Each time you check your student loan balance it hasn’t moved an inch. (You actually check it every now and then, right?) You pay and pay and pay; why isn’t it going away?
Paying the minimum won’t work
When you pay the minimum, your debts go away as slowly as possible.
The minimum payment is only a suggestion. Your debtors want to keep you in debt for the maximum amount of time so you’ll pay them the most money. Think about it: They didn’t choose the minimum monthly payment to do you any favors.
Don’t let them decide how much you pay. They love you (and your money) and they want you to stick around as long as possible.
Look at your monthly statement and see how much of your payment is going to the interest only. Do it now if you a) want to get super mad at me for suggesting this or b) want a harsh but motivating wake-up call.
Any money that goes to interest only isn’t moving your debt closer to exiting your life.
Forget the minimum, pay the maximum
Instead of thinking about the minimum you can pay on your debts each month, think about the maximum you could pay.
Your debt is an emergency, and you should be throwing as much money as possible toward it every month until it is gone.
Can you redirect an extra $50 a month toward your debt payments? Just a couple of meals out and a few coffees would do it. You could find an extra $50 by canceling just one subscription you don’t even use.
Go ahead and think of a few expenses that add up to $50 in savings each month. Now, log into your student loan account and increase the monthly automatic payment by (at least) $50.
Download your free debt snowball template to help organize your new plan at howdoimoney.com/debtsnowballtemplate.
Derek Olsen is a monthly money columnist for Ink. For more resources on getting out of debt faster, building a better budget, and growing your net worth visit howdoimoney.com