4 Things to Know Before Renting an Income-Restricted Apartment

Family sitting on couch in stylish income restricted apartmentThere’s no doubt about it: Like pretty much everything else in life, the cost to rent an apartment in the U.S. is going up.

Median monthly rent for U.S. apartments rose by 15 percent from 2000 to 2016, according to Harvard University’s Joint Center for Housing Studies. During that time, the median monthly rent went from $850 to $980.

To reduce the cost of an apartment, some renters turn to something called income-restricted housing. At complexes that offer income-restricted apartments, the monthly rental amount takes into account the renter’s income.

How does all of this work? Here are four things you should know before renting an income-restricted apartment.

1. Income-restricted apartments are designed to be affordable.

Income-restricted apartments are meant to help lower-income people afford a place to live. If you qualify for an income-restricted apartment, the savings can be significant.

To be approved for an income-restricted apartment, a household’s gross annual income must be at least 50 or 60 percent less than the median income of the area where you’re looking for an apartment. This percentage depends on the landlord and the type of unit you’re considering. The U.S. Department of Housing and Urban Development (HUD) sets the income guidelines each year.

Here’s an example of how income-restricted housing works.

As of April 2018, a single person making 60 percent of the median income in Phoenix would pay $777 for a one-bedroom apartment or $933 for a two-bedroom apartment in Phoenix, according to the Arizona Department of Housing.

By comparison, the average April 2018 rent for a one-bedroom apartment in Phoenix was around $860 and around $1,000 for a two-bedroom apartment.

The rent for an income-restricted apartment doesn’t go up or down based on your income.

So, if you pay $777 a month for a one-bedroom, income-restricted apartment that’s identical to the one-bedroom, income-restricted apartment next door, your monthly rent also is $777. It doesn’t matter that your neighbor’s take-home pay is slightly more than your pay, as long as both of you meet the income guidelines.

2. The landlord of an income-restricted property will check your background.

As apartment landlords usually do, the landlord of an income-restricted property will make sure you can afford the rent by verifying your employment and income. This also allows the landlord to confirm that your income matches what’s required for an income-restricted apartment.

In addition, the landlord normally will look at your credit record, rental history, and criminal background before approving your rental application.

By the way, don’t lie about income or anything else on your application. If the landlord discovers the lie before you sign a lease, your application could be rejected. Or if the lie is uncovered after you’ve signed a lease, you could be evicted.

3. Income-restricted apartments aren’t public housing.

Income-restricted apartments are owned and operated by private landlords.

But if you live in public housing, a government-run housing authority owns your building and is your landlord, according to the Massachusetts Law Reform Institute. In a few cases, a private company manages the property but the housing authority still owns it.

Typically, rent in public housing is based on a percentage of a renter’s annual income, so one renter might pay a lot less than a neighbor does for an identical apartment. This is known as income-based housing. Most residents of public housing pay 30 percent of their adjusted gross income, which is gross income minus tax deductions.

4. Income-restricted apartments often look like more expensive apartments.

In many cases, you can’t tell the difference between an income-restricted property and a traditional property, since they often appear a lot alike both inside and outside.

Here’s a description of an income-restricted apartment community in Texas:

“Beautifully landscaped grounds contain a swimming pool, picnic area, and a playground. We provide a fantastic clubroom with full kitchen, a fitness center, and an on-site laundry facility. Our apartments offer walk-in closets, large patios, fully equipped kitchens, and full-size washer/dryer connections.”

Sounds pretty great, right? Income restricted rental programs may be more common than you realize. Rental companies will often offer conventional and income restricted apartments side by side. You just have to know where to look and ask! Even if you’re not eligible for such apartments in your area, you can still find affordable apartments on ApartmentSearch. Search for apartments by price and once you sign your lease, get paid $200 in rewards.

Source: blog.apartmentsearch.com

How Do You Define True Wealth?

One of the discussions that we always seem to be having in this country has to do with what constitutes “wealthy.”

Are you “wealthy” if you make more than $250,000 a year, or do you need a net worth of at least $1 million to really be wealthy?

define-true-wealth

define-true-wealth

Questions about what it takes to be wealthy swirl around various factors, including:

  • Is it more about income?
  • Does net worth matter more?
  • How big of a role does location and cost of living play in wealth?
  • Do measures of wealth always have to be in terms of comparison?

The answer, of course, is that what we term “wealthy” is relative.

Someone with an annual income of $300,000 who lives in San Francisco might not be nearly as wealthy as someone who lives in Salt Lake City making $150,000 a year. How much money you have left over after paying your living costs can be a big deal — and it’s one of the reasons that so many people are against using the $250,000 annual income as a threshold for tax policy measures.

While it’s practically impossible to define “true” wealth on a broad scale, though, it is possible for you to determine what you think it means to be wealthy.

Your Financial Definition of Wealth

The first step is to consider your financial definition of wealth. Leave aside what other say it takes to be “wealthy.” Look at what would make you feel wealthy. In my case, it’s not about reaching a certain number. Some consumers feel they will have “made it” when they have a certain net worth, or when they have a particular income.

I prefer to look at wealth in terms of what my money allows me to do. Do I have enough money to cover my survival needs? Can I do most of what I want? If the answer is yes, I feel as though I have sufficient financial wealth. I am able to save for retirement, go on trips, and afford to live in my current location. I don’t need a certain type of car, or a big screen TV, to feel as though I’m wealthy. Instead, I like the idea of being able to use my money how I want. The choices make me feel wealthy.

Your Non-Financial Definition of Wealth

Of course, wealth isn’t just about money. There are other ways to view wealth. I like to look at my family and friends. Do I have people in my life that I care about? Do I feel like they care about me? What about health? The ability to pursue interests and hobbies? Can I feel a connection to my community?

All of these are questions that go into your non-financial definition of wealth. For many people, having a huge pile of money doesn’t assuage feelings of loneliness, or make up for the fact they feel no real purpose in life. If your life isn’t rich with experiences and love, can you really consider yourself wealthy, even if you have a lot of money?

What do you think? What is your definition of wealth?

Source: biblemoneymatters.com

How to Retire Forever on a Fixed Chunk of Money

These last two articles have focused on how common it is for early retirees to continue making money after they say goodbye to the cubicle. I share stories like that because I’ve seen it happen in so many lives, including my own. Plus, if you do it right, work is fun.

But the downside of all this “side hustle” talk is that you can take it too far, and people start to think that early retirement is possible only if you keep making money afterwards. To the point that I’ve now been hearing many thirtysomething millionaires saying things like,

“Sure, the numbers say I’ve easily reached financial independence, but I’m not even going to touch my nest egg until I’m 60.

So these days, I just do a bit of unpleasant consulting work here and there to cover my expenses and to get the employer subsidized health insurance. “

On top of that, it is hard to get mainstream financial advisers to admit that there is such thing as a finite chunk of money that you can live safely on, forever. They say stuff like, “Financial independence is great, but truly retiring from making money? Forget it.”

Related: your spending can be more efficient if you channel it through a good rewards credit card.

This is where Mr. Money Mustache puts a stake in the ground.

Because it IS absolutely possible and in fact very easy, to make a chunk of money last through your lifetime. There is no magic or unusual risk or hope involved, it’s just plain math.

Even with all the complexities of the modern financial world with its booms and busts, OPECs and Brexits and the churning sea of changing politicians and dictators, it still all boils down to a really simple number. And we can illustrate it with this really simple example:

Let’s say you want to be able to spend $40,000 per year, for life, and have that spending allowance continue to grow with inflation. And you never want to make another dollar from work in your lifetime.

In this situation, the following three sentences represent the entire universe of probability for you:

  • If you retire with $800,000 in investments, you will probably make it through your whole life without running out of money (a 5% withdrawal rate)
  • If you start with a $1 million nest egg (a 4% withdrawal rate), you will very likely never run out of money
  • If you start with a $1.33 million chunk (a 3% withdrawal rate), it is overwhelmingly certain that you’ll have a growing surplus for life.

Now, these statements do all depend on the continued existence of a productive human race which continues to innovate and trade and not destroy its own productive capacity.

But you know what?

  • In the event of a global apocalypse, you won’t be thanking yourself for spending those last few years in the office accumulating a few last shares of index funds anyway.
  • The strategies described in this blog are designed to shift us all to a more sustainable, healthy, productive economy. So when you live a Mustachian lifestyle, you’re boosting the likelihood of an apocalypse-free future for all of us. Thus, because of you, We are all going to do just fine.

So. A fixed chunk of money is about as safe a retirement strategy as you’ll ever find.

It’s safer than relying on any job, because keeping a steady job depends on the overall economy remaining healthy enough to feed your company, your company remaining solvent, and you remaining productive and useful to that company.

Meanwhile, a good investment portfolio just depends on the world economy in general continuing to exist.

But once you’ve got that chunk, how do actually convert it into a safe stream of lifetime income?

In other words, most of us get to the door of financial independence with something like this:

A complex financial picture with lots of dollar signs – but can you retire on it?

But what we really want is something like this:

This is how money flow really works in early retirement..

So What Is The Problem?

Most people get stuck on the same three questions:

  • What investments do I use to provide a lifetime of income?
  • A big chunk of my savings are in 401k or pension, locked up until I’m 59. How do I retire at 35?
  • How can I pay for (US) health insurance on a $3300 per month budget, when I’ve heard monthly premiums can exceed $1200 per month for a family of four?

The great news is that there are easy answers for all three. They are just not widely known because true early retirement (with no backup income) is such a rare field that very few people write about it. So let’s bang out those answers right here:

Investments:

The Simple Path to Wealth is a short book on investing that convinces you that the simplest strategy is also the best.

As always, I suggest that you only need one thing: a generous bucketload of low-fee index funds. It can even be a single index fund if you want to keep it even simpler: Vanguard’s VTI “Total Stock Market Exchange Traded Fund”

Whether you own these funds through your company’s 401(k) plan, or the brokerage account of your choice, or a Vanguard account, or through an automatic management service like Betterment* as I do, doesn’t matter. What matters is that you are buying pieces of real, profitable companies, which pay dividends and appreciate over time.

Okay, got the funds, Now What?

Okay, you’re 35 years old, you have saved exactly one million dollars, and handed in your resignation.

At this point, you will probably have at least two chunks of money: a normal chunk (also known as a taxable account), and a retirement chunk (perhaps a 401k, IRA, or pension).

Let’s suppose it is divvied up like this:

When you retire early, you Use up your taxable accounts first.

On your first day of freedom, you log into your account, find the option for what to do with dividends, and set those to get automatically deposited into your checking account.

Right now, the VTI fund happens to pay a 1.89% annual dividend, which means that the $500,000  account in that green box above will pay $9000 in annual dividends straight to you.

Then, if you’re shooting for $40,000 of annual spending, simply set up an automatic monthly withdrawal of an additional $31,000 per year ($2583 per month) to be sent to your checking account, which is set to automatically pay off your credit card, which you use to buy your groceries.

But Won’t I Run Out of Money If I Do This!?

That’s the magic of early retirement math – the answer is NOPE! Because check out how this plays out:

  • Because of those withdrawals, your account will lose a few shares every year.
  • But because of natural stock market growth, your account will be fighting back and each share will be worth a bit more.
  • Thus, your money lasts much longer than it would if you were just keeping it all in a checking account or stuffed in your mattress.
  • So a quick spreadsheet simulation of this drawdown reveals that your account survives almost 23 years. At which point you are 58 years old – almost eligible for penalty-free withdrawal of your true retirement money.
  • BUT, during this whole time, that other $500,000 in your retirement account grew untouched (and untaxed), and it’s now worth about $1.2 million dollars even after accounting for future inflation**. In other words, you have WAY more than enough to live on forever at that point.

Here’s a quick spreadsheet with simple assumptions and 4% after-inflation stock market returns. In this situation the first 500 grand lasts about 23 years.

And here’s the same thing, except I did it in Betterment’s fun retirement income simulator, using a 95% stock portfolio. This version is slightly less optimistic, but still gets us out to almost 20 years in the most probable scenario.

If you have a really large locked-up retirement balance and a small taxable account, you might want to tap into the retirement account sooner. There are ways to do that penalty-free too, see this earlier MMM article for a few ideas.

The overall lesson: It doesn’t matter how you have your investments split up between normal investments and retirement accounts. It just matters how much you have in total.

Heck, even if you are stuck with a $1 million house occupying a huge part of your net worth, you can convert that into livable money: sell the house, put the cash into index funds, and use the resulting cash stream to rent a spiffy but reasonably priced house or apartment in the lovely walkable area of your choice.

Okay, What About Health Insurance?

If you are stuck in the world’s most expensive medical care market like I am, the most profitable investment of all may be salads, bikes, and barbells because these virtually eliminate the “lifestyle diseases” that trigger about 75% of US healthcare spending.

But even so, most people choose to insure against surprise medical bills, and people with existing medical needs depend on help with those costs.

The good news is, the politically controversial Affordable Care Act actually handles this much better than most people assume. If I go to healthcare.gov right now (or in my case the Colorado-specific equivalent) and put in a hypothetical 4-person family with a $40,000 annual income in my zip code right now, I see this:

This represents a cost reduction of $830 per month relative to what a high-income person would pay for the same coverage. So in other words, the United States just has a progressive tax bracket system like other rich countries, chopped up a little differently. It’s not great and to be clear, this is shitty health insurance because it has a high deductible. But at least it’s not a retirement-buster.

Other Things You Probably Don’t Need To Worry About But Everybody Does

What if Stocks fall or My Cost of Living Goes Up?

