Imagine you’ve retired and it’s a relaxed Saturday afternoon. You’re sitting by the beach, bathing in the sun and enjoying your favourite beer. Ya! We’re sure that you keep dreaming about a great retired life often. Why not? After all those years of hard work, you deserve to live the life of your dreams. Be it opening a shack by the beach and trying out your bartending skills or becoming a wildlife photographer. No matter how wild your retirement plans are, with some right planning, you can make them all come true.
But, hey! Planning for your retirement is not enough. You need to work on other aspects of your financial life as well. Closing your Education Loan before you turn 30 tops the list. If you keep extending the loan tenure just to get some free cash handy now, you’ll have to regret a lot later. Not only will that ruin your amazing retirement plans, it’ll also wreck all other aspects of your financial life.
With the ever-growing competition all around you, investing in good education is something that’s a necessity. You can’t think of surviving this cut-throat competition jungle by getting some basic degrees. You need to step that game up and aim for some good educational qualifications. Doing that isn’t easy. Apart from all the exhausting hard work involved in cracking those entrance exams and making your way through to that prestigious college, you need to make some financial arrangements as well.
Additional Reading: How To Reduce The Burden Of An Education Loan
Education is quite expensive these days. And if you have plans of going abroad and studying in one of the Ivy League colleges, you really need to plan well. Your parents might help you out in the beginning. But after all, it’s your education and you should be responsible for paying off that loan too, right? Don’t panic! Take a deep breath. There’s nothing to panic about, really. Once you finish reading this post, you’ll know exactly what to do and how to push all those Education Loans behind.
Not convincing enough? Still wondering if it’s the right thing for you? Don’t worry! The following points will help you clear your mind and look at it more rationally:
- What’s the bigger picture?
Like we’ve been telling you, paying off that Education Loan as early as you can is a great decision. But, you also need to think about the bigger picture. You need to consider all the factors that might make you change your mind about this decision later. We’re talking about your other priorities, duh! For instance, if you still haven’t started building that emergency fund, you might want to focus on that first. Once you’re done building that fund, you can think of closing the Education Loan. Why so? If you don’t focus on that emergency fund, you’re indirectly inviting more debt later. Here’s the thing about emergencies—they arrive when you least expect them (just like those annoying relatives or neighbours). So, the best way to deal with them is by being prepared, all the time. Knowing your financial priorities and acting accordingly is the key to a happy retired life!
- What’s that interest rate again?
This is probably one of the most important factors you need to consider. You need to get started with the loan with the highest interest rate first. There’s no point focusing on your Education Loan on priority if there are other high-interest loans waiting in queue to be paid off. On the other hand, if the other loans are low-interest, you can consider paying them off a little later. In that case, you can make paying off that Education Loan first a priority.
- Take your goals into consideration
Before taking the plunge and deciding to focus on increasing those EMI payments to get rid of your Education Loan, wait! Think about the other aspects of your financial life. Will paying more now toward that loan have any negative effect on you? There could be other things to worry about. Maybe you want to buy a house, purchase that dream car or travel. You need to take everything into consideration. But if your ultimate goal and the first priority is to go debt-free as soon as you can, all these things can wait. In that case, you can talk to the lender and explore all the available options.
- How are you planning to repay?
Paying that Education Loan off can make your life a lot simpler, if you have your repayment plan in place. You get to save a lot on the unnecessary interest and that makes a lot of sense, doesn’t it? The best way to figure out a repayment strategy is by talking to your lender and exploring all the available options. Talking to them and exploring all your options can help you plan things better.
