Recently, I overheard a women going back and forth on making a purchase. “It’s only $60,” she said, “I really should just go ahead and do it.” Although I can’t tell you what she was purchasing- as she was on the phone and I wasn’t on the other end of the conversation- I can tell you that her remark of “It’s only $60,” really struck me. It’s only $60? Does this woman not know what you can get with $60?
Just a little over four months ago, my fiancé and I decided to start putting a little bit more towards my student loan debt. It seemed like a small amount that wouldn’t hardly make a difference until I really broke the numbers down and added up the savings. Lately, I have been doing more research on student loan debt and how to pay it off since we are hoping to buy a house within the next year. After researching the interest that my loans were accumulating, I decided that I wasn’t going to fall short of the extra expense and that I needed to do something about it.
A Few Extra Dollars Can do Wonders
Just putting a few extra dollars more per month towards my loans could ultimately cut years off of my payback period and save me money on interest in the long run. Take it from me, if you have any sort of debt, just paying a little extra each month can make a drastic difference. Take for example, a car loan. If you owe $5000 at a fixed interest rate of 4% and continue making the minimum payment, it will take you an additional 4 years to pay off that loan. But, if you can find a way to put an extra $50 into that payment each month then you can pay your car off one year and five months sooner! On top of that, you’ll end up saving yourself $200 in interest!
So where can you find that extra $50 per month to put toward your student loan or car loan? Try simple money saving tips first and gradually work your way up. This can range anywhere from skipping the salon this month and giving yourself an at-home manicure, or dining in on that one day you usually dine out. An even better plan is to schedule out your savings each month by writing them down. If you plan ahead to put back an extra $60 next month to go towards the loan payment, you will be more aware of what you’re spending and hopefully not make any bad financial decisions.
The last tidbit I wanted to share is that there are ways to cut down your interest rate. In fact, I was able to cut my interest by .25% for signing up for direct deposit. Although all financial aid companies are different, it’s worth a try to seek out additional information and make sure you’re using the system to the best of your ability.
