when I say this. I’m talking about 6 figures of non-mortgage debt.

This would be debt like credit cards, personal loans, car loans, student loans, etc. Basically I’m referring to anything that is debt, that isn’t a mortgage.

There are a lot of people in this boat. Don’t think that you’re alone.

I was there with $201k in student loans to become a teacher, which wasn’t the brightest idea. But, after just under 4 years, I have paid off $134k. I still have more to pay off, but the ridiculous burden is much less now.

Because I have experienced 6 figure debt, I know that it is much different than other debt free journeys.

From the start, you have to accept the fact that your journey will be different than most people because a lot of people don’t have 6 figure debt.

It also is going to be very different if this is your own debt, or if it is you and your partner’s debt. That makes a huge difference. For me, it was just myself that had all this debt and it was just me to pay it all off.

This is how a 6 figure debt free journey is different than others and what to consider if you are paying off 6 figures of debt.

1. The amount of time you will be on your debt free journey.

Let’s be realistic. We all would love to pay off our debt in 12 months. But, with 6 figures of debt, especially if you’re single, is going to take a longer time to pay off.

Don’t let this get you down. Never compare your journey to someone else’s, only use it for new ideas, motivation, or suggestions.

Paying off 6 figures of debt is going to take some serious time, but don’t let that get you down. Use it to motivate yourself to get creative and find ways to shorten your journey.

When I first started, my projected journey was going to be 8 years. I’ve paid off $134k in under 4 years. You can bet that this journey will not take me 8 years anymore.

I used undebt.it to figure out and track my debt free date. This is a great way to keep your motivation up throughout your journey.

2. The amount you send to debt each month will be much higher.

When you have 6 figures of debt, your minimums are naturally going to be high. That’s just how the math works. All over the #debtfreecommunity on Instagram is people sharing their monthly debt payoff. Myself included.

When I first started my journey, my minimums were roughly $2,000 every month. If I posted my monthly payment of $2,015 it looked like I sent a ton to debt, but I wasn’t making much progress.

My shovel was so small in the beginning because my minimums were so large. I was making these massive payments, but only a very small amount was higher than my minimum.

This meant that my journey didn’t get much shorter in the beginning.

Don’t get discouraged by this part in the beginning. Have faith in the process and keep working the plan.

3. You’re going to need to find more streams of income.

When you have 6 figures of debt, you’re going to need to increase your income to see progress. You can only cut so many expenses from your budget, but your income is infinite.

That’s how I made such large progress in my debt free journey. I moved to a high cost of living area, which gave me a higher teaching salary.

This also allowed me to make a lot more in my side jobs, I have 5 consistent streams of income. You can get a copy of my multiple income stream tracker here.

And I’m not saying you’re going to need to work your life away. But, find other sources of income and put it towards your debt.

This can be as easy as negotiating a raise at your current job, or working OT, if it’s offered.

4. To see a major payoff, you’re going to need to make major changes.

Like I said in number 3, with 6 figure debt you just need to do some things differently. In order to see major payoff, you’re going to need to make some major life style changes.

I mentioned moving to a higher cost of living area to have a higher salary. You probably thought, higher cost of living means higher everything else too, right?

You’re totally right, but not when you get creative about housing.

For me, I was making $3,000 a month with a minimum payment of $2,000. I moved to the area because it guaranteed me a salary that could at least support my minimum payments.

Most parts of the US, I wouldn’t have made enough as a teacher to even cover my minimums. So, I moved to a higher cost of living area and moved back into my parent’s house.

I told them my plan and explained to them that I would be putting every single extra penny I had to my debt. They allowed me to live rent free for almost 4 years and this is by far one of the biggest ways I was able to pay down my debt quickly.

This isn’t an option for everyone, but think of ways to hack your housing costs. Find a cheaper apartment, get a roommate, or use AirBNB to rent your space.

The key is to not compare your journey to someone else’s journey.

