5 Strategies to Start Repaying Your Student Loans + Become Debt-Free

The student debt repayment strategies you can rely on, and how to execute them now, no matter your loan amount.

Student loans in the United States totaled $1.73 trillion in the first quarter of 2021, and student debt repayment can be a huge burden on graduates just entering the workforce. (And even those who have been working for years!)

If you haven’t landed a job since graduating, the good news is that you can apply for a deferment for a year, and you won’t accrue additional interest charges during that time. When you’re new to the workforce and earning very little, you can also apply for an income-based repayment plan, which takes your income into account to determine monthly payments. But for those without those options, there’s still hope. 

But how, exactly, are you supposed to pay off your debt if you’re barely managing to keep your head above water? First, know that you’re not alone. Second, here’s a few strategies you can employ to ensure you’re making your payments on time, and one day soon, becoming debt-free. 

1. CREATE A BUDGET YOU CAN STICK WITH 

A solid budget is essential if you want to keep your financial priorities straight. (If you haven’t checked out our podcast with YNAB Founder Jesse Mecham on “Budgeting Without Tears” it’s a must-listen, as is our story on how to budget if your spending habits have changed!) There are countless ways to budget, and one of our favorite methods is the 50/30/20 budget. It’s fairly effortless to follow, and very beginner-friendly. This budget suggests that you allot 50% of your earnings to things you need, such as rent and other monthly expenses, 30% to things you want that aren’t necessary to your survival, and 20% toward savings and debt repayment. Once you get started, you’ll be amazed how just keeping an eye on your spending can change your financial life. 

2. USE YOUR GIFTS WISELY

Whenever you receive money for your birthday, a holiday, graduation or some other occasion, it might be tempting to treat yourself to an item (or several items!) on your wishlist. But give it some thought first. Do you really need that thing you’ve been eyeing? How much better would you feel if you put that money toward becoming debt-free?

Think about your gift as “bonus” money. After all, you weren’t counting on it as part of your budget, so why not put it towards your future? We bet the person who gave you that generous gift would probably be thrilled to know that you were using the money to improve your financial standing, and reach your bigger life goals. And the quicker you pay down your loans, the better off you’ll be. If you only make the minimum payment each month, it could take you up to 20 or even 30 years to repay your loan in full. You deserve to live your best life, debt-free. Why not contribute extra money to making that happen?

3. SET UP AUTOPAY

When you set up autopay for your student loan bill, your payment is automatically deducted from your bank account, and you never miss a payment since it’s all happening automatically.  Autopay also makes it easy for you to set up bi-weekly payments. This option can be a good one for people who get paid every two weeks. The idea is to make payments every two weeks by splitting your regular monthly payment in half, and by the end of the year, you end up paying more toward your debt than you would have with a traditional monthly payment, because several months have five weeks.  And, bonus: paying toward your balance every month, on time, also keeps your credit score up. 

4. CHOOSE YOUR JOB CAREFULLY

It’s no secret that some careers offer higher salaries than others. For example, an engineer is probably going to make more money right out of college than someone in the hospitality industry. If you’re looking to earn as much as you can early on in your career, and you’re passionate about several different things, then you might want to choose the career path where you stand to earn the highest salary. Also, keep in mind that certain careers earn may earn benefits (including forgiveness) from federal loans. People working jobs in the public sector, like teachers and nurses, may be eligible to apply for loan forgiveness. (Here’s the latest on student loan forgiveness proposals!) Just make sure you read the fine print! And don’t forget to pay close attention to the benefits you’re offered before you accept a new job.  Find a position with health benefits, retirement benefits, and whenever possible, assistance with student debt repayment. 

5. LOOK INTO REFINANCING  

Sometimes, the best way to pay off debt is to redistribute it to another lender with lower interest. If you refinance your loans, your debt will be given to a private lender. The good news is that your loans will all be lumped together with one lender, potentially with a lower interest rate. Just choose carefully, because you could end up with an interest rate you didn’t anticipate and add time to your balance.

