You want to feel confident about your financial situation. So what happens when you’re striving for two seemingly different financial goals, like saving money for a major milestone while paying down student loan debt?
Figuring out how to save money while paying off debt isn’t easy, but it is doable. Whether you’re saving for an upcoming wedding, a new car, or moving to a new state, you can still pay down on your debts.
How to save money while paying off debt
Here are some simple strategies to help you balance saving for big goals, and even retirement, while still prioritizing paying off student loan debt.
1. Leverage your savings potential
First, find out what you can do to leverage your savings potential right now. For instance, does your job offer a 401(k) match or any employer-sponsored programs that can save you money?
Emilie Burke of personal finance blog Burke Does said that she only saves for retirement up the amount that her employer matches the contribution, which is 4 percent of her gross income.
“I put that much into a 401(k) because it immediately has a 100% growth,” she explained. “Otherwise, I focus completely on paying down debt with everything else.”
Not only will this strategy allow you to take advantage of extra money in your retirement account, but you could be eligible for a credit on your tax return.
Aside from this, can you get a discount on your bills or loans for enrolling in automatic payments? With federal student loans, for example, you can sign up for automatic payments and receive a small discount on the monthly interest applied to your account.
Simply put, leveraging your savings opportunities is an easy way to maximize your savings right away. Any amount of employer-matching or discount savings you can participate in is more money in your bank over the long-term.
2. Make high-interest debts a priority
High interest loans and credit cards can thwart your long-term goals, ultimately keeping you in debt for many years. It’s nearly impossible to get ahead financially when you’re paying 15-25% interest rates.
Make a plan to pay off your highest interest rate debts first. Then see if you can refinance or consolidate any of your debts into low, or 0% interest loans. Most credit card balance transfer offers, for example, come with an introductory 0% interest rate for anywhere from 12-18 months.
Once you’ve created a new debt payoff plan, stick to it. Within a year or two, you can have your high-interest debts completely paid off.
3. Categorize your goals by timeframe
Make competing financial goals easier to reach by categorizing them into how long it will take to reach them.
For instance, saving for a down payment on a new home will take a lot longer than trying to save up for a family vacation next year. Organize your goals based on their importance to you as well as how long each one takes to achieve.
One way I do this is by opening multiple savings accounts then setting up small automatic payments from my regular checking account into each savings account on a weekly basis. I may only be able to save $10-25 each week, but I know I’m making progress on each goal, and if I stick with it I’ll be able to realize it one day soon.
4. Pay more than the minimum
While you’re saving up for big goals, don’t forget to make paying off your student loans a high priority, too. As much as possible, pay more than the minimum balance due. Even if it’s only $20 or $50, a little extra each month can really add up over time and help you make you reach your goals faster.
If you find that it’s difficult to pay more than the minimum, try making your payments more often, such as two times a month instead of once a month. Not only will this help you get out of debt faster, you’ll be able to save money on interest fees by shortening the repayment period.
5. Use your peers for motivation
If you’re the type of person who gets motivated by competitions and community involvement, don’t be afraid to lean on your friends for support. This will make the topic of money a lot easier to tackle and your friends and family can help keep you on track with regular check-ins.
Turn your small milestones into a game with a fun prize or reward system at the end. Work with your peers and compete with your friends to see how much progress you can make on your goals. It’s all too easy to get discouraged and feel hopeless if you try and reach your goals alone.
6. Increase your cash flow
Without a doubt, one of the best strategies to use when working towards multiple financial goals is to earn more money. There’s only so much you can do when cutting back your living expenses until you just need to increase your cash flow.
Take on a few hours of overtime at work, or start a side business on the weekends. In this age of technology, there are endless ways you can earn extra money to put towards specific goals. You could even use one specific source of income to pay down debts while setting aside another income stream for big savings goals.
Another way to increase your cash flow is to talk to your tax professional about adjusting your tax withholding at your day job. You’ll have less money taken out of your paycheck which means more money in your bank account.
7. Invest in a Roth IRA
Rebecca Stapler of Stapler Confessions and her husband started their careers with over $200,000 in student loan debt and about $4,000 in assets. This past month, they were finally able to reach a positive net worth. One of the main keys she attributes to this is investing in a Roth IRA.
In her experience, it’s a great way to hedge your bets for the future. “As long as a Roth IRA makes financial sense at the time, max out those contributions and, if you need a down payment for home, you can withdraw those contributions tax-free – as long as you wait five years,” she explained.
It’s true. If it’s your first home, you can withdraw up to $10,000 of the earnings in a Roth IRA without paying an early withdrawal penalty.
“That’s what we did, and the end result is that we earned more than $10,000 in our Roth IRA while we waited for the right time to buy a house,” said Stapler. “When we finally decided it was time to buy, we had a 10 percent down payment by withdrawing our contributions,” she explained.
Take time to prioritize what goals are most important for your future – whether that’s paying off student loan debt or buying a new home – and use these tips as a guide to balance the financial decisions you make going forward.
Interested in refinancing student loans?Here are the top 8 lenders of 2020!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 2.94% APR (with Auto Pay) to 5.98% APR (with Auto Pay). Variable rate loan rates range from 1.89% APR (with Auto Pay) to 5.98% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of February 4, 2020, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 2/24/2020. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on our student loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for SoFi.
3 Important Disclosures for Figure.
Figure’s Student Refinance Loan is a private loan. If you refinance federal loans, you forfeit certain flexible repayment options associated with those loans. If you expect to incur financial hardship that would impact your ability to repay, you should consider federal consolidation alternatives.
