(I wrote this guide some time ago, but figured I would post it here on Steemit)
Annihilate Student Debt
By
Patrick the Proletariat
OVERVIEW
The problem of student debt is enormous. As of June 2017 student debt totals 1.4 trillion USD. That’s embarrassing. Our wise overlords have set up a terrible system. Per borrower, the average debt straight out of college is 32,000 dollars. Quite a staggering number, especially for early career individuals. Well, this isn’t a book to talk about the systemic issues, but rather to help you get of your portion of that debt. Speaking about your portion, hopefully you’re on the lower side of that figure above. If not, prepare for a long battle ahead. That is a pretty daunting number. Gross. This plan will work for any amount of zeroes you have on your total student debt. The following are tangible steps and ideas that will help you pay off your debt faster than you ever dreamed. Most dreams about student debt are called nightmares. Stop having nightmares.
Why trust me? Just a schmuck looking to make a buck by telling others how to handle their money? I'd be happy to make peanuts from this guide, but to build the trust factor I personally paid off 15,000 dollars of debt 15 years faster than what was projected. If I made the minimum payments, I’d be paying them up until my own children went off to college. Paying the minimum is like showing up to a competition and getting ready to lose, you should be getting ready to win and pay your maximum, not your minimum. I don’t think you want to give your minimum, you want to give your maximum. This book will allow you to structure your finances to give your maximum. No, it’s not a budget, budgets are lame and don’t work. These are ideas you can implement today, that will make headways tomorrow. Some of the ideas used here may seem quirky and out of the box, but they really worked for me. KAKA!
FREE CHECKING ACCOUNT
You need to open a free checking account. This will be for the sole-purpose of paying off your debt. It’s as simple as that. Open a free checking account, put money in, and then make payments to your overlords. This helped me tremendously in paying off my student debts. I knew that I could count on that bank account to make payments anytime I felt like it. The checking account you have open right now is used for your everyday purchases. Student loans are not everyday purchases. You need to separate the two. This isn’t negotiable, open a free checking account today. It’s so easy in this fast paced instant gratification world, you can actually open accounts without meeting someone face to face. Awesome! Make sure the checking account is free. If not, walk away.
DEBT PAYOFF STRATEGY
You’ve got to have a strategy. You’re not going to just decide to do a better job at paying off your student loans and be done with it. Ideas need actions, and your actions need a strategy. The squints will chuckle at the strategy that I used. They’ll tell you to pay off the debt with the highest interest first. “Because dweeb, that will cut your interest payments and you will owe less moolah in the long run.” they’ll say. Well, to be perfectly frank they are right, but personally in my experience, they are wrong. Wrong because it is not a practical strategy. You are not a math robot. You are a human. Humans need confidence. Paying off a huge debt with a high interest rate will take so long you may get distracted and uninterested. That strategy may take years, even decades. You need to pay off your debt that has the SMALLEST outstanding debt on it. What's more practical? A goal that is 7 years out, or 3 months? You know the answer.
Depending on your student loans, you will probably have to pay some type of minimum on ALL of your outstanding debts. So your starting point is paying the minimum on all of your debts. You will get a penalty if you don’t pay a minimum and your outstanding loan amount will surely increase due to interest. You should use the following strategy.
Let’s say you have the following debts:
$1,223
$876
$3,986
$6,760
You should pay off the $876 off first. Yep, the smallest debt should be tackled first! Regardless of the interest rate. Likely they are around the same interest rate anyways. Now if you have something that is triple in interest rate, say 9% vs. 3% then maybe you should pay that off first, but most likely interest rates will be roughly the same. At least that was my experience. If your interest rates are similar to each other, I don’t want you paying any attention to them.
When you pay off that smallest debt, you get confidence, and whatever debt you paid off you can use that payment to pay off the next one. In the example above, after you pay off that $867 in debt, you can isolate the next lowest number ($1,223) and destroy it. It is that snowball into avalanche approach. Pay the minimum on all debts but pinpoint a certain debt with all of your extra payments. Don't divide your payments towards all of your loans, you need to isolate one of them. All the extra cash you get, isolate that debt and annihilate it. At first your payments are spread out with a focus on a small debt, but they will gradually evolve into targeting the last payment standing. It’s a good strategy that I employed. It makes sense and is easy to carry out.
