I’ve heard it’s better to pay off in big chunks, but I’ve also heard it’s better to make more frequent small payments. I’ve also heard it’s better to use my credit card and get points. What’s really the best way? Also, any motivation on how it felt to make that last payment would be awesome!
It felt AMAZING! I was $27500 in the hole once I earned my undergraduate degree, and I spent most of my extra money to pay down my loan debt--it took about 3 years, but I was able to save back about $750-1000 per month to put towards the balance. I did a couple of things to help achieve this so quickly:
1. I enrolled back in school part-time so that my subsidized loans stopped accruing interest, and still made my typical monthly payments. This was a bit easier for me than most since I got a job out of college at a large university, and was able to take classes part-time cheaply.
2. I joined the Army National Guard to assist with supplemental income; they do have programs like SLRP which you can get on an enlistment contract that will pay back your loans for you to a certain amount.
3. I would pay off entire amounts in chunks. On top of the monthly payment, I would save up $3-5k in a separate savings account and then make several large payments at once.
4. I lived with my partner out of college and we both shared a one bedroom apartment which was $800 monthly and included all utilities--this is a steal where we live!
I wouldn't recommend using credit cards to pay this! Just open a dedicate checking account that part of your paycheck deposits into automatically, and then use that to make the large payments. Trust me, it's a great feeling, and it's awesome to see your personal debt-to-income ratio take a drop so that you can look into home buying and other credit-based options! You can do it! :-)
Personally, it felt like a ton of bricks had been lifted off my chest, which had been sitting there for 20 years. My advice is:
1) Pay cash. Save what you can through the year, and whenever you come into chunks of cash, send them to the loans. Keep making your monthly payments, no matter what.
2) Do NOT defer your loans, ever! Even if you go back for that graduate degree or take a couple classes here or there, you will automatically be placed on deferment. Get yourself off immediately! The interest that accrues when you defer sets your hard-earned time back. By doing this, I knocked 10 years off my loans (Yes, I was financed for 30 years!).
3) Stay on budget. Take care of your house, car, family, food, etc. But, you must always manage to make that payment. If you are a single income household this can be tough, just hang in there. If you are a two-income household, try to live below your means and use your extra cash to pay down those loans.
4) As to credit cards, I wouldn't recommend it. Credit card debt, no matter the points, still has to be taken care of and you might not be able to handle those payments and student loans. Our family only uses debit cards and AMEX, which has to be paid off at the end of each month in full. Therefore, no interest. But we did not use AMEX to pay student loan debt.
I wish you the best of luck! I took loans because I wanted to attend the school I had dreamt of attending since I was a kid. It was worth the cost to receive the best education I could have possibly received.