Stock market crashes are never permanent. In the long run, the market always goes up. So all that happens during a crash is that those few shares that you do sell during those brief times when the market is down, will hurt your account balance just a bit more. Within a year or two, the market is back up and your remaining stocks are more valuable than ever. If you want even further reassurance, you could just choose to spend a bit less money during this time.

As for your cost of living going up faster than inflation – it rarely happens. And if it does, you can adjust by spending less in other areas. Most things are in your control, especially if you take a big-picture view. You can shop around, move, and alter your lifestyle in a million different ways, and in fact this is really good for you.

Standard retirement advice is based on protecting people from any form of hardship or change, which is completely counterproductive. In the right quantity, these are the backbone of a good life and the fuel for personal growth. Without them, you will melt into a whining puddle in front of a television that endlessly blares Fox News.

Every Financial Advisor (even Betterment!) Seems to Suggest Lots Of Bonds, – Why Does MMM Only Hold Stocks?

The quick answer is that stocks earn more money on average, especially right now in 2018 with bond yields so low. Sure, stocks are more volatile, but volatility only bothers fearful people who look at the stock market every day and fret when it jumps around. As a Mustachian, you don’t do this. Lower stock prices are simply a temporary sale on stocks.

What About All Sorts of Other Stuff Not Covered in this Article?

The absolute key to success in early retirement, and indeed most areas of life, is to get the big picture approximately right and not sweat the small stuff. And design the big picture with a generous Safety Margin, which allow lots of slop and mistakes in your original forecasts and allows you to still come out with a surplus.

For example, in the story above I assumed a $40,000 annual spending rate, which is way more than almost anyone really needs to live well here in the US, especially once your kids are grown. I completely ignored Social Security, which will benefit most people at a level between $1000 and $2500 per month for a big portion of their older years.  I ignored any incidental income or inheritances or profits you might make on selling your house someday, and the list goes on.

So that’s the line in the sand.

Although I personally think working hard almost every day after your retirement is good for you, it is also completely optional, and you do not have to earn any money at it if you don’t want to.

A chunk of money is a perfectly good retirement plan, and the math doesn’t care if you are retiring at 5 years old or 85. If you get the numbers right, you’re set for life.

—–

*Betterment, Wealthfront, and Personal Capital are investment management systems known as “Robo-Advisors”, which typically buy shares on your behalf and then add on features like rebalancing, tax loss harvesting and personalized advice. I happen to use Betterment because I like the interface and benefit from their tax loss harvesting more than pays for their service fees in my own tax situation.

Betterment purchases a flat rate advertising banner elsewhere on this site, although I don’t get paid for mentioning them or for any new customers they might get. And blog affiliates/advertisers have no say in what I choose to write.

** For this calculation, I assumed the stock market delivers a 4% rate of return including dividends, after inflation. (or roughly a 6-7% total annual return)


Source: mrmoneymustache.com

6 First Time Home Buying Mistakes I Made When I Bought My First House

Are you thinking about buying a house? Do you want to avoid common home buying mistakes?

I bought my first house when I was only 20 years old. Even though that was a little over 11 years ago, I have looked back many times and wondered how I did it.first time home buying mistakes

first time home buying mistakes

I made so many first time home buyer mistakes!

Of course, I was young and had a lot to learn. But, I definitely could have done more research to avoid many of the home buying mistakes I made, like not comparing interest rates or understanding the total cost of buying a home.

I’m not alone in how I approached buying a house. There are many people who simply do not understand everything that goes into buying a house, and that’s something that can negatively impact your finances and cause stress. 

Over the years, I have received many emails about buying a house in your early 20s or when you’re young. I also get lots of questions from people who have been renting and are thinking about buying their first home.

I thought it would be interesting to look back on the home buying mistakes I made and explain how to avoid the same mistakes I made. Hopefully you can be a better prepared home buyer than I was!

The mistakes first time home buyers make can cost you money and may even lead to regret. Perhaps you’re wondering why you even bought your home!

One thing you may not know about me is that the first house I ever lived in was actually my own. Growing up, we always lived in small apartments and rented. I wanted to have a home of my own – moving so often as a child was tiring.

Buying a house and being a homeowner was a completely new thing for me.

I had never done yard work, had to deal with house maintenance, home repairs, or anything like that.

I was as new as could be when it comes to living in a house!

It was a buyer’s market when we started searching. It was back in 2009, so the housing market was coming down. This meant that a monthly mortgage payment wasn’t too much more than rent at an apartment.

I felt like I was ready to buy my first house, and I needed a place to live.

So, buying a house seemed like a logical decision.

I made many home buying mistakes, like I said. While I made it through everything, my mistakes could easily have led to major financial trouble.

Read on below to learn more about mistakes home buyers make and my first-time home buyer tips.

Related content on home buying mistakes:

Here were some of my home buying mistakes.

 

first-time home buyer mistakes

This was our first house.

I didn’t prepare.

I was only 20, so I didn’t really understand how things worked, even though I thought I did at the time.

I found an online mortgage lender, and back in 2009, that was kind of a new thing. The company ended up doing a bunch of odd things and made a bunch of paperwork mistakes. It almost seemed scammy because online mortgages were so new at the time.

While my realtor was great and a family friend, she recommended a mortgage loan officer to me, and I just used that person.

The loan officer was great and very friendly.

But, I didn’t compare interest rates at all, I didn’t try to raise my credit score before I started looking at homes, and more.

Instead, I should have been paying attention to my credit score and worked to increase it before I started looking at rates. Then, I should have applied with multiple mortgage lenders and found the best interest rate.

Basically, I didn’t prepare.

Had I spent time increasing my credit score and shopping around for better rates, I could have gotten a better interest rate and saved money on mortgage payments.

While a small percentage difference in interest may not sound like much, it makes a big difference in how much you pay each month and how much you pay over the course of your loan.

For example, here’s the difference in two 30-year mortgages on a $200,000 home (this is before annual taxes being added in to the monthly payment):

  • With an interest rate of 3.25% your monthly payment would be $870, and you would pay $313,349 over the course of your loan.
  • With an interest rate of 4% your monthly payment would be $955, and you would pay $343,739.

That’s a difference of $85 a month, and you will have paid $30,000 more once your mortgage is paid off.

Looking back, I would have done more research on the home buying process and the factors that impact interest rates.

One of the easiest things you can do to avoid this mistake is to start paying attention to your credit score. You can receive free credit reports and credit scores, and I recommend reading Everything You Need To Know About How To Build Credit to learn more.

I avoided adding up all of the costs because it was scary.

Okay, so I knew that having a house could/would be expensive, and luckily we were fine, but wow, are there a lot of costs!

I avoided adding them all up for a while because I knew they would be higher than I thought. Eventually I did, and I was right – adding everything all together was a doozy.

We didn’t start adding up these costs until we were farther along in the buying process, and this is one of the home buying mistakes many people make. 

There are lots of people who only think about their mortgage payment, but there are so many more costs associated with buying a home

Before we purchased a home, we should have gone through all of the typical costs of owning a house and compared it to our housing budget. Comparing your current budget to your new homeowner’s budget will tell you whether or not you can actually afford to buy a home.

Here are some of the homeownership costs you want to consider:

  • Gas/propane.  Many homes run on gas in order to have hot water, to use the stove, and so on.
  • Electricity. Generally, the bigger your home then the higher your electricity bill will be.
  • Sewer. On average, your sewer bill may cost around $30 a month from what I’ve seen.
  • Trash. This isn’t super expensive either, but it’s still a cost to include.
  • Water. Water bills can vary widely. I know many who live in areas where the average water bill is a few hundred each month.
  • Property taxes. Property taxes can vary widely from town to town. You may find yourself looking at two similar houses with similar price tags, but the property taxes may differ by thousands of dollars annually. That is a LOT of money. While it may seem small when compared to the actual home purchase price, remember that you have to pay property taxes annually and a difference of just $3,600 a year is $300 a month for life.
  • Homeowners insurance. Homeowners insurance can be cheap in some areas but crazy expensive in others. Don’t forget to look into the cost of earthquake, flood, and hurricane insurance as well as that can add up quickly depending on where you live – not thinking about these was one of the home buying mistakes I made.
  • Maintenance and repairs. Even if your home is brand new, you may have to pay for repairs, which is something that will come up eventually. No matter how old your home is, repair and maintenance costs will eventually come into play.
  • Homeowners association fees. This can also vary widely. You should always see if the house you are interested in is in an HOA because the fees can be high and there may also be rules you don’t like.
  • Home furnishings. Furnishing your home can be done cheaply, but I know some who buy huge homes but can’t afford to put anything in them, such as a table, a bed, and so on. Why own a $500,000 house if you don’t have any furniture?

 

I probably should have spent less on the actual house.

While the house we bought was less than the amount we were pre-approved for, I definitely think that we could have found a house for even less.

We bought at the top of our budget, and this is one home buying mistake that can really get you in trouble.

Thinking back on it, the amount that we were pre-approved for, as young 20 year olds, was pretty insane. I am very glad that we did not buy a house that was that expensive.

It’s not uncommon to be approved for much more than your budget realistically allows for. Just because the bank approves you for a $350,000 mortgage, for example, does not mean you can afford to buy a house at that price.

We bought at the top of our budget thinking that we would get better jobs eventually. While that worked out in our favor since we were each barely making above minimum wage, it was a decision that could have ended quite badly.

 

We were living paycheck to paycheck and didn’t have an emergency fund.

We were young and didn’t have high paying jobs when we bought our house. In fact, we were barely making more than minimum wage at our jobs.

While we never racked up credit card debt, I did accrue student loans and we were living paycheck to paycheck.

Had one major (or even minor) thing happened with our new house, the only option would have been taking on debt. This is not where you want to be if you have just taken out a big mortgage. 

The best way to avoid this first time home buyer mistake is to set some money aside for emergencies before you buy, and to buy a house that fits in your budget. You want to be able to continue saving while making your new monthly home payments.

 

Make sure your home insurance covers what you need.

While I never had to use my home insurance, there were a few things that it did not cover, and I should have at least thought about them beforehand.

One of the biggest coverage issues was flooding. Flooding is a common problem where we lived in Missouri, yet I didn’t realize until a few years after I had already lived in the house that flooding was not covered unless you signed up for an additional policy.

Now, we weren’t in a floodplain – your lender may require you to buy special flood insurance if you live in a floodplain – but basement flooding was still a fairly common issue where we lived. 

Another special insurance consideration are earthquakes. Many normal home insurance policies do not cover earthquakes.

You can avoid this home buying mistake by researching what is the best kind of insurance policy for where you live. Floods and earthquakes aren’t a problem everywhere, but in some places you may want to have that kind of coverage.

 

Have a larger down payment.

We were 20, and we didn’t have a lot of money saved up before we bought our house.

Therefore, we did not put down a 20% down payment. That might sound like a lot, but 20% is the recommended amount to put down if you want to avoid PMI (private mortgage insurance).

A lender charges PMI because putting less than 20% down makes the loan look like a riskier investment for them. PMI protects lenders from borrowers who default on their loans.

PMI is normally around 0.5% to 1% of the mortgage annually, and it’s added to your monthly payment. If you borrowed a $200,000 mortgage, you would likely pay between $1,000 to $2,000 a year until you paid down enough of your mortgage principal to remove PMI.

We put less than 5% down towards our house purchase, and this led to us having PMI.

I don’t remember exactly how much we paid each month for PMI, but looking back, I could have used that money to pay off my student loans faster, save more, and so on.

While having a larger down payment isn’t one of the home buying mistakes I could have easily changed back then, in general, just saving more money instead of frivolously spending it in the beginning would have been a good decision.

Related content: Can You Remove PMI From Your Mortgage?

 

So, what’s going on with the house now?

As many of you know, we sold our house over 5 years ago. We wanted to travel more, and selling our house made more sense than keeping it.

We actually sold it for quite a loss, as the market was further down than when we bought it.

I’m happy that we bought the house – it taught us a lot, gave us responsibility, and gave us a place to live! And, it taught us how to avoid home buying mistakes in the future.

One of the things I haven’t mentioned is what we paid each for our mortgage. Our monthly payments were just under $1,000. 

Where we lived in the midwest is known for being a low cost of living area. I can’t imagine how we would have bought a house in some other parts of the U.S.

But, the low cost of living meant that buying a house at 20 was more doable.

Is it normal to regret buying a house? Is it normal to have buyers remorse after buying a house?

I don’t know what the statistics are on home buyers remorse, but it does happen. Hopefully with the tips before buying a house above, you can avoid that as much as possible.

Also, being realistic when it comes to what to expect when buying a house can help greatly as well.

What home buying mistakes did you make when you purchased your home?

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Source: makingsenseofcents.com

Mistakes I Made When I Bought My First House At The Age of 20

Are you thinking about buying a house? Do you want to avoid common home buying mistakes?

I bought my first house when I was only 20 years old. Even though that was a little over 11 years ago, I have looked back many times and wondered how I did it.first time home buying mistakes

first time home buying mistakes

I made so many first time home buyer mistakes!

Of course, I was young and had a lot to learn. But, I definitely could have done more research to avoid many of the home buying mistakes I made, like not comparing interest rates or understanding the total cost of buying a home.

I’m not alone in how I approached buying a house. There are many people who simply do not understand everything that goes into buying a house, and that’s something that can negatively impact your finances and cause stress. 

Over the years, I have received many emails about buying a house in your early 20s or when you’re young. I also get lots of questions from people who have been renting and are thinking about buying their first home.

