Student loan debt is this generation’s financial quicksand. Or maybe it’s more like a minefield.
You want proof? According to the Federal Reserve, Americans collectively owe $1.5 TRILLION in student debt. What’s more, borrowers typically owe $20,000 to $25,000, with one in five behind on their payments.
So are you supposed to be stuck in debt forever? Definitely not. There are ways out. In fact, if you have $25,000 or more in student loan debt, here are six things you can do right now to start digging yourself out and building your future.
1. See if You Can Save Thousands of Dollars on Your Debt
The interest rates on your student loans might seem low — not a big deal — but the truth is, interest can tack thousands of dollars onto your debt over time. That’s where student loan refinancing can help.
Here’s how student loan refinancing works: You take out a personal loan and use it to pay off your student loan (or loans — federal and/or private).
Sure, it might sound like you’re just moving your debt around, but the key is to find a personal loan that has more favorable interest rates, lower monthly payments and/or a longer repayment period. Now you’ll be left with one monthly personal loan payment that more easily fits into your budget.
You can check out your refinancing options with a company like Credible. Other companies offer similar services, but we like that the average Credible user saves about two interest points on their current federal loans.
We talked to Ashley Williams, a financial analyst who graduated in 2010 with $46,000 in debt. Refinancing her student loan saved her more than $18,000 in interest over the life of her loan.
See how much you could save by refinancing.
2. Don’t Ignore Your Future: Invest 15 Cents In the Stock Market
Even though you’re deeply indebted to the Student Loan Gods, you should still think about your future. No, you might not have hundreds of dollars to throw into a savings account or toward a retirement fund, but what about some spare change? Even just 15 cents?
Yeah, we know what you’re thinking: 15 cents? How’s that going to do me any good? Well, that leftover change from your morning coffee and evening grocery hauls could turn into more than $1,000.
That’s what happened when Penny Hoarder reader Jeremy Kolodziej opened an investment account with Acorns. The app’s round-up feature bumps each of your purchases up to the nearest dollar and puts the spare change into the stock market, which helped him mindlessly save $1,076 in about 20 months.
“It’s a virtual coin jar,” he said. “You don’t even think about it.”
Plus, Acorns invested the money for him, allowing him to grow his savings — without studying stock prices or managing trades.
The app is $1 a month for balances under $1 million, and you’ll get a $5 bonus when you sign up.
Just because you’re knee-deep in student loan debt doesn’t mean you can’t think about your future.
3. Cut Your Unavoidable Costs to Free up Extra Money
If you rent, then you know many landlords and property managers require you to have renters insurance. Sure, it’s annoying — another expense to add to your budget — but if something happens to your apartment or home, you’ll at least be covered.
But how much should you really be paying for renters insurance?
The truth is, the average person in the U.S. is paying $187 per year, but with Lemonade, you could get renters insurance for as little as $5 a month, less than half the average rate.
Oh, and if you own a home? You can get homeowners insurance for as little as $25 a month through Lemonade.
Even better: No phone calls. No lengthy sign-up process. Nothing. The whole process takes just 10 minutes.
Just because you’re only paying $5 doesn’t mean you’re skimping on coverage. In fact, Lemonade pays out 30% of its claims instantly. It even holds the world record for paying a claim in only three seconds.
By cutting your insurance rates down, you’re saving more money — which you can put toward your actual rent payment or student debt.
Lemonade is available in Arkansas, Arizona, California, Colorado, Connecticut Georgia, Illinois, Indiana, Iowa, Massachusetts, Maryland, Michigan, Missouri, Nevada, New Jersey, New Mexico, New York, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Virginia, Washington, D.C. and Wisconsin.
4. Can This Company Find You an Extra $670 to Put Toward Your Debt?
When you’re trying to pay off student loan debt, you might feel obligated to cut every enjoyable thing out of your budget. Pumpkin lattes? Gone. Night out with friends? Cut.
But, one of the simplest things to cut is actually your car insurance.
We don’t want you to get rid of it completely, but it takes two minutes to see if you’re overpaying with a free website called The Zebra.
Auto insurers offer different rates for different types of drivers, and The Zebra will scan more than 100 companies to see if yours is overcharging you. Just enter some basic information about your car and driving history here to get started.
The Zebra says it can find you up to $670 a year in savings. That’s more money you could put toward your student loans.
5. Copy Her Strategy to Get Money Back For Things You Already Buy
You know this by now: Every dollar counts.
What you might not know? Some stores have price-drop policies and will pay you back if something you buy online goes on sale after you buy it. But here’s the reality: Unless you revisit every website you ever order from, how would you know? Who has time for that?
Good news, though. Capital One has a free tool called Paribus that knows which stores have policies like this, and it does all the tracking for you. All you have to do is sign up with your email address and keep your emailed receipts. Then Paribus will help you get a refund when it finds a price drop on something you’ve bought.
We talked to one busy mom who has used Paribus to save $1,315.41 in about two years. Aimee B. says to save time, she does the majority of her shopping online — her clothes and household necessities.
“It really is as simple as giving your email address,” she says. “It’s kind of a no-brainer.”
Paribus monitors more than 25 retailers, including Target, Walmart and Home Depot, and has found more than $29 million in savings for customers.
One last perk: If your guaranteed Amazon shipment shows up late, Paribus will help you get compensated.
Disclosure: Paribus compensates us when you sign up using the links we provide.
6. Download This App and Forget About It (It’ll Pay You Cash)
Just because you have student loan debt, it doesn’t mean you have to deprive yourself of life’s pleasures. There’ll be mornings you’re craving a warm mocha. Or evenings you want to treat yourself to pizza delivery. That’s OK — just be sure you’re earning cash rewards.
No, we’re not going to tell you to use a cash-back credit card. Instead, use the Dosh app.
Each time you swipe your credit or debit cards at one of its partner stores, hotels or restaurants, it’ll give you a cash bonus automatically.
In fact, it’s so mindless that Penny Hoarder writer Carson Kohler forgot she downloaded Dosh. When she checked several months later, she had nearly $40 sitting in her account, collected from purchases at Walmart, Sephora and her favorite local coffee shop.
Here’s what you’ll need to do to get started:
- Download the Dosh app.
- Securely connect the credit and/or debit cards you shop with — as many as you want.
- Go about your daily routine.
The fun part will be checking back in a few months from now to see how much you’ve earned! Use your earnings to go toward your debt — or to just build some extra room in your budget.
Mike Brassfield ([email protected]) is a senior writer at The Penny Hoarder.