An essential part of paying off Student Loan debt is identifying key areas to save money. In the last few years, I have audited all my expenses and identified areas where I could cut back. It is important to focus on the expenses that yield the biggest bang for your buck – i.e your largest expenses because it can lead to the biggest savings.
Below are four areas I saved money in where I was able to use the savings to make a significant increase in my Student Loan payments.
1. Downgraded my car
In the fall of 2015, I made the decision to downgrade my vehicle. Previously I was driving a 2013 Toyota Tacoma truck, which I loved. I enjoyed being off the ground more than a car and all the fancy features the truck had. I leased my truck while I was in college which my parents helped cosign. My payments were $400 a month for a 36-month lease.
After researching, I came across the Toyota RAV4 and found its something that would work for me. I wanted something midsize, fuel-efficient, and reliable. I ended up paying $10,500 for a used 2010 model. It didn’t have some of the fanciers features my truck had but worked for me. Also, by owning my first car, I’m taking more pride in maintaining it.
I was able to trade in my Tacoma and profit about $4,500 in addition to what I owed on it as they hold their value better than most cars. I made the trade in and purchase at a Toyota dealership which made the transaction smooth.
So I went from a $400 a month payment to paying $7k ($4,500 bonus profit and $2500 money saved) in cash and financing $3500 at a 1.65% interest rate with my credit union. Currently, my monthly payments are $83 a month and plan to tackle this once my higher interest debt is gone.
2013 Toyota Tacoma – $400 month Lease
2010 Toyota RAV4 – Paid $7k upfront, Financed $3.5k @ 1.65% interest.
$317 savings per month and will have no car payment by March 2017. My goal for my next used car purchase is to pay 100% cash upfront.
2. Moved in with roommate
In June 2016 my girlfriend and I moved in together. Previously I was paying $975 a month for a one-bed rm apartment for myself. Now we are splitting a nicer place for $1200 ($600 each). After researching and visiting places for 2-3 months, we got lucky and found a place that was brand new and bigger than most that we were visiting. We also got a deal for first month’s rent free which helped me with the moving transition as I moved in May as my GF was still under her previous lease. Splitting rent was the most impactful way I increased my Student Loan payments.
$375 savings per month
3. Cancelled Gym membership
My last apartment was in walking distance from Lifetime Fitness. I liked lifetime because of the pools, basketball, and racquetball courts which most gyms don’t have in my area. However, over time I wasn’t going to the gym as much as I should and felt like I was wasting money each month. In May 2016 I canceled my membership and now work out at my apartment gym. It isn’t as good as a regular (pay per month) gym, but it does the job. My apartment also has some nature trails, so I run those using the Map My Run app.
$87 savings per month
4. Cut the Cord (Removed Cable)
Personally, the only reason for me to have cable is to be able to be able to watch Sports (ESPN and local NBA games). I was previously paying $105 a month for basic TV and 18MB internet. My contract ended in 2015, and I canceled my service with ATT. I signed up for 50MB Internet only with Time Warner for $36 a month. I also bought an internet modem so I wouldn’t have to pay the extra $8 a month to rent out a Time Warner Modem (this purchase paid for itself in less than a year).
Lower your payment or keep the same rate
The $36 a month price was good for a year then they would up my bill about $12 for the same service. I did some research and called them a month before my promotional rate expired. I know better than try to go back and forth on the phone with reps so I immediately asked for customer retention department and mentioned that “I would like to cancel my service.” The first thing they asked is why and I explained my rates are going up in a month and I didn’t wish to pay extra for my same service. The customer retention rep immediately gave me another year of the promotional $36 a month price :).
Calling customer retention hasn’t gone as smoothly every time I’ve done this in the past. If you get a rep that gives you trouble I’ll say “I’ll call back later” and then follow the same process until I get the rep that will give me the price I want. I find going directly to customer retention drastically increases your chances of success. I would also recommend you do your research and know how much new customers pay across all the Internet Service Providers, so you know what to ask for ahead of time.
$69 savings per month
Total: $848 saved per month
As a result, the money saved routes to paying my student loan off as soon as possible. Consequently, all of these changes took months of planning and research. I was able to maintain or improve my lifestyle while saving money.
I am now focusing on my monthly food budget and hope to save $100 to $150 a month by meal prepping and not eating out as much. I will be sure to keep you all posted on the progress!
How have you saved significant money to pay off your loans or debt? If not, what is holding you back? What other areas have you focused on to pay off debt quicker?