I thought it would be interesting to look back on the home buying mistakes I made and explain how to avoid the same mistakes I made. Hopefully you can be a better prepared home buyer than I was!

The mistakes first time home buyers make can cost you money and may even lead to regret. Perhaps you’re wondering why you even bought your home!

One thing you may not know about me is that the first house I ever lived in was actually my own. Growing up, we always lived in small apartments and rented. I wanted to have a home of my own – moving so often as a child was tiring.

Buying a house and being a homeowner was a completely new thing for me.

I had never done yard work, had to deal with house maintenance, home repairs, or anything like that.

I was as new as could be when it comes to living in a house!

It was a buyer’s market when we started searching. It was back in 2009, so the housing market was coming down. This meant that a monthly mortgage payment wasn’t too much more than rent at an apartment.

I felt like I was ready to buy my first house, and I needed a place to live.

So, buying a house seemed like a logical decision.

I made many home buying mistakes, like I said. While I made it through everything, my mistakes could easily have led to major financial trouble.

Read on below to learn more about mistakes home buyers make and my first-time home buyer tips.

Related content on home buying mistakes:

Here were some of my home buying mistakes.

 

first-time home buyer mistakes

This was our first house.

I didn’t prepare.

I was only 20, so I didn’t really understand how things worked, even though I thought I did at the time.

I found an online mortgage lender, and back in 2009, that was kind of a new thing. The company ended up doing a bunch of odd things and made a bunch of paperwork mistakes. It almost seemed scammy because online mortgages were so new at the time.

While my realtor was great and a family friend, she recommended a mortgage loan officer to me, and I just used that person.

The loan officer was great and very friendly.

But, I didn’t compare interest rates at all, I didn’t try to raise my credit score before I started looking at homes, and more.

Instead, I should have been paying attention to my credit score and worked to increase it before I started looking at rates. Then, I should have applied with multiple mortgage lenders and found the best interest rate.

Basically, I didn’t prepare.

Had I spent time increasing my credit score and shopping around for better rates, I could have gotten a better interest rate and saved money on mortgage payments.

While a small percentage difference in interest may not sound like much, it makes a big difference in how much you pay each month and how much you pay over the course of your loan.

For example, here’s the difference in two 30-year mortgages on a $200,000 home (this is before annual taxes being added in to the monthly payment):

  • With an interest rate of 3.25% your monthly payment would be $870, and you would pay $313,349 over the course of your loan.
  • With an interest rate of 4% your monthly payment would be $955, and you would pay $343,739.

That’s a difference of $85 a month, and you will have paid $30,000 more once your mortgage is paid off.

Looking back, I would have done more research on the home buying process and the factors that impact interest rates.

One of the easiest things you can do to avoid this mistake is to start paying attention to your credit score. You can receive free credit reports and credit scores, and I recommend reading Everything You Need To Know About How To Build Credit to learn more.

I avoided adding up all of the costs because it was scary.

Okay, so I knew that having a house could/would be expensive, and luckily we were fine, but wow, are there a lot of costs!

I avoided adding them all up for a while because I knew they would be higher than I thought. Eventually I did, and I was right – adding everything all together was a doozy.

We didn’t start adding up these costs until we were farther along in the buying process, and this is one of the home buying mistakes many people make. 

There are lots of people who only think about their mortgage payment, but there are so many more costs associated with buying a home

Before we purchased a home, we should have gone through all of the typical costs of owning a house and compared it to our housing budget. Comparing your current budget to your new homeowner’s budget will tell you whether or not you can actually afford to buy a home.

Here are some of the homeownership costs you want to consider:

  • Gas/propane.  Many homes run on gas in order to have hot water, to use the stove, and so on.
  • Electricity. Generally, the bigger your home then the higher your electricity bill will be.
  • Sewer. On average, your sewer bill may cost around $30 a month from what I’ve seen.
  • Trash. This isn’t super expensive either, but it’s still a cost to include.
  • Water. Water bills can vary widely. I know many who live in areas where the average water bill is a few hundred each month.
  • Property taxes. Property taxes can vary widely from town to town. You may find yourself looking at two similar houses with similar price tags, but the property taxes may differ by thousands of dollars annually. That is a LOT of money. While it may seem small when compared to the actual home purchase price, remember that you have to pay property taxes annually and a difference of just $3,600 a year is $300 a month for life.
  • Homeowners insurance. Homeowners insurance can be cheap in some areas but crazy expensive in others. Don’t forget to look into the cost of earthquake, flood, and hurricane insurance as well as that can add up quickly depending on where you live – not thinking about these was one of the home buying mistakes I made.
  • Maintenance and repairs. Even if your home is brand new, you may have to pay for repairs, which is something that will come up eventually. No matter how old your home is, repair and maintenance costs will eventually come into play.
  • Homeowners association fees. This can also vary widely. You should always see if the house you are interested in is in an HOA because the fees can be high and there may also be rules you don’t like.
  • Home furnishings. Furnishing your home can be done cheaply, but I know some who buy huge homes but can’t afford to put anything in them, such as a table, a bed, and so on. Why own a $500,000 house if you don’t have any furniture?

 

I probably should have spent less on the actual house.

While the house we bought was less than the amount we were pre-approved for, I definitely think that we could have found a house for even less.

We bought at the top of our budget, and this is one home buying mistake that can really get you in trouble.

Thinking back on it, the amount that we were pre-approved for, as young 20 year olds, was pretty insane. I am very glad that we did not buy a house that was that expensive.

It’s not uncommon to be approved for much more than your budget realistically allows for. Just because the bank approves you for a $350,000 mortgage, for example, does not mean you can afford to buy a house at that price.

We bought at the top of our budget thinking that we would get better jobs eventually. While that worked out in our favor since we were each barely making above minimum wage, it was a decision that could have ended quite badly.

 

We were living paycheck to paycheck and didn’t have an emergency fund.

We were young and didn’t have high paying jobs when we bought our house. In fact, we were barely making more than minimum wage at our jobs.

While we never racked up credit card debt, I did accrue student loans and we were living paycheck to paycheck.

Had one major (or even minor) thing happened with our new house, the only option would have been taking on debt. This is not where you want to be if you have just taken out a big mortgage. 

The best way to avoid this first time home buyer mistake is to set some money aside for emergencies before you buy, and to buy a house that fits in your budget. You want to be able to continue saving while making your new monthly home payments.

 

Make sure your home insurance covers what you need.

While I never had to use my home insurance, there were a few things that it did not cover, and I should have at least thought about them beforehand.

One of the biggest coverage issues was flooding. Flooding is a common problem where we lived in Missouri, yet I didn’t realize until a few years after I had already lived in the house that flooding was not covered unless you signed up for an additional policy.

Now, we weren’t in a floodplain – your lender may require you to buy special flood insurance if you live in a floodplain – but basement flooding was still a fairly common issue where we lived. 

Another special insurance consideration are earthquakes. Many normal home insurance policies do not cover earthquakes.

You can avoid this home buying mistake by researching what is the best kind of insurance policy for where you live. Floods and earthquakes aren’t a problem everywhere, but in some places you may want to have that kind of coverage.

 

Have a larger down payment.

We were 20, and we didn’t have a lot of money saved up before we bought our house.

Therefore, we did not put down a 20% down payment. That might sound like a lot, but 20% is the recommended amount to put down if you want to avoid PMI (private mortgage insurance).

A lender charges PMI because putting less than 20% down makes the loan look like a riskier investment for them. PMI protects lenders from borrowers who default on their loans.

PMI is normally around 0.5% to 1% of the mortgage annually, and it’s added to your monthly payment. If you borrowed a $200,000 mortgage, you would likely pay between $1,000 to $2,000 a year until you paid down enough of your mortgage principal to remove PMI.

We put less than 5% down towards our house purchase, and this led to us having PMI.

I don’t remember exactly how much we paid each month for PMI, but looking back, I could have used that money to pay off my student loans faster, save more, and so on.

While having a larger down payment isn’t one of the home buying mistakes I could have easily changed back then, in general, just saving more money instead of frivolously spending it in the beginning would have been a good decision.

Related content: Can You Remove PMI From Your Mortgage?

 

So, what’s going on with the house now?

As many of you know, we sold our house over 5 years ago. We wanted to travel more, and selling our house made more sense than keeping it.

We actually sold it for quite a loss, as the market was further down than when we bought it.

I’m happy that we bought the house – it taught us a lot, gave us responsibility, and gave us a place to live! And, it taught us how to avoid home buying mistakes in the future.

One of the things I haven’t mentioned is what we paid each for our mortgage. Our monthly payments were just under $1,000. 

Where we lived in the midwest is known for being a low cost of living area. I can’t imagine how we would have bought a house in some other parts of the U.S.

But, the low cost of living meant that buying a house at 20 was more doable.

Is it normal to regret buying a house? Is it normal to have buyers remorse after buying a house?

I don’t know what the statistics are on home buyers remorse, but it does happen. Hopefully with the tips before buying a house above, you can avoid that as much as possible.

Also, being realistic when it comes to what to expect when buying a house can help greatly as well.

What home buying mistakes did you make when you purchased your home?

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Source: makingsenseofcents.com

14 Smart Money Moves To Make In 2021

Are you looking to make some smart money moves to improve your future?

The new year is a great time to start thinking about what you can do to improve your financial situation. You can use this time to look forward and start making smart money moves that will help you in the future.

For example, maybe you want to become better prepared for emergencies in 2021 – probably on a lot of people’s minds after the year we had in 2020. There are several easy money moves you can take if being prepared is your goal.

You could put together an emergency binder that organizes your finances, contacts, personal information, etc. It’s everything someone would need if they had to take over your finances. 

There are also smart money moves like finding affordable life insurance and creating an emergency fund that can help you be better prepared in 2021.

If lowering your bills is one of your goals for 2021, you may want to refinance your student loans, or make one of the easiest money moves and find a less expensive alternative to cable.

There are so many smart money moves you can make in 2021. Some are small and some are bigger, like taking advantage of your company’s 401(k) match, but all of them will help you improve your financial future. 

The tasks on this list will help you to gather important documents, obtain free money (hello, company match!), find life insurance, save thousands of dollars a year, and more.

Of course, not everything on this list will apply to each of you, but this list is a good starting point. If anything, these smart money moves will get you motivated to start taking control over your finances in 2021.

Related content:

Here are 14 smart money moves to make in 2021.

 

1. Take your company’s 401(k) match

Does your employer offer a company match?

If so, I hope you are taking it!

A company or employer match is when your employer contributes to your 401(k). And, a 401(k) is a type of retirement account that you get through an employer.

Because this is basically free money that will help you grow your retirement savings, this is one of the best money moves right now. I highly recommend taking advantage of your company’s match if you can!

It allows you to invest a portion of your paycheck before taxes are taken out, and the amount in your 401(k) can grow tax free until you withdraw. Once you reach retirement and take money out of your 401(k), the amount you withdraw from this account is taxed.

Your 401(k) is an account that holds investments, similar to how your bank account holds your money. You may choose to place investments such as stocks, mutual funds, and more in your 401(k).

Each company offers its own kind of match. For example, an employer may match 100% of your contribution, up to 5% of your salary. 

If you have this option with your job, I highly, highly recommend this as one of the smart money moves you make this year. Look into this further AS SOON AS YOU CAN!

2. Create an emergency binder

An emergency binder is a way to store financial information, like bank account numbers and passwords. You can store insurance information, personal details about you and each member of your family, information about bills, and more.

Having an emergency binder is so very important.

I know there are many, many families who would be very lost if something were to happen to the person who usually manages their financial situation.

Accounts could get lost, passwords would be unknown, bills may be forgotten about, life insurance may be hard to find, and more.

It’s best to keep a family emergency binder of everything just in case something were to happen, even if it’s something no one ever wants to think about. Having one just makes life so much easier, and it’s one of the smart money moves you should make this year. 

I recommend having an emergency binder if:

  • You have a family
  • You have children
  • You are single – this is because someone will have to handle your affairs if something were to happen to you, and they’ll most likely have no clue as to where to start. The binder can guide them.

An emergency binder can help pretty much everyone and anyone.

This can be useful in non-emergencies as well. Creating a binder like this organizes all your family’s information in one place. It makes finding any piece of information quick and easy, and you’ll probably refer to it often.

My top tip is to check out the In Case of Emergency Binder to help you with creating your own emergency binder.

This is a 100+ page fillable PDF workbook.

 

3. Sign up for a complimentary $10,000 accidental death insurance policy

My friends at Harmonic have partnered with Making Sense of Cents, and they would like to give you a $10,000 accidental death insurance policy to encourage you to build your own personal safety net.

This company is simply looking to introduce more people to Harmonic, which is why they are giving away a complimentary policy. I share lots of free things on Making Sense of Cents – this is simply another item that I’ve negotiated for my readers. You have to be a U.S. citizen, though, to sign up. 

You can click here to sign up to claim your policy today! It takes less than 5 minutes.

This policy is slightly different in that it covers you in case you die in an accident – such as a car crash. Accidents are the number one cause of death for people ages 1-44, according to the folks in our government that track that sort of data.

Since this $10,000 accidental death insurance policy is at no cost to you, I recommend that everyone sign up for it. Whether you are single, have a family, have a dog, etc., it’s a no-brainer because this won’t cost you anything.

 

4. Find life insurance

Since we are talking about insurance, looking at life insurance is another one of the smart money moves you should take this year.

Surprisingly, life insurance is much more affordable than you’d probably think.

I did a quick search through PolicyGenius, and I was able to find a $1,000,000 policy for 20 years, for less than $27 per month.

