Just writing the words “student loans” makes me throw up internally. Add in “deadlines” “late fees” and “interest-rates” and I’m starring in the next “Exorcist.”
I realize the phrase “paying student loans” won’t strike the same sense of fear and hopelessness in everyone (thanks to their government funded education). However, for purposes of understanding let me bring under the umbrella credit card debt, interest loans, needing to pay back large sums of money, and now we can be sick together.
I went to graduate school knowing that I didn’t have the money to pay for it. I also knew I would be charged interest after I graduated. Islamically, I am not supposed to deal in interest loans. But I brushed that concern aside as something to be dealt with in the future. And it came with fury of guilt and worry a year and a half later when I still couldn’t find a full time job and my undergraduate loans also transferred over.
Less than two years after graduation I was debt free.
To be clear, I have lived a privileged life without many financial responsibilities. I lived with my parents and didn’t have to pay for rent or food. To say that I was blessed and comfortable is an understatement. The only thing hanging above my head was the sin of taking a loan on interest.
And I was able to pay it all back. Less than two years after graduation I was debt free. Thank the Lord.
Here are some of the things I did that helped me achieve it. And to be clear, I acknowledge that most people will not have the luxuries that I had had and every individual’s journey is different.
1. Made it a priority
I’ve made many promises to myself; I’m going to sleep early, exercise more, and paint more. But because, consciously or subconsciously, I’ve prioritized sleep, comfort and social media, those promises are left hanging.
It was different with my loans. It preyed on my mind. There were weeks where it was all I talked about with my family and friends. So I set up a schedule, gathered my resources, prayed, and got to work. Every Friday I would sit down, set small goals and check my progress. If I had carried a blase attitude of “it’ll get paid eventually,” I don’t think I would have done it.
2. Kept a progress log
One of the first things I did was bring all the information together. How much I needed to pay, what was the monthly requirement, how long would it take, and more. I drew a goal setting thermometer, and every time I made a payment I would mark the date and amount with a colored pen. I signed up for apps which would calculate my budget and inform me of my over spending and overall momentum. Overtime that progress thermometer doodle became the most motivating page in my journal.
3. Minimized social visits
Being an introvert this one comes easy to me. Early on, I realized hanging out with friends was expensive. We’d meet up, decide to stop at a store, find an item, which everyone agreed was a must have, and so I’d buy it. And then all that shopping required food which needed to be washed down with tea and sweetened with dessert. Going out with friends has to be the most dangerous activity while in debt. I have bought things just because everyone else was, or because I didn’t want to appear cheap. Then it would get buried in my closet. So my debt repayment play opened up a lot of space in my calendar. I didn’t become a hermit. But there were some declined invitations and some early departures. For those I wanted to keep constant communication with, there were phone calls and google hangouts to be had.
4. Gave personalized gifts
Come summer time and everyone is graduating and getting married. Throw in babies and birthdays and my budget was struggling. While it’s hard to be frugal at major milestones, I opted for less expensive and more personalized gifts for birthdays and bridal showers. I’ve seen others give handcrafted items which are met with much more enthusiasm than my $50 gift card. Another option was to thoughtfully buy something inexpensive which I knew the friend was in need of. I’ll be honest, I struggled with this category, especially because it took more time making the present than buying one. However, knowing it was temporary made it bearable.
It decreased my interest rate and made me incredibly happy to mark off a large chunk of my loans
5. Participated in an informal ROSCAS
Rotating savings and credit association or ROSCA is known by different names in different communities. South Asians call it “committee”, latin american’s call it “Tanda”. Basically it’s a short term interest free loaning system amongst trusted friends or family. Every set interval of time, say a month, people pool together money which goes to one individual of the group. The individual is selected randomly or is given based on need. Every interval a different individual gets the collected sum of money until everyone has given what they received. It helps with savings and making big purchases. When my aunt invited me to participate in the family “committee” that she led, I didn’t see the point. After some persuasion, I agreed to put down $350 a month for a 10 months cycle. I received a loan of $3500 and put that to pay my student loans. It decreased my interest rate and made me incredibly happy to mark off a large chunk of my loans. Of course I still had to pay off my monthly instalments to the “committee” but without fear of interest.
Stay tuned for part two of this post where I will discuss more tips on reducing loans . Do leave your comments in the section below and please share your ideas.