There are two words that strike fear and anxiety into the hearts of millennials and Gen Z alike: student loans.
A recent article from Forbes reports that 92% of American students possess student debt, with $28,950 being the average amount owed. To be honest, owing anyone more than $20 is enough to make me squirm, let alone owing an institution over 20 grand. It’s no wonder that anxiety and depression are prevalent mental illnesses among young people today.
I myself certainly fit into this demographic. I owed more than $20k in loans after graduation, and I experienced my fair share of midnight meltdowns over student loans. But a few years ago, I managed to pay back all of my loans in under the allotted time. While I am no financial advisor, I can share what worked for me. Here are the steps that I took to pay off my loans and live a full and (mostly) sane life:
1. Make a budget.
In order to pay off debt, it is absolutely essential to set and keep a firm budget. Making excuses or letting little “slides” build up is far too easy. Take your monthly paycheck and work backward — how much do you owe in loan payments? How much do you need to buy groceries and pay rent? Do you really need those subscriptions to Amazon Prime and Netflix and Hulu? (Allow me to make a suggestion that, actually, most of us don’t.)
Once you’ve set your budget, your next step is to keep it. There are many budgeting apps out there that are free — I used the free version of the EveryDollar app. It was a little annoying logging all of my purchases each day, but it also made me stop and think about how much I was spending (and what was worth spending money). I also highly recommend setting up an emergency fund. Life happens, and we can’t always be prepared for every scenario, but having a safety net to fall back on if you need to get your car repaired, or if your apartment floods makes all the difference.
2. Make a battle plan and go the extra mile.
When it comes to paying off student loans or any kind of debt, I ascribe to the mantra: “Know thine enemy.” Don’t just settle in and make the minimum payments — learn the essential details of your loans. Find out the deadlines, what your interest rates are, etc. in order to create your battle plan.
The plan that worked best for me was the debt snowball plan, but you may find that a different method works better for you. The main thing is to create a sustainable plan and stick to it as well as you can.
3. Make room in your life (and budget) for fun.
Practicing virtue often entails finding the middle ground between two extremes. When it comes to debt, we often think of the financial recklessness extreme. To compensate, it is easy to swing in the opposite direction of a frugality that rivals Ebenezer Scrooge. But just because you are on a budget doesn’t mean you can’t have a life.
If you can, incorporate “fun” categories into your budget — I had a “treat yourself” fund that allowed me to buy a cute new dress or grab a spontaneous milkshake at Chick-fil-A. If you’re really stretched, you can still find a ton of fun things to do that cost next to nothing. Explore a local hiking trail, find a fun read or a movie at your local library (it’s incredible what you can get from your library now for free — some libraries lend out everything from puzzles to baking pans to sewing machines), pick up a new hobby. Be sure to reward yourself somehow for the extra work you’re putting in to save money and become debt-free.
4. At the end of the day, entrust your finances to the Lord.
This may sound a little over-the-top, but as a person of faith, I find this step to be the foundation of everything else. There are a number of Bible quotes that exhort us to trust in God for basically anything: “Have no anxiety about anything, but in everything by prayer and supplication with thanksgiving let your requests be made known to God.” (Philippians 4:6) Giving over one’s finances to God not only helps one foster a healthy sense of surrender but also helps to increase trust in God’s providence and allows us to see his work more clearly in our lives.
This list is non-inclusive, but I would say if there was any point to be sure to follow, it’s the last one. When I found myself awake at night worrying about my debt, I found that a simple prayer of “Lord, I’ve done what I can — you take care of the rest” brought me a great sense of peace (my own variation of Pope St. John XXIII’s prayer, “Well, I did my best. It’s Your Church, so I’m going to bed now”). In the midst of your repayment journey, don’t forget to search for those moments of peace.