Once again, the strategy goes like this: make minimum payments on all your student loans and choose one to isolate and destroy. Using all the strategies I will talk about, put all of your money into that one isolated student loan debt and destroy it as quickly as possible. Now, once you have destroyed that debt, you can move on to your next target with even more ammunition. You have more ammunition because you have eliminated a minimum payment, this happened when you paid off your smallest debt. That is why you start with the smallest first, so that you gain momentum. Mathematically it may make a trivial difference, but psychologically, it is massive. Go for it, connect four!
POWER-MOVE ***
MAXIMUM NOT MINIMUM PAYMENT
Minimum payments are for losers. You don’t want to be a loser, so don’t make the minimum payment. Seriously, get angry at your student loans. They are dragging you down, you’re a captive to them. Get serious about them and start making far more than the puny minimum payment. Little knowledge for you, do you know why the bankers make the default the minimum payment? Ever wonder why bankers push 30 year mortgages? It’s because the slower you pay something off with interest the MORE money they STEAL from you. So flip that on them. Throw that UNO reverse card. Pay off that debt as fast as you can to pay as little interest as you can. Think of interest as taking jabs to the face in a boxing match. Stop taking those jabs. Start jabbing back by making payments however, wherever, and whenever you can.
So now that you are all psyched up, let’s talk about what your payments should be. This of course depends on your total student loan debt. For me, my payments were triple, and I think that is a good starting point. You will need to make sacrifices. So what, do it now, or slowly bleed to death over time. Rip that Band-Aid off and stop being such a *****. I’m curious what word you used. There are many fun ones out there. Listen, go to your student loan overlord account, total all of your minimum payments and triple that number. Think of that number depleting from your bank account every month. Ask yourself one question. Will you die? If the answer is no, go for it. If the answer is yes, please do not go for it. Seriously people, paying off your student loan debt is for your peace of mind, don’t go sacrificing too much.
Can’t afford triple? Then you need to double. Work yourself down or up, until your slightly uncomfortable with that number. Do it for a couple of months and reflect. Perhaps you can’t afford to gorge on Italian food, so what. Eggs, tuna, bread, grains, water, milk, delicious sports drinks, bananas, will keep you alive and somewhat healthy. You don’t need to spend $65 on dinner and drinks. It’s just not worth it. That $65 dollars can be used to spend on student loan debt. And really that $65 dollars with interest is more like $70 or more.
If your minimum payments total $250, I want you paying $750. Can’t afford that? Work yourself down to a number that you can still accomplish. Be aggressive in this space. You will make the necessary behavioral changes after a couple of months making a maximum payment. It will be easier than you think. Think about your wallet, because those loan sharks already have it. You need to rid yourself from them. You are in an abusive relationship. You need to do certain things to be free. You can have those dinners post student debt. You know what the 3 student loan agencies told me when I paid them off after years of blood, sweat, and tears? Nothing. No thanks, no good job, no nothing. Because you are their asset. You are free money to them. That is not okay. You are not free money, you own yourself, no agency or whoever you owe money to owns you. Get rid of your student loan debt, get rid of them, get back yourself. Make Huge Payments.
POWER-MOVE *****
HOARD CASH
One of the better tricks I learned while paying off my student loans was hoarding cash. What do I mean by hoarding cash? It means holding on to paper bills, you rube. Can’t believe you would even ask that question. Getting hands on cash is not quite as hard as you might think. Need to buy dinner at a restaurant with friends? Then offer to pay with your credit card and take the cash from the rest of your party. Yes yes yes, I know this will run up your credit card. And of course you have to pay off your credit card every month to dodge the interest demons. Only purchase what you know you can pay off. That is a must. But now you have accomplished two things by hoarding cash and paying with your credit card.
The first is that you have just made a credit card payment to pay off your student loans. The reason why this is important is because student loan agencies do not typically allow you to use your credit card to pay off student loans. It’s one of those regulations that our wise overlords have placed on us. The hoarding cash method, does allow you to do this. I had a deal with my friend that he would give me cash for something that he wanted to buy online, and I used my credit card for him interest free. It worked beautifully. Now you might guess the 2nd reason to use your credit card if you’re slightly intelligent. If not, I’ll tell you. The 2nd reason is that you get cash back or kickbacks to your credit card.