If you’re interested in refinancing, you’ll potentially earn several benefits. A lower interest rate means you could pay off your debt sooner — saving years on your student debt repayment plan. 

As another option, you could see if you qualify for a probate advance, which is available if you stand to inherit at least $10,000 from a relative some time in the future. Borrowing against your own inheritance is better than borrowing from an outside lender, since the funds will be yours to begin with — but, of course, this is not an option for everyone.

YOUR DILIGENCE WILL PAY OFF

The average American student carries almost $30,000 in debt. That’s an overwhelming sum that could very well be the same amount as someone’s first-year salary out of college. It’s no surprise that it can feel daunting to tackle all at once. Thankfully, with these strategies, you can make student debt repayment easier — and become debt-free sooner than you imagined.

More on HerMoney:

• The Top 5 FAQ About Refinancing Student Loans

• LISTEN: HerMoney Mailbag: College, Education, and Student Loans

• A Simple Trick To Get Out Of Student Debt Faster

SUBSCRIBE: Own your money, own your life. Subscribe to HerMoney to get the latest money news and tips!

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Downsizing vs. Rightsizing - Know the Difference Before Making a Move

The Very Good Reason Why Nobody Should Be “Downsizing”

When my husband and I started searching for a home last year, we both assumed we’d upgrade to a space with more square footage. But when we found a home we loved — one we could envision our family in — there was a catch. The new house was 400 square feet smaller than the house we were selling (and a lot more expensive).

We ended up downsizing, and with no regrets. We love the flow and layout of the space so much that it almost seems bigger — and it’s definitely more functional. But that’s not to say our decision is the right direction for everyone.

If you’re considering a move into a smaller house, Bruce Cram, a sales representative at Re/Max, wants to make the case against the term downsizing, which might have a negative connotation. Instead, he argues home buyers should be “right-sizing,” or finding the right-sized space for their needs.

While growing families or people who work remotely might need more space, empty nesters and super-practical folks might be looking for the opposite. Many people, Cram says, owe these realizations to the pandemic. Spending more time in personal spaces prompted more critical thinking about what you actually need. “The new normal has opened up the way we think about our homes, and rethinking your home may also mean right-sizing,” he says.

There’s no precise formula for figuring out how much space is “right” for you. But Cram says answering a few questions can help you make an informed decision about your next home — one that, hopefully, helps you enjoy your space and your life more.

What’s your motivation?

What would you change about your current home if you could? Answering this question is key to understanding the life you want to live in your new house. For example, if you’re going to be working from home for the long haul, more space (ideally, a home with an office) might make sense for you. But if you find yourself with space you don’t use and you want less clutter, then a home with a smaller footprint might make more sense.

What stage of life are you in? 

Another factor to consider: What stage of life are you in, and how is your life going to change in the next few years? Do you want to get a pet or have a kid? Do you plan to look for roommates or potentially move in with a partner? Then more space might be a good move. But if your kids are older or you’re ending a relationship, then you may consider a smaller home. 

What’s your lifestyle like? 

You don’t just sleep in your house — your space should also accommodate living, or the things you like to do. If entertaining or hosting overnight guests are top priorities for you, that’ll affect how much space you opt for. If you love to cook, then a bigger kitchen (which adds more square footage), would be appealing. And if you love to travel? Well, think about fewer square feet so you can dish out more for cool Airbnbs! 

How many bedrooms do you need? 

They don’t always add up to tons of square footage, but how many bedrooms you need should also drive your decision. You may be a family of four, in which case, a minimum of two bedrooms would do. If sharing a bedroom is not ideal, then you might look for a three-bedroom home, and so on.

Where do you want to live? 

When we moved, we specifically targeted a walkable area near Lake Michigan. Because those houses are in demand, they also cost more — which meant we could afford less square footage. If you have a specific location in mind, you may not get to be as picky about size. Cram suggests making a look of your top wants and needs, and understanding that the more you want, the more your house will cost — and the more you may have to settle on fewer square feet.

