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Student loans make up over one-third of the $3.34 trillion US consumer debt and Andrew Josuweit, CEO of Student Loan Hero says by implementing these four goals, results could certainly render a big payoff by the closing of 2016.
Whoa! How could a house fire and debt resemble each other? Josuweit says taking student debt seriously and extinguishing it as soon as possible, consumers can save for emergencies and retirement sooner rather than later because debt costs thousands every day in interest.
He offers one repayment strategy called the "debt avalanche" method:
1. Gather bills from highest to lowest interest rates.
2. Pay the minimum amount due on all of them except the bill with the highest interest rate.
3. Put as much as you can toward that high-interest rate loan.
4. Repeat with the next highest interest rate bill as soon as the first is paid off.
"In fact, in 2015, I paid off $48,000 in student loan debt using this method," Josuweit said in an article published on CNBC.com.
2. Up your earnings
Finding ways to earn extra money are abundant - and best of all, most don't require any additional training or education. Josuweit gives us three ways to put yourself to good use and earn a buck or two in the process.
1. Become a brand ambassador and make $15-$25+ per hour, wearing branded t-shirts and giving passersby handouts at events.
2. Rent out a vacant room or your entire home if you are going to be away. Websites like Airbnb, Rentometer.com, and Craigslist. Keep in mind to follow safety guidelines before jumping into such a commitment.
3. Earn $15-$30 per hour becoming a TaskRabbit. In other words, helping people run errands and do household chores.
3. Live a conservatively
By cutting major spending habits, like rent and car payments, consumers can save big while trying to pay down burdensome student loans. Josuweit said by keeping an older model car, borrowers can afford to work toward their financial goals instead of taking on yet another loan. He suggests even moving if you are in a position to do so.
"If taking on more work sounds overwhelming, start small," He said. "Even an extra $100 per month that you can put towards emergency savings, retirement contributions, or debt payments is worth it."
4. "Get rid of student loan debt for good"
The student loan debt crisis has been a hot topic among the 2016 presidential candidates, thus expanding the humanitarian efforts of some employers. For example, PwC employees have perks such as eligibility to receive up to $1,200 in loan assistance per year over the course of six years.
Income-driven repayment plans are also in place for borrowers to take advantage of. Call up your student loan servicer and see how they can help you get those loans paid off even under economic stress. These programs are geared to lower monthly payments according to your gross earnings.
Refinancing with a private lender for lower interest rates is also a possibility. It's imperative to weigh the pros and the cons from swapping to a federal loan servicer who may offer loan forgiveness after 20-25 years, to a private lender granting no forgiveness perks.
"Whatever your ultimate goal may be - saving more money, paying off debt, or improving spending habits - making one or more of the resolutions above can help you achieve it in 2016."