It can be really hard not to compare your journey to another’s. But, when you have 6 figures of debt, your journey will most likely look a lot different than most.

You’re not going to be super intense for 5 years. That would be absolutely insane. Maybe you can do months like that, but it’s not realistic to do multiple years.

Keep working on your plan and your goals. You’re going to get there, it’s just going to take a bit longer. Do you have 6 figures of debt, how has your journey been different than a typical debt free journey?

Money Management

How to Get Control of Your Finances

How to Get Control of Your FinancesThis post may contain affiliate links. Check out my Disclosure Policy for more information.

I remember when I got my first bill in the mail from my student loans. At the time, I was on campus at Syracuse University in my first semester of grad school. My father called me and told me a bill came for me from my private student loans for undergrad.

I didn’t even know I’d be getting a bill so soon after graduation, less than a month after. Talk about a reality check for me. My private loans didn’t come with a grace period apparently and they weren’t aware I was a student full time.

Panic ensued. Not because I’d need to pay that bill, I knew they would be deferred once I got the right paperwork to them. But because my private loans from undergrad alone were going to cost me $1,400/month in minimum payments.

Did I mention I was adding more debt at the time to go to grad school?

Yeah. Not the best decisions were being made, but I was under the impression that student loans were fine, it’s how everyone went to college. Did I mention I was going to school to be a teacher? Yeah, really bad decisions were being made.

Luckily, my reaction to bad situations is typically trying to figure out a way to fix it. I immediately jumped into action on the internet and reached out to my wonderful mentor that worked in the school of education.

I was determined to not let this ruin my finances or my life and control me for 20 years, like they originally would have with minimum payments.

These are the steps I took when my financial world was spinning out of control.

1. I took a close look at my current finances.

I wrote all of my accounts out, how much money was in all of my accounts and how much cash I had to my name. Then, I took a close look at my spending and where my money was actually going.

For me, my spending every month wasn’t bad while I was in grad school. I had some bad habits, like grabbing coffee between work and class, or grabbing dinner on my way home after my night classes. I was determined to make changes to my spending right there.

Luckily, my current situation wasn’t too bad. Of course, this didn’t include my massive impending student loan debt. But, I tried to focus on my current situation, not what was to be post grad.

2. I created a zero based budget for myself.

At first, it was hard for me to think about being on a budget. I had such a negative connotation of the word budget. There was zero part of me that wanted to feel restricted, like a budget would do.

It’s time to reframe your thinking about budgets, like I had to do. All a budget does is give you a plan for your money. And a zero budget makes sure you don’t leave any money on the table, it puts every single dollar to work for you.

Basically a zero based budget just means that every single dollar goes somewhere by the end of the month that came in. Your expenses equal your income. This allows you to reach your goals so much faster by using all of your money every single month.

Check out my post here that shows you exactly how to create your own and download the template I use to manage my zero based budget every month here.

3. I created a debt payoff plan.

Once I got myself on a budget and knew where my money was going, I was ready to get serious about my debt payoff plan. I knew it was going to be tight being a teacher and having such a high minimum payment.

My plan motivated me to keep going, even when I was only making small extra payments in the beginning. I love undebt.it to keep track of my debt payoff because it tells me my debt payoff month and updates as I make extra payments.

Creating a plan will get you motivated to start paying off debt because it shows you how much just a little extra every month can make a huge difference.

4. I supercharged my efforts throughout my journey.

At first, I just wanted to get my finances together. Once I felt confident with where I was, I was ready to really make changes. I increased my income through many different side jobs to pay off my debt faster.

This was life changing honestly. I eventually was making enough in side jobs that I lived off of that income, and my entire salary went to my student loans.

Then, I refinanced my student loans with Earnest, which was honestly the best decision I ever made. I decreased my interest rate by more than 2% saving me so much money and allowing me to pay off the loan faster. You can use my referral link and get $200 when you refinance your loans.

Before you refinance though, make sure you check out my post that outlines if refinancing is right for you.