Remember: Your home should be a place you can relax in. Rather than fixating on square feet, focus on finding a perfect match for your own individual needs. The right framework (and some right-sizing) can help you decide. 

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America’s Hottest Zip Code Isn’t in New York or L.A. - It's in Colorado Springs

A coveted Colorado hamlet is now the most active real estate market in the U.S.

Move over, Beverly Hills, 90210—America has a new hottest zip code: 80916, in Colorado Springs is the most in-demand area for real estate, according to a new report from Realtor.com.

Properties in 80916 spent an average of just four days on the market before selling, compared to 33 days nationwide, according to Realtor.com.

“Real estate is just selling like crazy,” Berkshire Hathaway Synergy Group realtor Linda Leiss Landry said in a release. “We’re in one of the most popular areas to move to right now.”

The median price for homes in this southeast slice of the Centennial State suburb is $318,000. That’s significantly lower than the $472,050 median for all of Colorado Springs, but represents a massive 20% uptick since last year—much of it fueled by buyers from California and Texas.

Realtor.com examined 29,000 zip codes nationwide during the first six months of 2021 and ranked them based on how quickly homes sold, along with how frequently listings were viewed online. (Another Colorado Springs zip code, 80911, took the top spot in 2020.)

The houses in 80916 are older (built in the 1970s and ’80s), cheaper, and more modest than others in the region. But Re/Max agent Robert Crawford told the Colorado Springs Gazette the southeast Springs area, about 75 miles south of Denver, is popular with military families looking for an easy commute to nearby Fort Carson. (Colorado Springs Airport and Peterson Space Force Base are both 10 minutes away, and Lockheed Martin and Northrop Grumman are nearby too.)

And 80916 is also popular with national corporate buyers, like Home Partners of America, who snatch up properties and lease them to tenants with an opportunity to buy.

Realtor.com’s other top zip codes were geographically diverse, although many were located in New England—including two each in Massachusetts (01960 in Peabody and 01757 in Milford) and New Hampshire (03301 in Concord and 03103 in Manchester).

“By definition, the zips that make our annual hottest report are very competitive, but this year, they are white-hot,” Realtor.com chief economist Danielle Hale said in the release. "Homes in this year’s zips are under contract in less than a week, which is three times faster than the contract times for last year’s hottest markets.”

Rounding out the list at number 10 was 37067 in Franklin, Tennessee—a bit of an outlier: It’s in the South, about 20 miles outside Nashville, and represented the most expensive zip code on the rankings.

Median prices for homes reached $847,000 in the first half of 2021, compared to $907,500 for all properties in the city limits.

Listing prices in Franklin are up more than 30% from last year. Realtor.com touts the town’s bucolic rolling hills, top-rated schools, and lower property taxes as a lure “for families and more established professionals.”

Homes are turning around in a head-spinning five days. “There’s so little inventory that so many homes sell off-market before they even hit Realtor.com,” said Angela Wright, a Compass broker who represents properties in the area.

“Everything is in a multiple-offer scenario,” Wright adds. “It’s stressful for the buyers, and it’s stressful for the sellers because they’re getting 20 offers.”

Realtor.com’s Top 10 Hottest Zip Codes of 2021:

1. 80916, Colorado Springs, Colorado

2. 14617, West Irondequoit, New York (Rochester)

3. 01960, Peabody, Massachusetts (Boston)

4. 03103, Manchester Proper, New Hampshire (Manchester)

5. 27616, Brentwood, North Carolina (Raleigh)

6. 43228, Lincoln Village, Ohio (Columbus)

7. 01757, Milford, Massachusetts (Worcester)

8. 03301, Concord Proper, New Hampshire (Concord)

9. 48336, Farmington, Michigan (Detroit)

10. 37067, Franklin, Tennessee (Nashville)
    
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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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Find a Dog a Home: Meet Taro

Hi! I'm Taro, and I'm currently looking for my forever family to play with, go on adventures with, and cuddle, and LOVE!

