3 Steps to Quickly Ditching Your Student Debt
Making six figures but still drowning in student loans? Welcome to the club no one wants to join. It’s time to start crushing your debt with a plan that actually works. Let’s rewrite your financial story.
You're not alone.
In fact, most of the six-figure earners we see carry an average of $80,000 in student debt (way above the national average). It’s a big financial burden. And if you ignore it, it can and will hinder your goals, delaying dreams of homeownership, investing, and other milestones that you care about.
But here's the good news, you have everything you need to rewrite that narrative. You can dismantle those financial obstacles and step into your 40s with confidence and a sense of liberation. This isn't about austerity or sacrificing life's pleasures; it's about making informed choices, strategically deploying your resources, and reclaiming control of your financial potential.
Should I Invest or Pay Off Debt First?
Your 3-Step Action Plan for Ditching Debt
In the early days you didn’t give your loans much of a thought. You figured maybe you’d wake up one day and poof, they’d magically disappear (reading minds is my low key hobby). But you’re in your 30s now and every morning you wake up to the irritation of them like that itchy tag on the back of your shirt you can’t quite reach.
It's time to move beyond simply managing debt and adopt a proactive strategy for paying it off entirely.
1. Master Your Cash Flow
Earning a six-figure salary is a significant advantage, but it's essential to understand where your money is going. Sure, you can sign up for online tools or apps that will analyze your spending, but you don’t need to. Spend 15-20 minutes looking at your credit card statements and you’ll have a good sense of how to create a plan without compromising your quality of life. We’re all paying for stuff we don’t use.
Before we talk strategy, let’s discuss a simple rule of thumb for how much money you should be putting towards your debt. Aim to dedicate 20%-30%% of your paycheck each month to a combination of extra debt payments and investments for your future goals. This balanced approach allows you to aggressively tackle your current debt while still planning for the future. This might involve increasing your 401(k) contributions, investing in a Roth IRA, or building a down payment fund for a house.
Is 10% Down Your Homebuying Edge?
2. Unleash the Avalanche
When it comes to tackling debt, there are two primary strategies:
The Snowball Method: This approach focuses on paying off the smallest debts first, regardless of interest rate. Like a snowball gathering momentum as it rolls downhill, each small victory fuels motivation and creates a sense of progress.
The Avalanche Method: This strategy prioritizes paying off debts with the highest interest rates first. Like an avalanche gaining force as it descends, this approach minimizes the overall interest paid and is the fastest way out of debt.
While the snowball method has its merits, I’m suggesting you aim for maximum efficiency. Prioritize those loans with the highest interest rates first, accelerating your progress and minimizing the total you’ll come out of pocket in order to be debt-free.
That said, if you find yourself in need of some motivation, you can incorporate elements of the snowball method strategically. Maybe start by eliminating a smaller loan to gain momentum and celebrate an early victory, then switch to the Avalanche Method. A hybrid approach can provide both financial efficiency and the psychological reward of quick wins. You know you best.
3. Cultivate Your Income Streams
Explore opportunities to supplement your primary income, whether by leveraging your skills through freelancing, consulting, or monetizing a passion project. These additional revenue streams can significantly speed up your debt payoff. Just one rule: don’t let that newfound money get sidetracked. Commit to using it strictly for crushing your debt.
How to Negotiate a Higher Salary
The Debt Payoff Mindset
For most high earners, the debt payoff journey is long. As much as it is about picking a strategy and sticking to it, it’s also about developing the right attitude. Start by making a plan and accepting the plan. Then, recognize the wins, no matter how small. These small victories keep you going and remind you that you're making progress. And let's be real, life throws curveballs. Unexpected expenses happen. Roll with it and adjust your plan. Whatever you do, don’t take your eye off the end goal. Picture yourself in your 40s, debt-free, doing exactly what you want with your money. Maybe it's traveling, investing, or finally buying that ridiculously expensive espresso machine. Whatever it is, don’t let small derailments affect your thinking. You WILL pay this off.
The Bottom Line
Paying off student debt isn’t an overnight success story—it’s more like training for a marathon. It takes strategy, persistence, and a little grit. But imagine this: a future where your paycheck is yours to spend, save, and enjoy however you want. Whether it’s traveling the world, investing in big dreams, or splurging on that espresso machine you’ve been eyeing, the freedom is worth it. Stick to the plan, celebrate the wins along the way, and keep your eyes on the prize—because financial freedom is closer than you think.
Key Takeaways
To efficiently pay off student loans, prioritize those with the highest interest rates first (the Avalanche Method) while maintaining a balanced approach by allocating 20%-30% of your income to both debt repayment and investments for future goals.
Cultivating a positive mindset and celebrating small victories are crucial for staying motivated throughout the debt repayment journey, even when faced with setbacks.
Supplementing your primary income through freelancing, consulting, or other ventures can significantly accelerate your progress toward becoming debt-free.
The F. Word
Ready for some real talk on how to master your money? Pull up a chair and pour yourself a glass.
Financial Planning For 30-Somethings
Whether you’re saving for Tahiti or a Tesla, we help you reach your goals and make the most of your money.
