One of my major goals is to pay off my student loans by the time I turn 30. That means I have roughly 4.5 years left to pay off my loans. I don’t have light sum of loans at the moment, so it’s not going to be an easy task.
Paying off my loans at an accelerated rate is important to me for a few reasons:
- I like minimizing the number of bills I need to pay each month
- I want to pay as little in interest as possible
- I want to be able to focus on saving for retirement and my future
- My expenses are relatively low at this point in my life, so I can afford to pay a little extra each month
- I don’t want to be paying for student loans when I’m in my mid-30s (10 years of repayment total)
- I really don’t want to have been paying for student loans a longer period of time than I had been living at the time that I completed my last degree
If I were to go with one of the federal government’s extended repayment plans, I could be paying student loans for 25 years. Let’s back up and think about that for a minute. I was 24 years old when I graduated from graduate school. At age 49, I would have literally been paying for my education for the majority of my life and for longer than I had even been alive when I graduated.
Each month, I contribute a bit extra to my minimum loan payment. I don’t pay a lot extra, but I do make a point to budget that extra money in each month. Every six months, I’d like to increase this amount by just a little bit. By slowing chipping away now, when I have relatively low expenses (e.g. no children, no mortgage, no car, etc.), I’ll be able to save thousands and reduce my repayment period significantly.
My choice is personal and I expect and realize that not everyone’s situations are the same. This is a hot topic and I a lot of people are having a hard time even paying off their minimum balance. As I wrote last week, I think that there are solutions to this problem – awareness, planning, education and motivation. It’s a long road to student loan freedom, regardless of whether you pay the minimum or extra each month.
Do you have student loans? Do you pay extra each month? Why or why not?