The truth is, it’s going to be hard to get control over your finances, but you can do it.

Making changes is hard, especially when it comes to your life. But, your life will be better once your finances are under control. I am still chipping away at my debt ($66k left as of July 2019), but I am so much less stressed just from paying off as much as I have. My life isn’t controlled and dictated by money and I get to make my decisions for me, not because of money anymore.

I want everyone to be confident in their money and take back control over their own finances. If you’re struggling with your money, I know how you feel and I want to help you get to a better place. Check out my monthly coaching offer where I help you get to a better place financially and create your very own money plan. How do you feel about your money, in control or controlled?

Debt

Here’s Why Your Student Loans Are Getting Bigger

 

Here's Why Your Student Loans Are Getting Bigger

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Student loans are a rare kind of debt. Most people take them out because they figure they’re “good debt,” and they can get a higher income with it post grad.

This usually is true and for some careers, you absolutely need a degree. But, you should be very aware of how much debt you are taking on while in school.

Of course, this is dependent on the degree you are going after. If you’re studying to be a doctor, chances are you will have a high income post grad. If you’re like me, studying to be a teacher, chances are your income is going to be lower.

Don’t make the same mistake I did and take out $201k to become a teacher. It will be nearly impossible to survive post grad, trust me.

And you just might find yourself in a situation of having your student loans get larger post grad, even if you’re making your payments.

How do student loans increase, if I’m making my payments?

I know it sounds crazy, but it’s very true. It happens to so many people. They make their minimum payments, but they realize their total is increasing, not decreasing.

This is the sad reality of student loans. Student loans are the craziest debt, in my opinion, especially federal loans, when you don’t understand them. They can’t be wiped away with bankruptcy and they can increase, even when making minimum payments. Also, they have a ton of different options for repayment and forgiveness.

But, that’s exactly why they are a problem and why they increase. People see they have a minimum payment of $0 and think it’s awesome.

The reality is that your loans are still accruing interest every single day. Once a year the interest capitalizes and now it’s part of your principal balance. Now, that total will be accruing interest and suddenly your loan has ballooned in size.

This happens to so many people and the fact that it even is possible is so terrible, in my opinion.

How can I prevent them from getting bigger?

The very first thing you need to do is become aware of your student loans and where your payment goes every month.

If your loans are private, you’re most likely fine. Usually, private loans don’t have the crazy repayment plans and require you pay off the interest and some principal in your minimum payment each month. To be sure, check your statement and see where your payments are going.

If your loans are federal, you need to very carefully check your payments. If you are on any kind of payment plan, you need to make sure your interest is being paid off every single month. If you see that your interest isn’t being paid off each month, this is when you get your loans increasing.

I’m not saying don’t use a payment plan option on your federal loans, I’m personally on one to lower my payment while I focus on other student loans. But, I’m sure to pay off at least my interest every month no matter what.

And this is how I prevent my student loans from getting bigger.

If you have student loans and are making minimum payments, I absolutely think you should check out how your payment is being made. Make sure you’re paying off the interest every month.

If you’re not paying off the interest every month and you see that it is growing. Make a change right now. Increase your payments to at least cover the interest. Make sure this happens by putting it in your budget and treating it like the minimum payment.

You might think it doesn’t matter, but once the interest capitalizes into your principal and it’s accruing even more interest, it will matter. It will make it much more difficult to pay off in the future.

Basically, just pay your interest in full every month.

That’s how I go about my student loans. No matter what, I pay off my interest in full. And I know that these loans qualify for forgiveness in 10 years of on time payments. But, that’s a super long time to be paying a minimum payment on these things.

Personally, I would much prefer to pay them off faster and just get to do whatever I want with my hard earned money.

Also, I assume that these programs won’t last. I don’t want to count on something that may not work out for me. Plus, I took out the loans and I absolutely should have to pay them back, so that’s what I’m doing. Do you have student loans? Have they increased in size while you pay the minimums?