The Two Most Effective Ways to Eliminate Student Debt

Confession Time: For over five years this site has largely ignored two steps that can be taken that would help people dramatically reduce their student debt.

To be fair, the things that we focus on, such as careful tax planning, finding ways to lower interest rates, and pursuing student loan forgiveness can all make a significant difference.

But at the end of the day, there are two steps that will make the biggest difference for the most borrowers:

  1. Earn more money
  2. Spend less money


This is hardly an Earth shattering revelation.  Instead, it is offered here as a reminder, an opportunity to take a step back and think about the big changes that could make a big difference on student debt.

Hopefully some of these tips will also provide some insight on opportunities for financial improvement.

Earning a bunch more money

It is no secret that wages for most Americans have been stagnant for a very long time.

For many, finding a steady job, even with a degree, can be a huge struggle.

In the past, the ticket to advancement was to be a loyal employee of the company and to work your way to the top.  Those days are over.  Today, the surest route to advancement — and more income — is to bounce from one company to the next.

The idea of changing employers, or moving to a new city, may seem like a non-starter for many.  Yet it deserves serious consideration, especially for those who find themselves unhappy at work.

Millennials often get criticized for not being loyal to the company, but most corporations show no loyalty to their employees… if they did, switching jobs wouldn’t be so advantageous.

Earning a bit more money

Those that choose to stick with their current job at their current salary still have a number of options for bringing in some extra income.

We will forgo the list of jobs that anyone can do — just Google side hustles for a ton of different opportunities.

The point is that a few hour each week can be dedicated to earning some extra money.  Many of these jobs can be done from home and done after the kids have gone to bed.

One effective strategy is to work the extra job and use the money earned strictly for extra payments towards student loans.  Even a little bit of extra money can go a long way at accelerating repayment.  Once the debt is eliminated, the now former borrower can use the extra income towards another financial goal or they can get a few extra hours of free time added to each week.

This approach makes the debt elimination milestone more achievable and more meaningful when it is reached.

Spending a lot less money

When many people think about spending less money, they envision skipping Starbucks or eating out less.  While these things can help, sometimes a big change is the thing to really make a difference.

Many Americans spend hundreds of dollars each month on a car payment.  Put another way, they are borrowing money to purchase an item that loses value every single day.  Somehow the auto industry convinced people that this was normal behavior.

Affordable used cars may sound like a lousy option, but the savings can be significant… especially if you save up for a bit and pay cash.  Selecting the right used car takes some time, but by doing the research you can find an extremely reliable, low maintenance car for a fraction of the cost of a new car.  You don’t need to be a mechanic or an engineer to find a good car at the right price.

Another way to put a huge dent in the monthly budget is to live somewhere less expensive.  Many people shop for housing according to their budget. I can afford $1000 per month in rent or a mortgage, so I will look at houses in that price range.  Why is this the typical procedure?

Instead, make a list of absolute needs and things that are wanted.  Find places that fit the needs.  How much more does it cost to get some items on the want list?  Is it worth the extra cost?

Saving money on living expenses can free up a ton of money for aggressive student loan repayment.

Spending a little less money

The little things can often add up to big amounts.

Everybody knows the value of budgeting and sticking to the budget, so we will skip past the obvious.

My favorite trick for saving money is shopping around before buying anything.  This approach helps in two ways.  First, it prevents impulse purchases.  Before buying an item that you see at the store, you are forced to go home and investigate other buying options.  This little bit of time can be the difference between a well thought out purchase and wasted money.  Second, shopping around for everything is a great way to save money on most purchases.

I also like trying to stack promotions.  Many credit cards offer rewards or cash back, depending upon the specific card.  These credit card rewards can be combined with making purchases through Ebates.  (Ebates enters affiliate relationships with most retailers and then shares the commission with customers… people who are new to Ebates can get an extra $10 back on their first purchase)  I’ve never had much luck with the coupon route, but for some people it can work out well.

Ultimately, constancy is the most important thing when it comes to saving money on the little things.  One week of pinching pennies is great, but a year of careful budgeting is far more valuable.  Whatever, strategies you use to save money, make sure it lasts for a long time.

Final Thoughts

Earn more.  Spend Less.

It isn’t rocket science, but it definitely requires some effort.

Taking some time for honest self-reflection can lead to finding new opportunities for improved income and savings.  It can also knock out student debt in a hurry.

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