Life insurance is money for your family if you were to pass away. And, if you are the sole or primary earner in your family, then there are probably a lot of people who rely on you financially. Life insurance is money that can be used to pay for funeral expenses, day-to-day bills, pay off debt, etc.

If you are looking for life insurance, I highly recommend looking into PolicyGenius.

PolicyGenius makes getting life insurance easy. A quote takes just 5 minutes and you can see comparable policies so that you can determine what is best for you.

You can click here to find a life insurance policy.

 

5. Shop around for more affordable car insurance

Shopping around for car insurance is something that most people do not do, and it can cost you tens of thousands of dollars over your lifetime.

By simply comparing insurance rates, you can save over $1,000 yearly.

You’d be surprised by how many people NEVER compare insurance rates, and how much money it can cost you.

In fact, a family member of mine has been paying around $2,200 a year for quite some time, and when I found out, I was absolutely shocked! 

I easily helped them find car insurance with better coverage for just $600 a year. Yes, they were able to save around $1,600 in literally less than 30 minutes. 

You can shop car insurance rates through Get Jerry here.

This company will allow you to get quotes from up to 45 insurance companies, and switching is super easy – you simply click a button and save money.

This is one of the quick money moves that can help you save money each month for years to come!

 

6. Have a money meeting

A new year is a great time to have your next (or first!) money meeting.

In your money meeting you may want to discuss things like:

  • Completing an annual financial checkup
  • Looking over your debt amounts
  • Checking your expenses
  • Discussing your financial goals
  • Thinking about what changes need to be made
  • What the family’s budget is
  • How much is needed for retirement, and where you are on that track
  • Any financial problems, and so on

There is no exact outline of what you should talk about in your money meetings because every financial situation is different. 

Money meetings help you get comfortable talking about your finances, and they make it easier to set goals and work towards them with your partner. I know talking about money can feel uncomfortable at first, but starting to have regular money meetings is one of the smart money moves every couple should take in the new year.

 

7. Start an emergency fund

An emergency fund is money that you have saved for when something unexpected happens, and I think 2020 showed many people why creating an emergency fund is one of the best money moves right now.

Your emergency fund can be used for something such as paying your bills if you lose your job (or if your hours or pay are cut), paying for a car repair, a medical bill, or something like a surprise leaking roof.

You can learn more at Why You Need An Emergency Fund and How To Start One Today.

 

8. Learn how to invest

Investing is important so you can:

  • Retire one day
  • Prepare for unexpected events in the future
  • Allow your money to grow over time

If you want to learn how to live your best life in the future, investing is a great way to do so. And, you can even start investing with little money.

Investing is a smart money move because it means you are making your money work for you. If you weren’t investing, your money would just be sitting there and not earning a thing.

This is important to note because $100 today will not be worth $100 in the future if you just let it sit under a mattress or in a checking account. However, if you invest, you can actually turn your $100 into something more. Investing for the long term means your money is working for you, potentially earning you an income.

For example: If you put $1,000 into a retirement account that has an annual 8% return, 40 years later that would turn into $21,724. If you started with that same $1,000 and put an extra $1,000 in it for the next 40 years at an annual 8% return, that would then turn into $301,505. If you started with $10,000 and put an extra $10,000 in it for the next 40 years at that same percentage rate, that would then turn into $3,015,055.

 

9. Increase your credit score

Do you know what your credit score is? Do you know how it can impact your life?

While I don’t think that you need to go crazy and obsess over your credit score, improving your credit score is not something that will hurt you.

Your credit score can impact the interest rate you receive on a loan or a mortgage, finding a rental home, attaining certain jobs, your insurance rates, even your cell phone bill, and more.

A credit score is a three digit number that shows others your creditworthiness, and is often used as an indicator to show how risky you are. A good credit score is usually over 720.

You can check your credit score with Credit Sesame for free.

If this is one of the smart money moves you want to make in 2021, here are some of the actions you can take to increase your credit score:

  • Pay your bills on time
  • Regularly check your credit report
  • Keep your balances and utilization rate low

Learn more at Everything You Need To Know About How To Build Credit.

 

10. Get your free credit report

One easy money move that I recommend this year is to start getting your free credit report.

You can receive one annual free credit report from the three main credit bureaus (Equifax, TransUnion, and Experian).

Yes, this means that you get one from EACH, so three each year. I recommend spacing them out so you can get one every four months.

You can read more about this here

 

11. Find an alternative to your expensive TV bill

Over five years ago, we decided to get rid of cable.

And, we haven’t missed it one bit. 

I know of many people who spend $100 each month on cable TV, many spend over $150 a month, and I even had someone tell me that they spend over $300 each month on cable.

If you’re trying to find ways to cut your budget, and you have an expensive TV bill, I definitely recommend finding an alternative. This is one of my favorite smart money moves in 2021 because there are more options than ever. There’s no reason to spend that much on cable ever again.

Learn more about your options at 16 Alternatives To Cable TV That Will Save You Money.

 

12. Track your money

Tracking your money is important when it comes to managing your money.

Luckily, there is a free, easy tool that allows you to do this.

Personal Capital is a free personal finance software that allows users to better manage their finances.

You can connect accounts, such as your mortgage, bank, credit cards, investment portfolio, retirement, and more, and it is all free.

You can track your cash flow, your spending, how much you’re saving, how your investments are doing, and more.

With their free financial platform, you can easily see all of your accounts in one place so that you can manage everything efficiently.

If tracking your money is one of the smart money moves you want to make in 2021, Personal Capital can help you reach your goal.

 

13. Refinance your student loans

Do you have student loans?

If so, then you may want to think about refinancing them. This is one of the smart money moves that can help you lower your monthly bills and possibly save money over time.

Student loan refinancing is when you apply for a new loan that is then used to pay off your other student loans.

This is usually a great option if you borrowed private student loans and your credit score is better now than when you originally took out your student loans.

By refinancing your student loans, you may qualify for better repayment terms, a lower interest rate, and more. This is great because it may help you pay off your student loans quicker.

The positives of refinancing student loans include:

  • One monthly payment to simplify your finances
  • Lower monthly payments
  • Lower interest rates, and more

Companies, such as Credible, help you to refinance your student loans. With refinancing, the average person can save thousands of dollars on their loan, and that’s incredible! You can save a lot of money with student loan refinancing, such as with Credible, especially if you have high interest federal or private loans.

Credible’s platform is similar to the way Expedia works for finding flights – with Credible, you simply search the available rates to find the best student loan rate for you. There is no service fee, no origination fee, and no prepayment penalty if you end up paying off your student loans faster.

To use Credible, it takes less than 10 minutes and just follow these steps:

  1. Fill out a quick simple form (2 mins) – It only takes one form to see the many different lender options.
  2. Choose an option you like (2 mins) – On Credible, you can easily compare the different lenders all in one place.
  3. Provide your loan details (3 mins) – After providing more information about yourself, it takes one business day to receive your finalized offer.

Before refinancing a federal student loan, though, you will want to think about different federal benefits that you may be giving up. You may give up income-based repayment plans, loan forgiveness for those who have certain public service jobs (including jobs at public schools, the military, Peace Corps, and more). By refinancing your federal student loans, you may be giving up any future options for these loan forgiveness programs.

However, keep in mind that by refinancing your student loans, you may receive lower monthly payments, lower interest rates, and more. This may help you pay off your debt much faster. For me, I didn’t qualify for any loan forgiveness, so refinancing would have definitely helped me if I knew about it back then.

 

14. Get a travel rewards credit card

Do you earn rewards with your credit card?

Using a travel rewards credit card means that you can gain points that you can use to get free or cheap travel. You can earn airline tickets, gift cards, hotel stays, cash, etc., all for simply using your credit card.

If you are going to pay for something anyway, then you might as well get something for free out of it, right?

If you travel a lot and/or already use credit cards, then signing up for the ones with the best rewards can help you earn free travel.

However, this is only a smart move money if you are able to use credit cards responsibly. Taking on debt to earn travel rewards isn’t a smart move!

Two cards I recommend include:

What should I do with my money in 2021?

It’s entirely up to you! Start by thinking about what your goals are for this year and your future.

Do you want to pay off debt? Start investing more? Reduce your monthly bills?

Those are all smart money moves to make, and the ideas on this list can help you work towards any of them. 

Remember, what you decide to do with your money in 2021 is personal. You may want to make steps towards quitting a job you don’t love, plan a vacation, donate more to your favorite charity, and so on.

It’s never a bad idea to focus on paying down your debt and finding ways to save money, but from there, think about what you want for your future.

What is the smartest thing to do with your money?

I believe that paying off your high interest rate debt is one of the most important smart money moves. Debt makes it hard to save or invest for your future, and the average person holds a lot of debt.

Having debt can keep you in a debt cycle that is hard to break free from, but you can learn how to become debt free and finally start focusing on your future.

What’s on your financial to do list for 2021? What smart money moves are you making?

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Source: makingsenseofcents.com

How To Get Your Blog Featured In The Media, Magazines, News, and More

Are you looking to grow your blog and business?

No matter what type of business you run, being featured in the media can improve your market reach, page views, income, and more.

How To Get Your Blog Featured In The Media

Photo credit: Daisy Gamboa

Today, I’m excited to introduce you to Selena Soo.

Selena has landed publicity and been featured in places like Forbes, Business Insider, Entrepreneur, and Inc., Entrepreneur On Fire, Smart Passive Income, and more.

I have heard amazing things about Selena over the years, and we randomly connected one day when we realized that we were both in a small town in Puerto Rico at the same time for several months.

Media features are something that I’m always extremely happy to land, and I know that they do wonders for a blog. In fact, in 2021, I am hoping to land even more features. I have been featured on Oprah, Reader’s Digest, Forbes, CNBC, Business Insider, and so much more.

Due to that, I know how valuable media mentions are!

You can see many of my features here, and as you can see, I have put a lot of time into it over the years.

All the time I am asked how I have so many features in the media….

And, luckily today you can learn how to get your blog and business featured in the media more.

In this interview, you’ll learn:

  • How publicity has changed Selena’s life;
  • How publicity can help grow your blog;
  • The first step to getting featured in the media;
  • What an effective pitch consists of;
  • How to build authentic relationships without being annoying;

And more!

You can also get free access to her 2021 Publicity Calendar. This contains 179 story ideas, dates, and hooks to help you create endless media attention and buzz! If you want to get featured in magazines and popular websites, this is something that you will definitely want to sign up for.

Please enjoy the interview with Selena below.

1. Tell me your story. Who are you and what do you do?

I’m a publicity and marketing strategist who has worked with everyone from eight-figure business owners to entrepreneurs just getting started. I help them shine a spotlight on their expertise using the power of the media.

But my seven-figure company didn’t spring up overnight.

When I was in my mid 20s, I had a quarter life crisis while working for a nonprofit.

As I was figuring out what I wanted to do with my career, I stumbled upon a network of inspirational authors, coaches, and entrepreneurs.

I was grateful for how their wisdom and mentorship helped me through a difficult time in my life and felt inspired to help them reach more people.

I started my publicity agency to help them create the same impact they had on me, but on a much larger scale. I’ve since expanded my brand into other offerings, like my best-selling online program Impacting MillionsⓇ!

2. How has publicity changed your life and business?

It’s always been easy for me to help others get attention — but as a natural introvert, I shied away from the spotlight.

The challenge was that I knew that if I wanted to create my biggest impact, I needed to put myself out there and become visible.

After my first guest post, I doubled my email list with over 1,000 people signing up the first day my article was released.

Since then, I’ve landed top publicity in places like Forbes, Business Insider, Entrepreneur, and Inc., as well as top industry podcasts.

It’s helped me to grow my audience, increase my credibility, and ultimately, to build a multi 7-figure business!

3. How and why did you start connecting with influential people?

I started connecting with people that inspired me because I wanted to help them get their message out into the world.

I followed their work closely and began to see ways and opportunities to support them.

So I started to reach out, saying things like, “I know someone you should connect with.” Or, “This would be a great opportunity for you — can I put you in touch?”

Today, I’m able to count the most amazing people as my friends, mentors, and clients.

4. How can publicity help grow a blog and other businesses?

Publicity is the fastest way to gain credibility in your industry.

It’s one thing to tell everyone you’re the best at what you do, but it’s another to have media and influencers vouching for you—and publicity does just that.

Not only have our students been able to leverage publicity to establish themselves as authorities in their fields, but they’ve also been able to translate media wins into financial gains.

Impacting Millions students have used media appearances to sell their courses, find new clients and take their businesses to a whole new level.

Graduates have told us that they increased their rates (with some catapulting from 3-figure to 5-figure offers even during a pandemic), have consistently brought in $10,000 per month, have gotten paid book deals and have increased their revenue by six figures due to publicity.

5. Can you go over the steps it takes to get featured in the media?

One of the first steps to being featured in the media is to prepare yourself mentally for the opportunity.

So many of my successful clients and students dream of appearing on their favorite podcasts or popular blogs, but they’re terrified of putting themselves out there until they go through the course.

One of the first things we do in Impacting Millions is to help you get into the mindset of the media so that you can confidently email a podcast host or a TV producer without your hand shaking over the send button.

Additionally, it’s essential to position yourself as an expert and have a great story idea. All things we help you do in Impacting Millions!

Photo credit: Patience Manzare

6. What is an effective pitch? What does it consist of?

Email is the most effective way to reach out to the media.

A strong pitch has a subject line that will grab their attention, as well as an email body that establishes why you’re an expert worth taking notice of.

Include your story ideas in the email, as well as relevant samples of your work.

