Paying off loans for students is a challenging task. Our first salary is not always enough to meet this financial obligation. Plus, for first-time professionals in a new city, it’s an uphill task to set boundaries and pay off the debt. When my husband and I got married, we started our married life with the burden of his student loan. He was fresh out of a B school. It took us a couple of years to pay off the student loan taken in India. In retrospect, we think there were a couple of things we could have done to meet the obligation faster. Here’s what we see other professionals around us do to pay off their student loans:
First things first, before we try to use one or the other method, do the following:
Make a Plan
Know the exact amount of loan payment – principal, interest, and the tax benefit. Understand the monetary benefit of each element before plunging into the decision of repayment. Set a timeline. Not too high, say 5 years. Not too low that it becomes unattainable and the plan eventually fails. Two to three years is a reasonable time frame. Then decide the monthly amount you wish to pay. And lastly, the way you would pay it – post-dated cheques or auto deductions from the salary account. After having a broad framework, use any of these methods to pay the loan faster:
Heading to read the post on student loan and think three years is a reasonable time rather than five years to avoid the amount being dragged, preventing interest accumulating and rest easy.
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