4 Important Disclosures for Laurel Road.
Laurel Road Disclosures
Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. Mortgage lending is not offered in Puerto Rico. All loans are provided by KeyBank National Association.
ANNUAL PERCENTAGE RATE (“APR”)
There are no origination fees or prepayment penalties associated with the loan. Lender may assess a late fee if any part of a payment is not received within 15 days of the payment due date. Any late fee assessed shall not exceed 5% of the late payment or $28, whichever is less. A borrower may be charged $20 for any payment (including a check or an electronic payment) that is returned unpaid due to non-sufficient funds (NSF) or a closed account.
For bachelor’s degrees and higher, up to 100% of outstanding private and federal student loans (minimum $5,000) are eligible for refinancing. If you are refinancing greater than $300,000 in student loan debt, Lender may refinance the loans into 2 or more new loans.
ELIGIBILITY & ELIGIBLE LOANS
Borrower, and Co-signer if applicable, must be a U.S. Citizen or Permanent Resident with a valid I-551 card (which must show a minimum of 10 years between “Resident Since” date and “Card Expires” date or has no expiration date); state that they are of at least borrowing age in the state of residence at the time of application; and meet Lender underwriting criteria (including, for example, employment, debt-to-income, disposable income, and credit history requirements).
Graduates may refinance any unsubsidized or subsidized Federal or private student loan that was used exclusively for qualified higher education expenses (as defined in 26 USC Section 221) at an accredited U.S. undergraduate or graduate school. Any federal loans refinanced with Lender are private loans and do not have the same repayment options that federal loan program offers such as Income Based Repayment or Income Contingent Repayment.
All loans must be in grace or repayment status and cannot be in default. Borrower must have graduated or be enrolled in good standing in the final term preceding graduation from an accredited Title IV U.S. school and must be employed, or have an eligible offer of employment. Parents looking to refinance loans taken out on behalf of a child should refer to https://www.laurelroad.com/refinance-student-loans/refinance-parent-plus-loans/ for applicable terms and conditions.
For Associates Degrees: Only associates degrees earned in one of the following are eligible for refinancing: Cardiovascular Technologist (CVT); Dental Hygiene; Diagnostic Medical Sonography; EMT/Paramedics; Nuclear Technician; Nursing; Occupational Therapy Assistant; Pharmacy Technician; Physical Therapy Assistant; Radiation Therapy; Radiologic/MRI Technologist; Respiratory Therapy; or Surgical Technologist. To refinance an Associates degree, a borrower must also either be currently enrolled and in the final term of an associate degree program at a Title IV eligible school with an offer of employment in the same field in which they will receive an eligible associate degree OR have graduated from a school that is Title IV eligible with an eligible associate and have been employed, for a minimum of 12 months, in the same field of study of the associate degree earned.
The interest rate you are offered will depend on your credit profile, income, and total debt payments as well as your choice of fixed or variable and choice of term. For applicants who are currently medical or dental residents, your rate offer may also vary depending on whether you have secured employment for after residency.
The repayment of any refinanced student loan will commence (1) immediately after disbursement by us, or (2) after any grace or in-school deferment period, existing prior to refinancing and/or consolidation with us, has expired.
POSTPONING OR REDUCING PAYMENTS
After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship.
We may agree under certain circumstances to allow a borrower to make $100/month payments for a period of time immediately after loan disbursement if the borrower is employed full-time as an intern, resident, or similar postgraduate trainee at the time of loan disbursement. These payments may not be enough to cover all of the interest that accrues on the loan. Unpaid accrued interest will be added to your loan and monthly payments of principal and interest will begin when the post-graduate training program ends.
We may agree under certain circumstances to allow postponement (deferral) of monthly payments of principal and interest for a period of time immediately following loan disbursement (not to exceed 6 months after the borrower’s graduation with an eligible degree), if the borrower is an eligible student in the borrower’s final term at the time of loan disbursement or graduated less than 6 months before loan disbursement, and has accepted an offer of (or has already begun) full-time employment.
If Lender agrees (in its sole discretion) to postpone or reduce any monthly payment(s) for a period of time, interest on the loan will continue to accrue for each day principal is owed. Although the borrower might not be required to make payments during such a period, the borrower may continue to make payments during such a period. Making payments, or paying some of the interest, will reduce the total amount that will be required to be paid over the life of the loan. Interest not paid during any period when Lender has agreed to postpone or reduce any monthly payment will be added to the principal balance through capitalization (compounding) at the end of such a period, one month before the borrower is required to resume making regular monthly payments.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of February 25, 2020 and is subject to change.
5 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers.
6 Important Disclosures for College Ave.
College Ave Disclosures
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
1College Ave Refi Education loans are not currently available to residents of Maine.
2All rates shown include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
3$5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees.
4This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
Information advertised valid as of 1/1/2020. Variable interest rates may increase after consummation.
7 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 1.68% effective January 10, 2020.
8 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 12/019/2019 student loan refinancing rates range from 1.90% to 8.59% Variable APR with AutoPay and 3.49% to 7.75% Fixed APR with AutoPay.
|1.89% – 5.98%1||Undergrad & Graduate|
|2.31% – 6.48%2||Undergrad & Graduate|
|1.93% – 6.68%3||Undergrad & Graduate|
|2.29% – 6.65%4||Undergrad & Graduate|
|1.99% – 7.06%5||Undergrad & Graduate|
|2.62% – 6.12%6||Undergrad & Graduate|
|1.77% – 6.25%7||Undergrad & Graduate|
|1.90% – 8.59%8||Undergrad & Graduate|