What do I do if my student loans aren’t forgiven?
On August 24, 2022, the White House released a fact sheet on their website outlining President Joe Biden’s plan to relieve piling student loan debts. When the news originally broke, many people were hopeful of what could come of this plan. Many government leaders have talked about student loan forgiveness in the past, but this time it looked more promising than ever before. Fast forward to June of 2023 and the Supreme Court of the United States voted 6-3 in favor of striking down Biden’s debt forgiveness plan that would have wiped out nearly $400 billion dollars in debt and impacted almost 43 million Americans in the process. After news broke of the SCOTUS vote, many who were feeling hopeful were now watching the idea of financial freedom slip from their grasp.
The good news is that you do not need to depend on the government to offer you financial freedom. You can do that all on your own with a little help and the willingness to make the sacrifices that are needed. The purpose of this article is not to offer my opinion on whether or not either side made the right decision or if student loan debt should be forgiven or not. The purpose of this article is to give people some options in the case that student loan debt is not forgiven. Although Biden stated, after the news of the SCOTUS vote, that he would explore other paths to accomplish his goal of student loan forgiveness, there is the lingering feeling that this might not end well. As a matter of wisdom, it’s smart to think through some options in the case that it doesn’t pan out.
Make drastic cutbacks
I know COVID-19 is wrapping up and we’re all ready to get back to all-inclusive resorts and nice European excursions, but it’s things like this that will keep you under your student loan debt for longer than you need to be. If you are really serious about getting rid of student loan debt, you’ll need to cut some things out of your life for the time being. The longer you wait to pay off your debt, interest will begin to build up and the total bill will just keep getting larger. What’s worse is that student loans, depending on where you got them from, have the ability to garnish your wages to get the debt paid off. Here are some easy ways to cut back and use the extra income to pay down student loan debts.
Sell your car and downgrade.
If you have a nicer car that is more than you truly need to get from point A to point B, consider selling your car and taking the proceeds to buy something used and more modest. Use the remaining profit from the sale to put directly towards your student loan debts. Take a moment and see how much Carmax would offer you for your car today.
Take a 5-year vacation break.
Yes, you read that right, take a five-year vacation from vacations. Vacations are one of the most expensive things you can do that offer a limited return on the investment. Other than great memories, vacations don’t give you much else. They are never as relaxing as we think they will be and they often end up costing us way more than we planned. Instead of flying to exotic locations and taking expensive cruises, maybe find some local things to within driving distance of your home. Try and visit places where you have family and close friends you can stay with to save money. If we’re honest, it’s more fun to hang out with people you know anyways.
Eat out once a month.
Another expense that is easily avoidable is eating out. The restaurant industry typically charges a nearly 300% markup to make their profits. This means that a meal for two that costs $21.00 would cost approximately $7.00 to make at home. In isolation, this doesn’t seem like a big deal, but when you multiply the markup over the course of a month or a year, you’re looking at thousands of dollars that could have been repurposed for things like student loan debts. I recommend finding some good recipe books at a local used bookstore and getting really good and making between 10-15 dishes that you could rotate through. Over time, you can learn a new dish here and there to add to your rotation.
Pick up a side job
I apologize if this seems too simplistic or unrealistic of an idea, but it’s not. Take a second and just think about how you spend your spare time. Like vacations, it is important to have some downtime but our society today has over-emphasized how much downtime we need. You do not need 4 hours of social media consumption or 1 whole season of Stranger Things each day to relax. Do you know what’s relaxing? Getting rid of lingering debt. It’s relaxing when you’re phone stops ringing non-stop from all of those debt collectors looking for you to make way to pay your student loan debts off. That’s relaxing. Maybe consider finding an evening gig or something with a flexible schedule that you can do in addition to your full-time job. Use 100% of the income you get from these side gigs to pay down your student debt. And then, once you pay off your debt, maybe keep your gig and use 100% of the income to pour into a retirement account to set yourself up for a healthy retirement.
Hire a Financial Coach
When we know that we need help but just can’t seem to get started in the right direction, hiring a financial coach is a good option. I know it seems a little backward to spend money to get rid of debt, but the right financial coach is an investment that you are making for your future. Yes, you may spend a couple of hundred dollars an hour, but the return on their expertise is going to help you eliminate thousands in debt and set you up for a life of success with your finances. The truth is, if you don’t start doing something about your debt now, you’ll pay more on the accruing interest than you would on a financial coach. As long as you’re motivated to make the changes that your coach will recommend, this is a smart option for anyone looking to conquer debt.
All of the above
If you’re sick and tired of being in crippling debt, this route will set you up to conquer your debt quickly. Working with a financial coach in combination with drastically cutting back your expenses and increasing your income will change your financial outlook faster than any other route.
If you’d like to schedule a free consultation with me, a Dave Ramsey Licensed Financial Coach, we can begin moving you towards a life of freedom from debt.
