My friends over at Get Rich Slowly have added another great post about dealing with debt. In this case, they are writing about student loan debt, a very important topic for me. Not only do I teach at a College where many students make the grave mistake that they must have a college degree and thus go deeply into debt to get there, my own daughters are now into their college years. I’ve been telling my students for years that perhaps College is not the correct place….not because they are not smart enough, but because they (and the country) has been sold a myth about college. Just last year I wrote this:
Today, much of the scrutiny now cast on higher education is coming because so many of the students and their families who took out massive debt now realize such efforts may have been for naught. Not only do many find it nigh impossible to find a job, the jobs they find are not necessarily more lucrative than others. The myth has told them that “college graduates make more money on average” but for there to be an average in any industry, there must be a low end. Poor performing students who muddle through in some degree will most likely be among those in some job industry on the low end. So, years later, not only are they still paying off their school debt, they are doing so in a job that might not actually make them happy….[To fix this issue] we must provide students true and honest advising, which would include telling many students that they are pursuing the wrong path, or even that they should not be in college.
Well, even with that truth out there, millions of kids head off to college taking on thousands of dollars in debt. Then, after college, even if they DO get a job they like, paying off the debt is difficult.
But not impossible.
It takes discipline and determination. The three great ideas from Get Rich Slowly suggest this:
Just like so many other student loan debt horror stories, it has all the makings of a segment on the nightly news, but with a twist. Lance and Tori didn’t allow themselves to become a pawn in the growing student loan debt crisis. They took control of their situation instead. Here’s how they did it (and how you can do it too):
- They used the debt snowball method. Made popular by Dave Ramsey, the debt snowball method for debt repayment requires you to focus your energy on either your loan with the smallest balance until it is paid off. Then you move on to the loan with the next lowest balance, and so on. “We paid off the highest rate first,” says Lance. “Then we went loan by loan and decided which was most risky due to things like private vs. federal and fixed vs. variable rate.”
- They focused on earning more. One of the most efficient ways to pay off debt is to earn as much as possible. To do this, Tori picked up extra shifts at work and Lance focused on earning extra money on the side through freelance writing and starting a website, Money Manifesto. You can do the same by finding ways to make more money, whether it’s freelancing, dog-walking, or babysitting. The end result is all that matters.
- They kept their expenses low. Earning more only works if you’re disciplined enough not to spend it elsewhere. To put as much money toward their loans as possible, Lance and Tori quit going out to eat and slashed their entertainment budget in half. They also lived a frugal lifestyle and went without many of the modern conveniences many of their friends had, like smartphones. Want to find a way to cut your expenses? Start by tracking your spending to see where your money is going in the first place.
Simple enough, right? Well, as someone who (like most) has had to fight out of debt, it is simple but not easy. Takes a lot of discipline, but it can be done. The story of Lance and Tori are that after only three years, using both of their incomes, living on far less than their peers, they got there. Your journey, like mine currently, may take longer. You, like my family, may only have one income. You may have already cut out the fat from your budget like I have—no cable, AC set high, take public transportation when possible, wear clothes till they wear out. But make no mistake, you can do it.
Be wise with your college decisions. Avoid debt as much as you can. Look for cheaper alternatives to get you to the goal. But if you still do end up with debt, move to get out of it quickly. You can do it!