For example, if you’re looking to write a guest post, share writing samples. If you’re looking to be on TV, include video clips of you being interviewed.

7. How can a person make themselves stand out so that they can get those coveted media features?

One of the best ways to stand out is to offer the media a compelling story idea.

When submitting it, choose a headline that would grab the reader’s attention and get a lot of clicks.

When you outline the tips you’d share, include fresh perspectives that are surprising and counterintuitive.

You want to spotlight your brilliance by offering advice they haven’t heard before.

8. How can a blogger build authentic relationships with those in their network, without being annoying?

When you meet someone new, make it a priority to understand their needs and goals.

When you take a genuine interest in other people your interactions will be memorable in all the right ways.

How could you help them or support them?

  • It might be as small an action as leaving a thoughtful comment on their social media feed or letting them know that you shared their content with your audience.
  • It could be as big as suggesting a virtual coffee date to learn more about the projects they’re working on and how you can be of service with no strings attached.

When you’re in touch about things that are important to them, you’ll never be seen as an annoyance.

9. What advice would you give to someone who is an introvert, and afraid to put themselves out there?

Reconnect to your why.

It’s natural to have fears, but when you remember the work that you’re doing is for the greater good, it can take away some of that fear.

10. Can you tell me more about your program, Impacting MillionsⓇ?

Impacting Millions is for entrepreneurs, experts, coaches, and service providers who have a deep desire to reach more people with their message.

You’ll learn to create a strategic media plan to land dream publicity opportunities to catapult you from best-kept secret to highly sought-after leader.

As a result, you’ll attract clients with greater ease, while impacting more lives than you ever imagined!

11. What is your very best tip (or two) that you have for someone who wants to see success in the media?

It’s fairly similar to creating a successful blog.

Don’t just think about what you feel like writing or talking about. You need to focus on the stories that you know that the audience of that media outlet wants to hear. If you’re focused on making the podcast host or the website’s editor be the first to highlight a trend for their audience, get original advice on a topic, or bring lots of traffic to their site, you’ll become a darling of the media.

Additionally, make sure to promote your articles and interviews when they are published. Not only will it make the people at the media outlet happy, but it creates excitement within your audience—who may also share it with the people in their world. The more people are seeing and talking about your media appearances, the bigger impact those appearances will make!

12. You have a free gift for readers who want more publicity. Can you tell us more about that?

Yes!

I have a 40+ page Publicity Calendar with hundreds of story ideas, key dates, and special hooks to get into the media. One of the secrets to landing media is to make your pitches timely and relevant—and this calendar helps you do just that. We have ideas and tips for all 12 months of the year.

You can instantly download your free copy here.

Are you trying to grow your blog or other type of business? Have you tried getting featured in the media? What other questions do you have for Selena?

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16 Free Work From Home Courses & Resources

Trying to find free work from home courses? Would you like to learn how to work from home?

Today, I have a great list of free online courses, plus webinars and ebooks that will help you learn how to start your own home business.Free Work From Home Courses

Free Work From Home Courses

If you’re looking to make extra income or a full-time living, working from home can be a great idea for you to learn more about. 

For me, I love being able to work from home. I have been working from home for over 7 years now, and I wouldn’t change a thing!

Many people enjoy working from home for reasons such as eliminating your commute, making extra money from home, being your own boss, having a more flexible schedule, and so on.

Also, around 50% of U.S. businesses are now based at home, and that number is expected to to grow.

There are lots of valuable paid online courses for work from home jobs, but if you’re not sure about an idea, you might not want to invest any money just yet.

That’s why free courses and guides are a great way to learn.

In fact, I learned how to start my business by first taking free courses. Since I wasn’t sure what I was doing when I started this blog, I didn’t want to spend money that I didn’t have just yet. I wanted to wait until I felt more comfortable and sure that blogging was what I wanted to do.

You can learn more about each of these online business ideas, figure out what is needed in terms of skills and education, the amount of money you can make, and so on. You get to test these ideas a little bit before you invest a lot of time and money, which is very nice.

Here is a quick list of the free work from home courses and resources that I’m sharing in today’s article:

  1. Sell on Amazon Starter Course
  2. Selling Printables on Etsy Ebook
  3. How To Start a Blog Course
  4. Build A Voiceover Action Plan From Scratch Minicourse
  5. Start An Online Advertising Business From Scratch
  6. Start Your Virtual Bookkeeping Business
  7. Turn Your Passion For Visiting Thrift Stores, Yard Sales & Flea Markets Into A Profitable Reselling Business In As Little As 14 Days
  8. General Transcription Mini-Course
  9. Become a Proofreader 76 Minute Webinar
  10. Court Transcript Proofreading Mini Course
  11. Podcast Virtual Assistant Workbooks
  12. Make Money Writing Romance Novels ecourse
  13. Pinterest Virtual Assistant Training Workshop
  14. Jumpstart Your Virtual Assistant Business
  15. Self-Publishing Your First Book
  16. FREE Intro to Scoping Mini-Course

In the article below, I will be talking further about each work from home business idea and the free work from home courses or resources available for them.

Here are 16 free work from home courses and resources.

 

1. Sell items on Amazon.

The first year that my friend Jessica ran her Amazon FBA business, working less than 20 hours a week total, she made over $100,000 profit.

This free course shows you how to start a profitable Amazon business in a 9-part video course. You’ll learn:

  • The exact steps to follow to set up your Amazon Seller account
  • Two easy and affordable ways to find items to sell
  • How to choose profitable inventory that customers actually want to buy

If this is one of the free work from home courses you’re interested in, click here to learn more and sign up for the FREE Amazon FBA Starter Course!

 

2. Sell printables online.

Did you know that you can earn a living by selling printables online?

Creating printables on Etsy can be a great side hustle because you just need to create one digital file per product, which you can then sell an unlimited number of times.

Printables are digital products that customers can download and print at home. Examples include grocery shopping checklists, gift tags, candy bar wrappers, printable quotes for wall art, and patterns.

You can sign up for this free ebook that helps you figure out where to start when it comes to selling printables on Etsy.

 

3. Create a blog.

Blogging changed my life for the better, and it allows me to earn thousands of dollars a month, all by doing something that I love.

Blogging has allowed me to save up enough money for early retirement, to travel full-time, have a flexible schedule, and more.

Here’s a quick outline of what you will learn in this free course:

  • Day 1: Reasons you should start a blog
  • Day 2: How to determine what to blog about
  • Day 3: How to create your blog (in this lesson, you will learn how to start a blog on WordPress – my tutorial makes it very easy to start a blog)
  • Day 4: How to make money blogging
  • Day 5: My tips for making passive income from blogging
  • Day 6: How to grow your traffic and followers
  • Day 7: Miscellaneous blogging tips that will help you be successful

You can easily learn how to start a blog with my free How To Start a Blog Course.

 

4. Voice over act.

A voice over actor is the person you hear but rarely see on YouTube videos, radio ads, explainer videos, corporate narration, documentaries, e-learning courses, audiobooks, TV commercials, video games, movies, and cartoons.

In 2014, Carrie Olsen replaced her salaried day job to become a full-time voice over actor. People are constantly asking her how she got her start and how they can too.

So, she created Build A Voiceover Action Plan From Scratch Minicourse – This free course will help you learn about becoming a voice over artist, even if you’re brand new!

 

5. Manage Facebook advertising for local businesses.

This is a skill that you can learn without any prior experience in marketing or advertising.

The going rate for Facebook Ad management is $1,000 – $1,500 per month, per client.

This free webinar will teach you:

  • How one client can earn you $1,000 to $2,000 per month
  • Where to find Facebook ads clients

And more!

You can sign up for free at How To Manage Facebook Ads For Clients & Build Your Own Online Marketing Business.

 

6. Become a bookkeeper.

A bookkeeper is someone who tracks the finances of a business. They may handle payroll, billing and invoicing, etc.

And, you can learn how to become a bookkeeper without being an accountant or having any previous experience.

This free resource will teach you more about running your own virtual bookkeeping business. You’ll learn:

  • Is a bookkeeping business for you?
  • What exactly is a bookkeeping business? What kind of work do they do?
  • How much money can you make as a bookkeeper?
  • How do you find clients?

You can sign up for free at Start Your Virtual Bookkeeping Business.

 

7. Flip items for resell on eBay, Craigslist, and more.

Have you ever found something that you thought you could resell to make some money?

I’m sure you’ve thought about it in the past. I know that I have!

My friend Melissa’s family earned $133,000 in one year by buying and selling items that they’ve found at thrift stores, yard sales, and flea markets.

Some of the best flipped items that they’ve sold include:

  • An item that they bought for $10 and flipped for $200 just 6 minutes later
  • A security tower they bought for $6,200 and flipped for $25,000 just one month later
  • A prosthetic leg that they bought for $30 at a flea market and sold for $1,000 on eBay the next day

This is one of the home business ideas that anyone can start because you can start off selling things in your own house – I know we all have lots of stuff in our home that we could stand to get rid of. Then once you get a feel for the work, you can start purchasing items to resell.

I know quite a few people who have been flipping items for resale successfully for years!

You can sign up for the free webinar at Turn Your Passion For Visiting Thrift Stores, Yard Sales & Flea Markets Into A Profitable Reselling Business In As Little As 14 Days.

 

8. Transcribe audio or video into words.

Transcription is when you turn audio or video content into a text document. You listen to what’s being said and type it up into a text format.

There are many businesses looking for transcriptionists too – since general transcriptionists convert audio and video to text for virtually any industry, there really isn’t a typical client. Some examples include marketers, authors, filmmakers, academics, speakers, and conferences of all types.

Beginning transcriptionists earn around $15 an hour, and it increases from there.

In this free course, you will learn:

  • What it takes to become a transcriptionist
  • How much you can earn as a transcriptionist
  • How you can find transcriptionist work

You can learn more in the Free General Transcription Mini-Course. This is one of the free work from home courses that can introduce you to a very flexible side job.

 

9. Become a proofreader.

Have you ever read an obvious mistake and wanted to fix it?

Proofreaders look for punctuation mistakes, misspelled words, lack of consistency, and formatting errors.

You take content that other people have written and then go over it with a fine-tooth comb. You might be proofreading blog posts, print articles, academic articles, website copy, ad copy, books, student papers, emails, and more.

In one year, my friend Caitlin made around $43,000 by working as a freelance proofreader.

In her free 76-minute workshop, you will learn:

  • Common questions about becoming a proofreader
  • How to become a proofreader
  • 5 signs proofreading could be a perfect fit for you

You can sign up for free at Transform Your Passion for Words & Reading into a Thriving Proofreading Business in as Little as 30 Days.

 

10. Become a court transcript proofreader.

Becoming a court transcript proofreader is a more focused version of the last idea.

Court reporters also use court transcript proofreaders because of the importance of this type of work.

There is more training that goes into becoming a court transcript proofreader, and that is why I separated it from the general proofreading workshop above.

Caitlin, mentioned above, also has a great FREE 7-day course just for people who are interested in becoming a court transcript proofreader.

 

11. Become a podcast virtual assistant.

There’s a big demand for podcast virtual assistants right now due to there being over 800,000 podcasts. And, that number just continues to grow like crazy!

While the podcast host is responsible for recording themselves, other tasks like editing and publication take time, so many podcasters outsource their work to freelancers or virtual assistants. Also, some podcasters may not know how to do those things, or they may choose to focus their time on other areas.

In this free resource you will learn:

  • A list of the top podcast skills that businesses need help with
  • A custom podcast production checklist that the instructors use with all of their clients

And more!

You can sign up here for free workbooks and checklists that will tell you more about how to become a podcast VA. 

 

12. Write romance books.

My friend Yuwanda has found one of the most interesting home business ideas – she writes romance novels, and in one month, she was able to make over $3,000!

In this free course, you will learn:

  • How to get over your fear of not being a good writer
  • The technical side of self-publishing
  • How she got started writing her first romance novel

And more!

Learning to become a romance writer is by far one of the most interesting free work from home courses. If you’re interested, you can sign up for free at Make Money Writing Romance.

 

13. Help businesses on Pinterest.

Do you enjoy spending time on Pinterest?

Businesses are always looking for Pinterest virtual assistants.

Pinterest virtual assistants help businesses with tasks such as:

  • Designing Pinterest images for a website
  • Helping business owners set up their Pinterest account
  • Scheduling pins because this can be time consuming for the average business owner
  • Brainstorming a marketing plan

Click here and click on “Free Training Workshop” to learn how to become a Pinterest virtual assistant and find your first client. In this free course, you’ll learn what you need to do to get started, what services to offer, and how much to charge as a Pinterest virtual assistant.

 

14. Help businesses as a virtual assistant.

Virtual assistance is a field that is growing very quickly and is one of the most popular online business ideas, as you’ve seen with some of the niche VA courses I’ve already mentioned.

Virtual assistant tasks may include social media management, formatting and editing content, scheduling appointments or travel, email management, and more. Basically, you can get paid to do any task that needs to be done in someone’s business, but doesn’t need to be done by them.

If you are looking for free work from home courses for virtual assistants, then, I recommend checking out Jumpstart Your Virtual Assistant Business. In that link, you’ll receive a free worksheet and workbook that will help you decide what virtual assistant services you can offer (there are over 150 choices!).

 

15. Write your own eBook.

Writing your own eBook is a great way to make money from home, and there is probably something super helpful that you could write about (even if you think otherwise!).

In fact, my friend Alyssa self-published her first book and has sold more than 13,000 copies.

She is now earning a great passive income of over $200 a day from her book ($6,500 in one month alone!).