We hope these factors help you decide whether going after repaying that Education Loan right away is the right thing to do or not. In case you’ve decided to go ahead and repay it before entering your 30s, let’s help you out with ways of doing so. Here we go:
- Watch your spending habits
First things first. You need to clearly establish this fact in your head that focusing on your spending habits is a priority. Since you need to pay off a humongous loan, you need to plan your other financial activities accordingly. This might mean looking for more economical ways of doing things. For instance, if you have this habit of eating out quite frequently, you could think of cooking at home for as long as you can. If you live in a hostel, and cooking is not an option, you could try eating in the mess or look for cheaper tiffin services available in your area instead of ordering in all the time. Eating out once in a while is okay as long as it’s not affecting your monthly budget and those EMI payments. Going to the movies is a great recreational activity. But instead of going out to watch every single movie that hits the screens, you could restrict it to your favourite actor’s films. That way, you’ll not only save money, the chances of you hating the movie and walking out of the theatre half way reduce as well (considering it’s your favourite actor and that’s all that matters to you). Similarly, there are a couple of other ways of checking those unnecessary expenses. If you desperately need a car or bike, you should think of exploring the second-hand market instead of buying that dream vehicle. Later, once you’ve paid the loan off, you can think of buying that expensive car, right?
- Time is money. Not always.
We know that you’re in a rush to repay that loan. But that in no way implies that you need to look for quick and easy ways of making some more money. If you’re thinking of investing in dubious ‘quick’ money-making schemes, you’re doing it wrong. You’re not only increasing your vulnerability toward scams, you’re also digging a hole for yourself (quite a big one). There’s nothing worse than falling prey to one of those fake schemes and losing all your money, right? Precisely why it makes more sense to think your decisions through (especially when they’re about your financial life). Looking for the easy way out might be fairly simple than following the conventional ways. But what you also need to consider is that the chances of these schemes failing are quite high too. The conventional ways might be slower than these quick schemes you’re looking for, but they ensure better security as well. Better keep that in mind, friend.
- Get a part-time job
No matter how well you earn, sometimes a part-time job makes a lot of difference. If you’re lucky and you look in the right places, you might find something that can take care of your entire EMI. What could possibly be better than that? If you’re really serious about considering this option, you can find a couple of websites that offer you freelancing jobs according to your job profile. Although it won’t be easy, you’ll get to get rid of that Education Loan real quick. That should motivate you enough to consider this option. Even if that means starting with a job that’s not too great according to your current post, go for it. You’re doing this just for those few extra bucks – just remember that.
- Debt consolidation might not be the best option for you
You know how debt consolidation works, right? You basically take a new loan to combine and pay off all the previous loans. We know that sounds quite tempting and you might have already started Googling the best debt-consolidation options. But wait! That’s not what we’d suggest you to go for. Opting for another loan to repay the existing ones isn’t always the best option. If you’re a spender, debt consolidation might turn out to be one of the worst financial mistakes you’ll ever make. It’s hard to control the urge of buying more stuff and jumping back into the sea of debt when you know that you have some free cash to take care of things. It just spoils you for more. That doesn’t make debt consolidation a bad option though. If you’re a disciplined person (money wise), and you’ve got control over your spending habits, go ahead! To be on a safer side, however, we suggest you consider other options (like the ones mentioned above) instead of opting for debt consolidation. You want a worry-free retired life ahead, don’t you?
Additional Reading: Spend For Your Kids, Get Tax Benefits!
Like you must’ve understood by now, getting rid of that Education Loan early isn’t the easiest thing to do. It needs a lot of determination, effort and discipline. If you’re short of any of these ingredients, that dish you’re planning to cook is already spoilt! Given the advantages of paying that loan off before entering your 30s, you sure must at least consider it once. What’s the worst that could happen? Maybe you’ll have to work a bit harder than usual, juggle two or more jobs, or explore other short term and high-yielding investment options. But looking at the bigger picture (the relaxed Saturday afternoon, you sipping beer by the beach), getting rid of all your financial worries early sounds like a great thing to do. Not just great, it’s also the right thing to do. You also need to think about your retirement plans and unforeseen medical expenses. The risk of medical expenses only increases as you grow older. You don’t want your Education Loan EMIs burdening you when you already have a couple of medical bills to take care of, do you? So, take care of it now (when you still can). Why wait till later and clutter your financial life?
If you’re looking for ways to make those dreams of studying in an Ivy League college come true – great! We’re impressed by your ambitious nature. All you need to do now (apart from preparing hard, of course) is look for the right Education Loan. Don’t worry! While you focus on the studying part of the problem, we’ll help you with the financing part.