Most credit cards use points or something and after you accrue a solid amount of them, you can cash them in. Now remember, you want to cash these points in to your student loan checking account. You could wait until you accrue hundreds of dollars to make a splash payment, but I personally preferred to use that payment the second it cleared in the bank account. (Clearing times really piss me off). Okay now that you have hoarded the cash, you’re obviously going to deposit the cash into your student loan checking account.
Today depositing cash couldn’t be easier, most ATMs allow you to do this with your debit card. And again no lame banker to talk to. Let’s look at the following example to realize how awesome this strategy is. You might be thinking that this is just a parlor trick that makes you appear to have money, but really it isn’t and it is more psychological. The key is that you have created cash by using your credit card. I would use a credit card that gets you the most percentage back on various purchases ranging from restaurants to gasoline. Anyways, here is the example: you go to the movies with a friend or two (assuming you have a friend or two) and each ticket is 12 dollars. Instead of separately buying, offer to pay if they have cash. With two people, you have received 24 dollars cash. You will deposit this into your bank account, therefore, making a twisted credit card payment of $24 towards your student loans. Good move. But wait, you’ve done something better. You have TRIPLED your cash back bonuses on your credit card payment. If you were to pay for yourself it would be $12, but you paid for your friends and that is now $36. On your credit card that gets a kickback. Compound this strategy hundreds of times and believe me, you are going to make some nice dents into your student loan debt.
Another hoarding cash move is to simply withdraw from your original checking account and deposit into your student loan checking account. You might be thinking that this is possibly the worst advice you have ever received and are questioning the reason you are reading this guide. Well, you may be right, but let me explain something to you. Your checking account is used to make everyday purchases, and your student loan checking account is to pay off your student loans. Keep the two separated. Life will be easier. You need to think of terms of feeding the beast. No not your stomach but your student loan checking account. Your new checking account is the beast to pay off your loans. You need to feed that beast.
This is the type of mentality you need in order to get serious. FEED THE BEAST. I had to take out about 280 dollars every week to pay for daycare. I took out an additional 20 dollars every week and deposited it into the other student loan checking account. I FED THE BEAST. This adds up over time and can make a huge dent into paying off your student loan. 52 weeks times $20 is $1,040 a year. Pretty simple strategy to make a student loan payment.
One last thing about depositing the cash into your checking account. Make sure that you have a student loan checking account that can accept cash into their ATM as a deposit. And even more convenient is a drive-up ATM that accepts cash as a deposit. The thing about cash is that you are apt to spend it at any time. The quicker and easier it is to FEED THE BEAST the better! Oh, and not dealing with those shenanigan bankers is also awesome.
POWER-MOVE ****
EBAY
This is self-explanatory, but let’s dig a little deeper. While everyone knows they can resell the junk they have laying around their house for cash, most people forget to use EBAY. OR they are lazy. EBAY is more work than you think, especially the shipping, oh god the shipping. Some easy things to sell on EBAY that I have sold: technology, sports memorabilia, flipping video games, gifts, Hahaha gifts, they’ll never know. You are not going to get full value because people buy on EBAY under retail price, and secondly EBAY gets around a 10% cut. With all the negatives, EBAY still helped me make a couple of dents into my student loan debt. Set up your EBAY so that it goes to your Paypal. Then you take your Paypal and link it up to your student loan checking account. Paypal is free to transfer and is rather quick.
You might want to read a quick how-to guide on selling on EBAY. It’s not that easy, but it isn’t that hard. Notice earlier when I mentioned flipping video games. Well, this is a personal area of knowledge for me, you might have knowledge about certain products that you could flip. Music, events, sports, giveaways, collectibles, etc. are things that you could turn a profit on. People flip items for pleasure but you’re going to flip items for the purpose of flipping your student loans to zero. From zero to hero.
POWER-MOVE **
GET A 2nd JOB YOU LAZY BUM
Easier said than done, right. I had plenty of odd-jobs during my tenure of paying off my student loans. I had some jobs that paid 10 dollars an hour and some that were commission based. Of course you want a high paying or high yielding second gig, but most importantly is what you do with that money. Yep, you guessed it, act like it is NOT yours. Do not spend it on luxuries, do not spend it on goods, do not spend it on saving for that weekend getaway that is overpriced, and DO NOT pass go. Do one thing with it and make it become automatic. Link it up with your student loan checking account and basically don’t even think about using it for anything than other than putting a dent into your student loans. That reminds me, your tax returns, yeah put as much as you can towards your student loans and FORGET ABOUT IT.
