How to Achieve Financial Freedom and Pay Off Student Loans
It comes to no surprise that about 44.7 million Americans have student loan debt, according to a 2018 report by the Federal Reserve Bank of New York. As this is the reality for many, paying off student loans and achieving financial freedom is a topic becoming more demystified than ever. As Millennials and Generation Z undergo years of financial burden, there are certain tips and ways of thinking that could alleviate the stress to support those facing the widespread issue. Here we share just a few…
Personal Revenue – Expenses (Including Loans) = Financial Freedom (if 0 of more)
Understand your Situation (Expenses)
Understanding your personal financial situation is key to beginning your journey towards a stress-free financial life. If you follow either Wealth Simple’s Money Diaries or are a fan of Refinery29’s own Money Diaries (two different series despite the same name), you may already know where we are going with this. As painful it may be, sitting down and running through your finances and debt (how much you have in the bank and how much you owe), will allow you to categorize your expenditures and understand where your expenses lie. It will help you get a dollar figure you can target to pay off with a timeline in mind. The more honest you can be with yourself from the beginning the better – no sugarcoating!
What you Made – What you Spent - What you Still Owe…
A good way to start your personal finance Excel spreadsheet is by running through your credit card and loan items, and subtracting these from your savings. How much do you have left on a monthly basis?
Expense Categorization
If you were to categorize your expenses, what do you spend most on? For instance, do you take too many Ubers or spend most of your savings exploring the latest cafes and restaurants? Is it clothes? Understanding your spending behaviors will help you understand what you need to cut back on to put more of your savings towards paying off your debt.
This simple exercise can help you understand your situation, especially on the expenses side, and begin to take control.
Negotiate a Good Starting Salary & Finding the Side Gig (Revenues)
On the revenue side, negotiating a base salary that is both livable and reasonable to be able to pay off your student debt while allowing you to live comfortably within your lifestyle is crucial. While this is one of the largest pieces to think about when planning for financial freedom, it is difficult to change if you didn’t do that earlier. If you are in a job where you cannot ask for more or cannot afford to switch jobs yet, finding a side gig (regardless) is a great way to make additional income to put towards paying off your debt. The below are just a few ways you can make some extra cash:
Upwork: Sign up as a freelance digital marketer, webpage designer, programmer, translator and more.
Photography / Creative gigs: On Craigslist, sign up to become a photographer in your area and with flexibility, you may be able to earn some cash on the side.
Airbnb: Rent out your home.
Turo: Have a car? Rent it out! DFW
Cut down expenses + Join Forces w/ Friends (Expenses)
Many recurring revenue services make it difficult to think about how easily money leaves our pockets on a monthly basis without even thinking about it. Joining forces with friends to split accounts like Netflix, Spotify, Amazon Prime and others by half is a great way to hold each other accountable and save some money.
The final secret is the known fact that there is no magic formula to make debt go away tomorrow. It takes time and a consistent plan. Take control today and know you are doing your best, and yes – you will get there. Just by having read this, you are on a greater path towards achieving financial freedom!