In this free resource, you will learn:

  • What it takes to publish a book
  • The strategies used to launch a book
  • Writing tips

And more!

You can sign up for free at Self-Publishing Your First Book.

 

16. Become a scopist.

A scopist is someone who edits legal documents for court reporters. A typical salary for an average scopist is around $30,000 to $45,000 per year.

In this free course, you will learn:

  • What is scoping? What does a scopist do?
  • What about finding clients and marketing?
  • What’s the earning potential?
  • What do I need to get started?

If you are looking for free online job training courses about becoming a scopist, I definitely recommend you click here to sign up for the free How To Become a Scopist course.

 

Which course is best for working from home? What can I learn at home for free?

As you can see, there are many different free work from home courses that can help you start your own home business.

The best work from home job will vary from person to person.

I recommend writing down the ones that interest you the most, and exploring those further by taking the free resources mentioned above, doing some online research, and even asking those in the industry how they like their job.

Again, below is a quick list of the free work from home courses and resources that I shared above:

  1. Sell on Amazon Starter Course
  2. Selling Printables on Etsy Ebook
  3. How To Start a Blog Course
  4. Build A Voiceover Action Plan From Scratch Minicourse
  5. Start An Online Advertising Business From Scratch
  6. Start Your Virtual Bookkeeping Business
  7. Turn Your Passion For Visiting Thrift Stores, Yard Sales & Flea Markets Into A Profitable Reselling Business In As Little As 14 Days
  8. General Transcription Mini-Course
  9. Become a Proofreader 76 Minute Webinar
  10. Court Transcript Proofreading Mini Course
  11. Podcast Virtual Assistant Workbooks
  12. Make Money Writing Romance Novels ecourse
  13. Pinterest Virtual Assistant Training Workshop
  14. Jumpstart Your Virtual Assistant Business
  15. Self-Publishing Your First Book
  16. FREE Intro to Scoping Mini-Course

Which free work from home courses are you interested in?

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How I Paid Off My $40,000 Student Loan Debt In Less Than One Year

Are you interested in learning how to pay off student loans? Are you looking for the best way to pay off student loans?

Today, I want to talk about how I paid off my student loans, tips to pay off student loans, and answer many of your top questions about how student loans work.best way to pay off student loans

best way to pay off student loans

I graduated college with $40,000 student loan debt, and I paid off my student loans in just 7 months. It’s been several years since I paid them off, but I still receive so many questions about this topic.

There are approximately 45 million student loan borrowers in the U.S. with a total of $1.6 trillion in student loan debt. Yes, that’s trillion.

With so much student loan debt, it’s not surprising that I receive so many questions about how to pay off student loans. Student loans can stay with you for years, and they can affect almost every financial decision you make until they are paid off. 

Student loans can prevent you from saving for retirement, make it harder to pay off other types of debt, find the job of your dreams, and so on.

Living with student loan debt can cause a lot of stress, and that’s one of the reasons I wanted to pay mine off as quickly as possible. I didn’t want to live with that debt on my shoulders any more. 

In this article, you will learn how I paid off my student loans, and while it did take a lot of hard work, it was well worth it.

Paying off my student loans completely changed my life, and it’s something I’ll never regret.

Paying off student loans can lead to many benefits, such as:

  • Feeling less stress because you no longer have a huge debt hanging over you.
  • Having the ability to use that money towards other goals in life, such as saving for retirement or buying a home.
  • Gaining the option to pursue other goals in life, such as traveling more or looking for a better job.

I know these benefits are real because paying off my student loans is one of the best decisions that I’ve ever made.

No, it wasn’t easy to pay them off so quickly, but it was definitely worth it. No longer having those monthly payments hanging over my head is a big relief, and it allowed me to eventually leave my day job and travel full-time.

If you’re reading this article, then you’re probably interested in paying off your debt as well.

Below, I’m going to answer some common questions that I’ve received over the years about paying off student loan debt, the steps I took to pay off my student loans in 7 months, along with other questions you may have as well.

 

How I paid off my student loans.

You will want to read through the steps below if you are asking, “How can I pay off my student loans fast?” 

Paying off your student loans so quickly is not easy, but it doesn’t mean it’s impossible. You have to find creative ways to make money, understand exactly how your student loans work, reduce your expenses as much as possible, and make a plan to pay off your loans.

Below are the 8 steps I took to pay off my loans, and then I will answer many of the questions I receive about student loans so you can understand the best way to approach your pay off. As you can see, there are many different student loan repayment methods.

1. Understanding my student loans

First off, I did everything I could to better understand my student loans.

I always think it’s best that you understand your debt so you can find the best strategies to pay it off. Understanding your loans helps you pay off student loans faster and save money over the course of your pay off.

Here’s what you should understand about how student loans work:

  • Your interest rate. Some student loans have fixed interest rates, whereas others have variable rates. Fixed rates stay the same, and variable rates go up or down based on the market. You’ll want to figure out the interest rates on each of your loans because that may impact the student loan repayment plan you decide on. For example, you might choose to pay off your highest interest rates student loans first so you can pay less money over time.
  • What a monthly payment means. Many people believe that a monthly payment is all that you have to pay, are allowed to pay, or that by paying just the minimum monthly payment you won’t owe any interest. Those three things are so incorrect! Even if you pay the minimum monthly payment, you will most likely still owe interest charges (unless your interest rate is 0% – but that is very unlikely with student loans).
  • Student loan reimbursements. Some employers will give you money to put towards your student loans, but you should always do your research before assuming it’s just that simple. Some employers require that you work for them for a certain amount of time, that you have great grades, good attendance, and they might have other requirements as well. There are many employers out there who will pay your student loans back (fully or partially), so definitely look into this option.
  • Auto-payment plans. For most student loans, you can probably autopay them and receive a discount. Always look into this as you may be able to lower your interest rate by 0.25% on each of your student loans.

Related: How Do Student Loans Work?

 

2. I added up my total student loan debt

This is probably the most important step. I know that many of you will think I am crazy, but this is crucial to seeing success.

I recommend that you take time to add up the total amount of student loans that you have.

When you total your student loans, do not just estimate how much debt you have.

You should actually pull up each loan and tally everything, down to the penny. By doing so, you will have a much more realistic view of exactly how much you’re dealing with.

Plus, the average person has no idea how much student loan debt they have! Usually, they have far more than they originally thought.

 

3. I received an easy interest rate deduction

If you automatically pay your student loans each month or consolidate them, then sometimes you can get an interest rate reduction.

With Sallie Mae, I believe the reduction is 0.25%.

That may not seem significant, but it is something! Remember, every little bit counts when it comes to having a good student loan repayment plan.

Related: I recommend that you check out Personal Capital (a free service) if you are interested in gaining control of your financial situation. Personal Capital allows you to aggregate your financial accounts so that you can easily see your financial situation, your cash flow, detailed graphs, and more. You can also connect accounts, such as your mortgage, bank accounts, credit card accounts, investment accounts, retirement accounts, and more. Plus, it’s FREE.

 

4. I found ways to make extra money

Making extra money is something I did a lot of back when I had student loans, and it was the big reason for why I was able to pay off $40,000 in student loans in just 7 months.

And, I believe that the fastest way to pay off student loans is to find ways to make extra money.

Making extra money can allow you to pay off your students loans quickly because there is no limit to how much money you can make. When you make money in addition to what you make at your current job, you have that much extra money to put towards your debt repayments.

Every extra bit of money I made went towards paying off my student loans, and I would usually make a payment as soon as the extra money from my side hustles hit my bank account. I did this so I was never tempted to spend that money. 

Here are a few of the things I did to make extra money: started this blog and made money from it, sold items on eBay, mystery shopped, had roommates in my house, took paid online surveys, wrote for other websites, and much more.

If you want to learn how to pay off student loans fast, then I definitely recommend that you find ways to make extra money. Here are various ideas you can try:

  • Start a blog. Blogging is how I make a living and just a few years ago I never thought it would be possible. You can create your own blog here with my easy-to-use tutorial. You can start your blog for as low as $2.75 per month, plus you get a free domain if you sign-up through my tutorial.
  • Start a business. There are many business ideas that you could start in order to make extra money. You can clean houses, walk dogs, house sit, work as a freelancer, and much more.
  • Sell your stuff. There are many ways to make money selling things. We all have extra items lying around that can be sold, or you can even search for items that can be bought and resold for a profit.
  • Rent an extra room in your home. If you have extra space in your house, then you may want to rent it out. Learn more at What You Need To Know About Renting A Room In Your House.
  • Answer surveys. Survey companies I recommend include Branded Surveys, American Consumer Opinion, Swagbucks, Survey Junkie, Pinecone Research, Opinion Outpost, Prize Rebel. They’re free to join and free to use! You get paid to answer surveys and to test products.
  • Find a part-time job. There are many part-time jobs that you may be able to find. You can find a job on sites such as Snagajob, Craigslist (yes, I’ve found a legitimate job through there before), and so on.
  • Sell crafts. If you’re looking for creative ways to pay off student loans, this one is for you!

Learn more at 80+ Best Side Job Ideas To Make Extra Money.

5. I sought out ways to reduce my expenses

The next step is to pay off student loans faster is to cut your budget. Even though you may have a budget, you should go through it line by line and see what you really do not need to be spending money on.

There’s probably something in your budget you can cut.

Until you look everything over,, you may not realize how much money you are wasting on things you don’t need. And, it’s never too late to start trimming your budget and start putting that money towards important things like paying off student loans!

Even if all you can cut is $100 each month, that is better than nothing. That’s $1,200 a year right there!

Some expenses you may be able to cut include:

  • Lower your cell phone bill. Instead of paying the $150 or more that you may currently spend on your cell phone bill, there are companies out there like Republic Wireless that offer cell phone service starting at $15. YES, I SAID $15! If you use my Republic Wireless affiliate link, you can change your life and start saving thousands of dollars a year on your cell phone service. If you are interested in hearing more, I created a full review on Republic Wireless. I’ve been using them for over a year and they are great.
  • Sign up for a website like Rakuten where you can earn CASH BACK for spending how you normally would online. The service is free too! Plus, when you sign up through my link, you also receive a free $10 cash back!
  • Pay bills on time. This way you can avoid late fees.
  • Shop around for insurance. This includes health insurance, car insurance, life insurance, home insurance, and so on. Insurance pricing can vary significantly from one company to the next. The last time we were shopping for car insurance, we found that our old company wanted something like $205 to insure one car each month, whereas the company we switched to charged $50 a month for the same exact coverage.
  • Save money on food. I joined $5 Meal Plan in order to help me eat at home more and cut my food spending. It’s only $5 a month (the first four weeks are free) and they send meal plans straight to you along with the exact shopping list you need in order to create the meals. Each meal costs around $2 or less per person.
  • Fuel savings. Combine your car trips, drive more efficiently, get a fuel efficient car, etc.
  • Trade in your car for a cheaper one. How much is your monthly car payment, if you have one? This can be an easy way to cut your budget drastically.
  • Live in a cheaper home. I’m not saying that you need to live in a box, but if you live in a McMansion, then you may want to think about a smaller home. This way you can save money on utility bills and your mortgage payment.
  • Learn to have more frugal fun. We don’t spend anywhere near the same amount of money on entertainment as we used to. There are plenty of ways to have frugal fun.

 

6. I created a plan to pay off my student loans

After you have completed the steps above, you’ll want to put it all together and create a plan.

Without a plan, you would just be all over the place, making it difficult to reach your goal of learning how to pay off student loans.

You should create a plan that details the steps you need in order to pay off your student loans, what will happen as you reach each step, when and how you will track your progress, and more.

Here’s what my student loan pay off plan included:

  • Setting up autopay on my student loans so I never missed a payment. I had autopay set up to pay the minimum payments on each of my student loans, and then I made targeted payments (more on this in the next point) with any extra money.
  • Paying off the student loans with the highest interest rates first. All of my extra money went towards my student loans with the highest interest rate, and once that loan was paid off, I put the money I was paying towards that loan towards the loan with the next highest interest rate until all of my loans were paid off. This helped me save money on interest charges
  • Put every bit of extra money towards my student loans. Like I said earlier, any time I made extra money, I immediately made a payment on my student loan debt, even if it was something small like $20. This meant all of my extra money went towards student loans, and I was never tempted to spend it on something else.
  • I checked my student loan balances a couple of times a month. Seeing my debt go down helped me stay motivated.  

This plan took a lot of hard work and dedication, but it’s exactly how I paid my student loans off so quickly.

7. I stayed motivated with my student loan payment plan

For me, motivation was crucial for paying off my student loans. Luckily, I received great satisfaction each time I put even just a little bit towards my student loans.

But, staying motivated can be hard. Motivation is important because it can help you keep your eye on your goal to pay off student loans even when you want to quit, which can happen often during a big debt repayment.

Yes, student loan repayment can seem very stressful when you think about it. Many people owe thousands and thousands of dollars in student loans. It may feel like you are trying to scale a mountain.

However, think about how good life will be once all of your student loan debt is gone.

Please try to not let your student loans get you down. Think positively and attack that debt so that you can pay it off fast!

Trust me, once you finally pay off those expensive student loans, you’ll be much happier.

Some ways to stay motivated while you pay off student loans includes:

  • Remember the reasons for why you are wanting to pay off your student loan debt.
  • Make your goal visual with a debt thermometer.
  • Set smaller goals in between. For example: If your overall goal is to pay off $24,000 in debt in two years, then you might want to aim for $1,000 in debt payoff each month. This seems much more attainable than the $24,000 number, and this can help you stay motivated while still challenging yourself at the same time.
  • Keep track of your progress.
  • Think about how you will feel in the future.