Remember, you don’t live a luxurious life. Your plan is to live a student debt free life. 2nd jobs come and go. Perhaps it’s under the table for a friend or family, who cares. Just use all of your extra job money to go towards your student loans. Just google 2nd jobs and you’ll have at least an idea of what you can do. Remember the key is to link it up with your student debt checking account so that you are not tempted to spend it on frivolous things like clothes. I know this isn’t a unique idea, but if your serious about paying off those loans you need to get serious about your approach. Having a 2nd job for the sole-purpose of paying off your loans isn’t what you went to college for, but you know what, you didn’t go to college to get entangled in bad relationships, but hey it happened. Move on. Put some actions into place now so that you can close that chapter of your life. Like Nike says, Just Do It.
POWER-MOVE ***
STUDENT DEBT REFINANCING AND FORGIVENESS
I did not use either of these strategies because I simply did not qualify. You need to look into these. Refinancing can simplify things for you. For me, it was difficult bouncing around 3 agencies to pay off. It would be nice and will be nice for you to have one spot to go to online to make your payments. Of course you still need to follow my strategy of paying off your lowest amount first. Pay it, delete it, forget about it. You also have to get familiar with your student loan accounts. Become comfortable with the platform and understand how to target specific debts. If you need help, they should have customer service capabilities with all that money they are earning from student debt. Take advantage and get answers. Make a $1 payment if need be to understand how it works.
Loan forgiveness is offered for some employment opportunities. The people offering these, will probably just foot the bill to some other fool (taxpayers) down the road, but I don’t think you should have any moral qualm about looking into this. You are only partly to blame for your huge amount of student debt, the powers at be have not made getting a license or jobs easy in the 21st century. Oh boy, I think I might go full political, but this is not about politics, it’s about getting the **** out of debt. Let’s keep it clean, Nancy.
*UPDATE - Be careful who you believe. Just recently there has been growing concerns over some jobs (Teachers in poor areas) that have been offered debt elimination. I won't go into specifics, just understand that things can go sideways if you are "banking" on somebody else to pay off your remaining student loans. Don't fully trust any promises.
POWER-MOVE **
GAMBLING AND THE STOCK MARKET
Yep, you read that right. Listen, if you can’t stomach making a bet, then just stay away. If you can, do your homework, make a couple of bucks with the little money you have, then GET OUT. Return your bet money to your student loan banking account and make another dent into your loans. Listen, this is most likely a coin flip unless you have some knowledge about betting, stocks, or something else that is left up to chance. There are plenty of apps that allow you to make micro-fraction deposits. You also might be the type of person to play poker or make bets with your friends. I’m not saying this is the wisest way to make some more money on the side, but I’d be lying to you if I said that this was not one of the ways that helped me pay off my debt.
POWER-MOVE *
IN CONCLUSION
Now you have a strategy to rid yourself of student loans. Keep at it, stay with it, and power through. Think about all that extra play money you will have once you accomplish getting that monkey off of your back. Once I implemented my plan it took me about 3 years to accomplish. I got serious about it. You need to get serious about it too. The loans are affecting your life, they are not to be taken lightly. They may be preventing you from: purchasing a house, a car, going on vacations, having children, going out to eat, going to concerts, having fun with your friends, and drinking quality beer :) Those are things you could be missing out on. These loans are not a game; you need to eliminate them from your life. Your only partly to blame for getting in this mess, but you are fully responsible for getting whatever number you have to ZERO. Once you get to ZERO, you will feel like a HERO.
The 2 things that I would do to get started today are opening a free checking account and writing down, either by hand or digitally, all of your student loan debt. Perhaps you can consolidate, but if not, write your smallest debt first all the way to your largest debt. One last thing, Don’t pay anybody to help you pay off your student loan debt. It’s not that tricky to set up a plan. They are simply taking your money to tell you how to spend your money, this guide is cheap or even free, they are not. Use the guide, get creative, and get aggressive.
In Super Conclusion here are the steps: Open a free checking account > small debt strategy > maximum payments > hoard cash > Ebay/gambling/2nd job > feed the beast > get rid of your student loans and be free :)
Good Luck!