As you can see, there are many ways to stay motivated.

 

8. I paid more than the minimum student loan payment

The key to speeding up your student loan repayment process is that you will need to pay more than the minimum each month.

Most student loans, especially many federal student loans, are set up for a 10 to 20-year repayment plan. But if you want to pay them off faster, then you must pay more than the minimum payment each month.

Not only does paying more than the minimum help you pay off your loans faster, it helps you save money on interest charges. For some people, that can make the difference of thousands of dollars saved over the course of their repayment.

Paying more than the minimum may sound hard, but it really doesn’t have to be. Whatever extra you can afford, you should think about putting it towards your student loans. You may be able to shave years and thousands of dollars off your student loans!

Common questions about the best way to pay off student loans

In this section, I am going to answer common questions that I’ve received about the best way to pay off student loans.

Is it smart to pay off student loans quickly? What is the smartest way to pay student loans?

There are many benefits to paying off your student loans early. For me, I hated the feeling of having all of that debt hanging over my head. No longer feeling that stress was the benefit.

I recommend sitting down and thinking about how paying off student loans quickly could positively change your life too.

It might mean you are eventually able to leave a job you hate, finally buy a house, travel more, retire early, and so on.

How does paying back student loans work?

Most student loans have a 6 month grace period where you don’t have to make your first payment until 6 months after you graduate or if you go to school less than half-time.

But, this all depends on the student loan, so you will want to make sure that you read the terms on your loan.

Even though you may not have to pay back your student loans right away, that doesn’t mean you can’t.

You can start paying back your student loans early, and you can pay more than the minimum monthly payment as well.

Your student loan servicer, whether federal or private student loan lender, will send you information to set up your repayment plan some time in that 6 month period. If you are still in school, I recommend starting to think about how you will pay off your loans.

Federal student loan borrowers have a few different options for paying back their loans, including income-based repayment plans, graduated plans, and so on. You should look into each option to see what makes the most sense for you.

No matter which option you choose, remember that you can always make more than the minimum payment, and that’s what you should do if you want to pay off student loans quickly.

 

Is it better to save or pay off student loans? Should I pay off my student loans?

A big question when paying off debt is if that should be your sole focus. Should you still be trying to save money while paying off your debt?

Or, should all of the extra money you have be going towards your student loan debt?

You may be wondering things such as:

  • Should I pay off debt or emergency fund first, as in set some money aside for emergencies?
  • Should I pay off debt or save up for a downpayment?
  • Can I pay off debt AND save money at the same time?

And so on and so on.

I paid off my student loans quickly, which meant that I focused entirely on my student loans and completely skipped any other financial goals. It doesn’t mean that’s the best decision for everyone, though.

I know several people who paid off their student loans quickly like me and didn’t have any money saved while they were doing so, and a couple of them wish they had an emergency fund. 

It all depends on your situation. If you have kids, health problems, a house, people who rely on you financially, etc., then you may want to have at least an emergency fund.

I recommend reading Pay Off Debt Or Save Money – Is One Better For You? to learn more about this subject.

What other ways can you pay off student loan debt?

If you are looking for other ways to pay off student loan debt, there are plenty of other options.

These may include:

  • Asking your employer to help pay off your student loans
  • Refinancing your student loans
  • Seeking out student loan forgiveness

Below, I will be talking about these options in more detail.

 

See if your employer will reimburse your student loan debt.

Some companies offer their employees student loan reimbursements. I know of someone who received a $2 bonus for each hour that she worked to put towards her student loans.

$2 may not seem like a lot, but if you work full-time, then that’s over $300 a month (or $3,600 a year!). $300 a month for student loans is a good amount! 

And, because it’s free money, it can all be put towards paying off your student loans quickly.

If you are looking for a new job, this may be something you will want to ask about.

 

Should you refinance your student loans?

By refinancing your student loans, you may qualify for better repayment terms, a lower interest rate, and more. This is great because it may help you pay off your student loans quicker.

This can be a good option if you borrowed private student loans and your credit score is better now than when you originally took out your student loans.

The positives of refinancing student loans include:

  • One monthly payment to simplify your finances
  • Lower monthly payments
  • Lower interest rates, and more

Companies, such as Credible, allow you to refinance your student loans. With refinancing, the average person can save thousands of dollars on their loan, and that’s incredible! You can save a lot of money with student loan refinancing, such as with Credible, especially if you have high interest federal or private loans.

Credible’s platform is similar to the way Expedia works for finding flights – with Credible, you simply search the available rates to find the best student loan rate for you. There is no service fee, no origination fee, and no prepayment penalty if you end up paying off your student loans faster.

To use Credible, it takes less than 10 minutes and just follow these steps:

  1. Fill out a quick simple form (2 mins) – It only takes one form to see the many different lender options.
  2. Choose an option you like (2 mins) – On Credible, you can easily compare the different lenders all in one place.
  3. Provide your loan details (3 mins) – After providing more information about yourself, it takes one business day to receive your finalized offer.

Before refinancing a federal student loan, though, you will want to think about different federal benefits that you may be giving up. You may give up income-based repayment plans, loan forgiveness for those who have certain public service jobs (including jobs at public schools, the military, Peace Corps, and more). By refinancing your federal student loans, you may be giving up any future options for these loan forgiveness programs.

However, keep in mind that by refinancing your student loans, you may receive lower monthly payments, lower interest rates, and more. This may help you pay off your debt much faster.

For me, I didn’t qualify for student loan forgiveness, so refinancing would have definitely helped me if I knew about it back then.

 

How does student loan forgiveness work?

Teachers, nurses, and government employees may be eligible for student loan forgiveness through a program called Public Service Loan Forgiveness (PSLF). It is only available for Direct Federal Student Loans, including Direct Plus and Direct Consolidation Loans.

To qualify, you must be working full-time, make 10 years of on-time monthly payments under a qualifying repayment program, which includes:

  • Income-Based Repayment Plan (IBR)
  • Income-Contingent Repayment Plan (ICR)
  • Pay As You Earn (PAYE)
  • Revised Pay As You Earn (REPAYE)

You will have to certify your income and repayment plan every year, and PSLF does not apply to private student loans.

PSLF is one of the most confusing aspects of how student loans work, so I highly recommend that you contact your student loan servicer as soon as possible. They will explain exactly how to move forward with forgiveness.

Are there grants to pay off student loans?

Yes, there are grants that help people pay off student loans, but most student loan borrowers will not qualify for them.

The kinds of grants available are for health care workers, veterinarians, military personnel and surviving family members, and lawyers (specifically state defenders and prosecutors). 

I recommend searching online to learn more about these grants if you fall into one of those categories above.

How long will it take to pay off student loans?

The time it takes to pay off your student loans depends on the kind of repayment plan you are enrolled in. There are 10 and 20-year repayment plans for federal student loans, or you can pay them off early.

As I’ve said, paying your student loans off early can be a very good thing, and you can possibly save thousands of dollars over your loan repayment period.

 

What do I do when my student loan is paid off?

After my student loan debt was paid off, we celebrated!

Paying off my student loans in full was an amazing feeling for me.

I can’t remember exactly what we did, but I think it involved a nice dinner, haha. Paying off my student loans opened up other doors for me – I felt more comfortable pursuing my side business full-time, as I no longer had a huge monthly debt payment hanging over my head.

For you, you may decide to do other things such as:

  • Pay off any other debt that you have
  • Fully fund your emergency fund
  • Save for retirement

And so on!

I hope you enjoyed today’s blog post on the various ways to pay off student loans, along with the common questions that I have answered.

If you have any questions about how to pay off student loan debt, please leave them as a comment below or send me an email.

Do you want to learn how to pay off your student loans? What other tips do you have on the best way to pay off student loans?

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Best Way To Pay Off Student Loans – How I Paid Off $40,000 In 7 Months

Are you interested in learning how to pay off student loans? Are you looking for the best way to pay off student loans?

Today, I want to talk about how I paid off my student loans, tips to pay off student loans, and answer many of your top questions about how student loans work.best way to pay off student loans

best way to pay off student loans

I graduated college with $40,000 student loan debt, and I paid off my student loans in just 7 months. It’s been several years since I paid them off, but I still receive so many questions about this topic.

There are approximately 45 million student loan borrowers in the U.S. with a total of $1.6 trillion in student loan debt. Yes, that’s trillion.

With so much student loan debt, it’s not surprising that I receive so many questions about how to pay off student loans. Student loans can stay with you for years, and they can affect almost every financial decision you make until they are paid off. 

Student loans can prevent you from saving for retirement, make it harder to pay off other types of debt, find the job of your dreams, and so on.

Living with student loan debt can cause a lot of stress, and that’s one of the reasons I wanted to pay mine off as quickly as possible. I didn’t want to live with that debt on my shoulders any more. 

In this article, you will learn how I paid off my student loans, and while it did take a lot of hard work, it was well worth it.

Paying off my student loans completely changed my life, and it’s something I’ll never regret.

Paying off student loans can lead to many benefits, such as:

  • Feeling less stress because you no longer have a huge debt hanging over you.
  • Having the ability to use that money towards other goals in life, such as saving for retirement or buying a home.
  • Gaining the option to pursue other goals in life, such as traveling more or looking for a better job.

I know these benefits are real because paying off my student loans is one of the best decisions that I’ve ever made.

No, it wasn’t easy to pay them off so quickly, but it was definitely worth it. No longer having those monthly payments hanging over my head is a big relief, and it allowed me to eventually leave my day job and travel full-time.

If you’re reading this article, then you’re probably interested in paying off your debt as well.

Below, I’m going to answer some common questions that I’ve received over the years about paying off student loan debt, the steps I took to pay off my student loans in 7 months, along with other questions you may have as well.

 

How I paid off my student loans.

You will want to read through the steps below if you are asking, “How can I pay off my student loans fast?” 

Paying off your student loans so quickly is not easy, but it doesn’t mean it’s impossible. You have to find creative ways to make money, understand exactly how your student loans work, reduce your expenses as much as possible, and make a plan to pay off your loans.

Below are the 8 steps I took to pay off my loans, and then I will answer many of the questions I receive about student loans so you can understand the best way to approach your pay off. As you can see, there are many different student loan repayment methods.

1. Understanding my student loans

First off, I did everything I could to better understand my student loans.

I always think it’s best that you understand your debt so you can find the best strategies to pay it off. Understanding your loans helps you pay off student loans faster and save money over the course of your pay off.

Here’s what you should understand about how student loans work:

  • Your interest rate. Some student loans have fixed interest rates, whereas others have variable rates. Fixed rates stay the same, and variable rates go up or down based on the market. You’ll want to figure out the interest rates on each of your loans because that may impact the student loan repayment plan you decide on. For example, you might choose to pay off your highest interest rates student loans first so you can pay less money over time.
  • What a monthly payment means. Many people believe that a monthly payment is all that you have to pay, are allowed to pay, or that by paying just the minimum monthly payment you won’t owe any interest. Those three things are so incorrect! Even if you pay the minimum monthly payment, you will most likely still owe interest charges (unless your interest rate is 0% – but that is very unlikely with student loans).
  • Student loan reimbursements. Some employers will give you money to put towards your student loans, but you should always do your research before assuming it’s just that simple. Some employers require that you work for them for a certain amount of time, that you have great grades, good attendance, and they might have other requirements as well. There are many employers out there who will pay your student loans back (fully or partially), so definitely look into this option.
  • Auto-payment plans. For most student loans, you can probably autopay them and receive a discount. Always look into this as you may be able to lower your interest rate by 0.25% on each of your student loans.

Related: How Do Student Loans Work?

 

2. I added up my total student loan debt

This is probably the most important step. I know that many of you will think I am crazy, but this is crucial to seeing success.

I recommend that you take time to add up the total amount of student loans that you have.

When you total your student loans, do not just estimate how much debt you have.

You should actually pull up each loan and tally everything, down to the penny. By doing so, you will have a much more realistic view of exactly how much you’re dealing with.

Plus, the average person has no idea how much student loan debt they have! Usually, they have far more than they originally thought.

 

3. I received an easy interest rate deduction

If you automatically pay your student loans each month or consolidate them, then sometimes you can get an interest rate reduction.

With Sallie Mae, I believe the reduction is 0.25%.

That may not seem significant, but it is something! Remember, every little bit counts when it comes to having a good student loan repayment plan.

Related: I recommend that you check out Personal Capital (a free service) if you are interested in gaining control of your financial situation. Personal Capital allows you to aggregate your financial accounts so that you can easily see your financial situation, your cash flow, detailed graphs, and more. You can also connect accounts, such as your mortgage, bank accounts, credit card accounts, investment accounts, retirement accounts, and more. Plus, it’s FREE.

 

4. I found ways to make extra money

Making extra money is something I did a lot of back when I had student loans, and it was the big reason for why I was able to pay off $40,000 in student loans in just 7 months.

And, I believe that the fastest way to pay off student loans is to find ways to make extra money.

Making extra money can allow you to pay off your students loans quickly because there is no limit to how much money you can make. When you make money in addition to what you make at your current job, you have that much extra money to put towards your debt repayments.

Every extra bit of money I made went towards paying off my student loans, and I would usually make a payment as soon as the extra money from my side hustles hit my bank account. I did this so I was never tempted to spend that money. 

Here are a few of the things I did to make extra money: started this blog and made money from it, sold items on eBay, mystery shopped, had roommates in my house, took paid online surveys, wrote for other websites, and much more.

If you want to learn how to pay off student loans fast, then I definitely recommend that you find ways to make extra money. Here are various ideas you can try:

  • Start a blog. Blogging is how I make a living and just a few years ago I never thought it would be possible. You can create your own blog here with my easy-to-use tutorial. You can start your blog for as low as $2.75 per month, plus you get a free domain if you sign-up through my tutorial.
  • Start a business. There are many business ideas that you could start in order to make extra money. You can clean houses, walk dogs, house sit, work as a freelancer, and much more.
  • Sell your stuff. There are many ways to make money selling things. We all have extra items lying around that can be sold, or you can even search for items that can be bought and resold for a profit.
  • Rent an extra room in your home. If you have extra space in your house, then you may want to rent it out. Learn more at What You Need To Know About Renting A Room In Your House.
  • Answer surveys. Survey companies I recommend include Branded Surveys, American Consumer Opinion, Swagbucks, Survey Junkie, Pinecone Research, Opinion Outpost, Prize Rebel. They’re free to join and free to use! You get paid to answer surveys and to test products.
  • Find a part-time job. There are many part-time jobs that you may be able to find. You can find a job on sites such as Snagajob, Craigslist (yes, I’ve found a legitimate job through there before), and so on.
  • Sell crafts. If you’re looking for creative ways to pay off student loans, this one is for you!

Learn more at 80+ Best Side Job Ideas To Make Extra Money.

5. I sought out ways to reduce my expenses

The next step is to pay off student loans faster is to cut your budget. Even though you may have a budget, you should go through it line by line and see what you really do not need to be spending money on.

There’s probably something in your budget you can cut.

Until you look everything over,, you may not realize how much money you are wasting on things you don’t need. And, it’s never too late to start trimming your budget and start putting that money towards important things like paying off student loans!

Even if all you can cut is $100 each month, that is better than nothing. That’s $1,200 a year right there!

Some expenses you may be able to cut include:

  • Lower your cell phone bill. Instead of paying the $150 or more that you may currently spend on your cell phone bill, there are companies out there like Republic Wireless that offer cell phone service starting at $15. YES, I SAID $15! If you use my Republic Wireless affiliate link, you can change your life and start saving thousands of dollars a year on your cell phone service. If you are interested in hearing more, I created a full review on Republic Wireless. I’ve been using them for over a year and they are great.
  • Sign up for a website like Rakuten where you can earn CASH BACK for spending how you normally would online. The service is free too! Plus, when you sign up through my link, you also receive a free $10 cash back!
  • Pay bills on time. This way you can avoid late fees.
  • Shop around for insurance. This includes health insurance, car insurance, life insurance, home insurance, and so on. Insurance pricing can vary significantly from one company to the next. The last time we were shopping for car insurance, we found that our old company wanted something like $205 to insure one car each month, whereas the company we switched to charged $50 a month for the same exact coverage.
  • Save money on food. I joined $5 Meal Plan in order to help me eat at home more and cut my food spending. It’s only $5 a month (the first four weeks are free) and they send meal plans straight to you along with the exact shopping list you need in order to create the meals. Each meal costs around $2 or less per person.
  • Fuel savings. Combine your car trips, drive more efficiently, get a fuel efficient car, etc.
  • Trade in your car for a cheaper one. How much is your monthly car payment, if you have one? This can be an easy way to cut your budget drastically.
  • Live in a cheaper home. I’m not saying that you need to live in a box, but if you live in a McMansion, then you may want to think about a smaller home. This way you can save money on utility bills and your mortgage payment.
  • Learn to have more frugal fun. We don’t spend anywhere near the same amount of money on entertainment as we used to. There are plenty of ways to have frugal fun.

 

6. I created a plan to pay off my student loans

After you have completed the steps above, you’ll want to put it all together and create a plan.

Without a plan, you would just be all over the place, making it difficult to reach your goal of learning how to pay off student loans.

You should create a plan that details the steps you need in order to pay off your student loans, what will happen as you reach each step, when and how you will track your progress, and more.

Here’s what my student loan pay off plan included:

  • Setting up autopay on my student loans so I never missed a payment. I had autopay set up to pay the minimum payments on each of my student loans, and then I made targeted payments (more on this in the next point) with any extra money.
  • Paying off the student loans with the highest interest rates first. All of my extra money went towards my student loans with the highest interest rate, and once that loan was paid off, I put the money I was paying towards that loan towards the loan with the next highest interest rate until all of my loans were paid off. This helped me save money on interest charges
  • Put every bit of extra money towards my student loans. Like I said earlier, any time I made extra money, I immediately made a payment on my student loan debt, even if it was something small like $20. This meant all of my extra money went towards student loans, and I was never tempted to spend it on something else.
  • I checked my student loan balances a couple of times a month. Seeing my debt go down helped me stay motivated.  

This plan took a lot of hard work and dedication, but it’s exactly how I paid my student loans off so quickly.

7. I stayed motivated with my student loan payment plan

For me, motivation was crucial for paying off my student loans. Luckily, I received great satisfaction each time I put even just a little bit towards my student loans.

But, staying motivated can be hard. Motivation is important because it can help you keep your eye on your goal to pay off student loans even when you want to quit, which can happen often during a big debt repayment.

Yes, student loan repayment can seem very stressful when you think about it. Many people owe thousands and thousands of dollars in student loans. It may feel like you are trying to scale a mountain.

However, think about how good life will be once all of your student loan debt is gone.

Please try to not let your student loans get you down. Think positively and attack that debt so that you can pay it off fast!

Trust me, once you finally pay off those expensive student loans, you’ll be much happier.

Some ways to stay motivated while you pay off student loans includes:

  • Remember the reasons for why you are wanting to pay off your student loan debt.
  • Make your goal visual with a debt thermometer.
  • Set smaller goals in between. For example: If your overall goal is to pay off $24,000 in debt in two years, then you might want to aim for $1,000 in debt payoff each month. This seems much more attainable than the $24,000 number, and this can help you stay motivated while still challenging yourself at the same time.
  • Keep track of your progress.
  • Think about how you will feel in the future.

As you can see, there are many ways to stay motivated.

 

8. I paid more than the minimum student loan payment

The key to speeding up your student loan repayment process is that you will need to pay more than the minimum each month.

Most student loans, especially many federal student loans, are set up for a 10 to 20-year repayment plan. But if you want to pay them off faster, then you must pay more than the minimum payment each month.

Not only does paying more than the minimum help you pay off your loans faster, it helps you save money on interest charges. For some people, that can make the difference of thousands of dollars saved over the course of their repayment.

Paying more than the minimum may sound hard, but it really doesn’t have to be. Whatever extra you can afford, you should think about putting it towards your student loans. You may be able to shave years and thousands of dollars off your student loans!

Common questions about the best way to pay off student loans

In this section, I am going to answer common questions that I’ve received about the best way to pay off student loans.

Is it smart to pay off student loans quickly? What is the smartest way to pay student loans?

There are many benefits to paying off your student loans early. For me, I hated the feeling of having all of that debt hanging over my head. No longer feeling that stress was the benefit.

I recommend sitting down and thinking about how paying off student loans quickly could positively change your life too.

It might mean you are eventually able to leave a job you hate, finally buy a house, travel more, retire early, and so on.

How does paying back student loans work?

Most student loans have a 6 month grace period where you don’t have to make your first payment until 6 months after you graduate or if you go to school less than half-time.

But, this all depends on the student loan, so you will want to make sure that you read the terms on your loan.

Even though you may not have to pay back your student loans right away, that doesn’t mean you can’t.

You can start paying back your student loans early, and you can pay more than the minimum monthly payment as well.

Your student loan servicer, whether federal or private student loan lender, will send you information to set up your repayment plan some time in that 6 month period. If you are still in school, I recommend starting to think about how you will pay off your loans.

Federal student loan borrowers have a few different options for paying back their loans, including income-based repayment plans, graduated plans, and so on. You should look into each option to see what makes the most sense for you.

No matter which option you choose, remember that you can always make more than the minimum payment, and that’s what you should do if you want to pay off student loans quickly.

 

Is it better to save or pay off student loans? Should I pay off my student loans?

A big question when paying off debt is if that should be your sole focus. Should you still be trying to save money while paying off your debt?

Or, should all of the extra money you have be going towards your student loan debt?

You may be wondering things such as:

  • Should I pay off debt or emergency fund first, as in set some money aside for emergencies?
  • Should I pay off debt or save up for a downpayment?
  • Can I pay off debt AND save money at the same time?

And so on and so on.

I paid off my student loans quickly, which meant that I focused entirely on my student loans and completely skipped any other financial goals. It doesn’t mean that’s the best decision for everyone, though.

I know several people who paid off their student loans quickly like me and didn’t have any money saved while they were doing so, and a couple of them wish they had an emergency fund. 

It all depends on your situation. If you have kids, health problems, a house, people who rely on you financially, etc., then you may want to have at least an emergency fund.

I recommend reading Pay Off Debt Or Save Money – Is One Better For You? to learn more about this subject.

What other ways can you pay off student loan debt?

If you are looking for other ways to pay off student loan debt, there are plenty of other options.

These may include:

  • Asking your employer to help pay off your student loans
  • Refinancing your student loans
  • Seeking out student loan forgiveness

Below, I will be talking about these options in more detail.

 

See if your employer will reimburse your student loan debt.

Some companies offer their employees student loan reimbursements. I know of someone who received a $2 bonus for each hour that she worked to put towards her student loans.

$2 may not seem like a lot, but if you work full-time, then that’s over $300 a month (or $3,600 a year!). $300 a month for student loans is a good amount! 

And, because it’s free money, it can all be put towards paying off your student loans quickly.

If you are looking for a new job, this may be something you will want to ask about.

 

Should you refinance your student loans?

By refinancing your student loans, you may qualify for better repayment terms, a lower interest rate, and more. This is great because it may help you pay off your student loans quicker.

This can be a good option if you borrowed private student loans and your credit score is better now than when you originally took out your student loans.

The positives of refinancing student loans include:

  • One monthly payment to simplify your finances
  • Lower monthly payments
  • Lower interest rates, and more

Companies, such as Credible, allow you to refinance your student loans. With refinancing, the average person can save thousands of dollars on their loan, and that’s incredible! You can save a lot of money with student loan refinancing, such as with Credible, especially if you have high interest federal or private loans.

Credible’s platform is similar to the way Expedia works for finding flights – with Credible, you simply search the available rates to find the best student loan rate for you. There is no service fee, no origination fee, and no prepayment penalty if you end up paying off your student loans faster.

To use Credible, it takes less than 10 minutes and just follow these steps:

  1. Fill out a quick simple form (2 mins) – It only takes one form to see the many different lender options.
  2. Choose an option you like (2 mins) – On Credible, you can easily compare the different lenders all in one place.
  3. Provide your loan details (3 mins) – After providing more information about yourself, it takes one business day to receive your finalized offer.

Before refinancing a federal student loan, though, you will want to think about different federal benefits that you may be giving up. You may give up income-based repayment plans, loan forgiveness for those who have certain public service jobs (including jobs at public schools, the military, Peace Corps, and more). By refinancing your federal student loans, you may be giving up any future options for these loan forgiveness programs.

However, keep in mind that by refinancing your student loans, you may receive lower monthly payments, lower interest rates, and more. This may help you pay off your debt much faster.

For me, I didn’t qualify for student loan forgiveness, so refinancing would have definitely helped me if I knew about it back then.

 

How does student loan forgiveness work?

Teachers, nurses, and government employees may be eligible for student loan forgiveness through a program called Public Service Loan Forgiveness (PSLF). It is only available for Direct Federal Student Loans, including Direct Plus and Direct Consolidation Loans.

To qualify, you must be working full-time, make 10 years of on-time monthly payments under a qualifying repayment program, which includes:

  • Income-Based Repayment Plan (IBR)
  • Income-Contingent Repayment Plan (ICR)
  • Pay As You Earn (PAYE)
  • Revised Pay As You Earn (REPAYE)

You will have to certify your income and repayment plan every year, and PSLF does not apply to private student loans.

PSLF is one of the most confusing aspects of how student loans work, so I highly recommend that you contact your student loan servicer as soon as possible. They will explain exactly how to move forward with forgiveness.

Are there grants to pay off student loans?

Yes, there are grants that help people pay off student loans, but most student loan borrowers will not qualify for them.

The kinds of grants available are for health care workers, veterinarians, military personnel and surviving family members, and lawyers (specifically state defenders and prosecutors). 

I recommend searching online to learn more about these grants if you fall into one of those categories above.

How long will it take to pay off student loans?

The time it takes to pay off your student loans depends on the kind of repayment plan you are enrolled in. There are 10 and 20-year repayment plans for federal student loans, or you can pay them off early.

As I’ve said, paying your student loans off early can be a very good thing, and you can possibly save thousands of dollars over your loan repayment period.

 

What do I do when my student loan is paid off?

After my student loan debt was paid off, we celebrated!

Paying off my student loans in full was an amazing feeling for me.

I can’t remember exactly what we did, but I think it involved a nice dinner, haha. Paying off my student loans opened up other doors for me – I felt more comfortable pursuing my side business full-time, as I no longer had a huge monthly debt payment hanging over my head.

For you, you may decide to do other things such as:

  • Pay off any other debt that you have
  • Fully fund your emergency fund
  • Save for retirement

And so on!

I hope you enjoyed today’s blog post on the various ways to pay off student loans, along with the common questions that I have answered.

If you have any questions about how to pay off student loan debt, please leave them as a comment below or send me an email.

Do you want to learn how to pay off your student loans? What other tips do you have on the best way to pay off student loans?

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Source: makingsenseofcents.com