I'm a young dude, so my new family will have lots of time to teach me all kinds of new things and how to be the bestest boy ever!! I'm a tad shy at first, but I do like to play and enjoy the company of hoomans and dogs alike. I also really enjoy cuddling and spending time with my foster family and all their friends! We have the bestest block parties! When we're not entertaining the neighbors, my foster family is teaching me all kinds of things, like how to go outside like a big boy, how to sleep in my own crate, and that hoomans can be pretty awesome! If you're looking for a young, playful, sweet little buddy, then look no further, and mention Taro on your application!

More About Me:

• Breed: Siberian Husky

• Gender: Male

• Color: Black & White

• Age: 6 months

• Weight: 30 lbs

• Energy Level: Medium-Low

• Location: Colorado

To fill out my adoption application, click here!

Could Identity Theft Keep You From Buying a House?

Imagine you’ve finally found your dream home and have put in an offer, and you’re declined—not due to anything you’ve done wrong, but because someone’s stolen your identity.

Sound far-fetched? Ever year, approximately 14.4 million adults are victims of identity theft, and many don’t even realize it until the financial scrutiny of homebuying brings the crime to light.

“Identity theft is on the rise, and if you don’t pay attention, you could have a harsh awakening when applying for a mortgage to purchase a home,” warns cybersecurity expert Sandra Estok, author of the “Happily Ever Cyber!” book series.

Typically, identity thieves steal personal information such as your Social Security number (usually by hacking into your email account, sometimes even from your trash) and then use it to open credit cards or loans in your name. The result?

“False charges on your account can deplete your funds and ruin your credit score,” Estok says.

Identity theft can also present problems with your debt-to-income ratio and with getting title insurance, since any outstanding debts in your name could make you flat-out uninsurable.

Due to this new threat, part of prepping for a house hunt today should be to take steps to safeguard your financial reputation preemptively, and to repair damage if it’s already been done. Here’s what homebuyers need to know.

How homebuyers can prevent identity theft

“One proactive step to take before putting in an offer, or even before you consider looking at homes, is to review your credit report at annualcreditreport.com or directly with all three major bureaus—Equifax, Experian, and TransUnion,” says Estok. “Each of these companies maintains a separate report that can give you clues if something doesn’t add up.”

What you want to pay attention to are the sections that have to do with your payment history and open lines of credit, so you can spot any errors or suspicious activity.

Estok also suggests that you set a regular schedule to check your credit reports and bank statements.

“There is a 60-day window to report suspicious activities in your account during which financial institutions may restore the illegal spending. After this period, you may be liable for the full amount stolen,” says Estok. If you are regularly monitoring your financial accounts, you are more likely to catch anomalies.

Many credit cards also offer enrollment in fraud detection programs, which enable you to be alerted to any atypical spending. You could also enable alerts for all financial transactions.

“The easiest way to catch if something is happening in your financial accounts is to activate text or email messages every time a transaction is done, or someone logs in to your account,” says Estok. “You can either visit your bank website to activate these alerts, or contact your bank representative directly for further assistance.”

Another important step is to visit the site haveibeenpwned.com to check if your email or phone has been involved in a data breach. If your email has been affected, Estok suggests replacing any passwords you used with passphrases—which are short sentences that are simple to remember, but not easy to guess. An example of a good passphrase would be “IfeelHappy@tmyNEWh0me” because it also replaces letters with numbers and special characters to make it even harder to crack.

What to do if you’re a victim of identity theft

“Some people may find out that they are victims of identity theft before placing a bid on a house, when the underwriters for their mortgage evaluate their credit application and pull their credit score,” says Estok. “Others may find out after the offer is placed. Whatever the timing, the sooner the victim takes action to report and repair their identity, the higher the possibility they can continue the process of buying a home.”

One thing to know is that there are different types of identity theft.

“The ones that directly impact the purchase of a home include tax identity theft, Social Security identity theft, financial identity theft, and medical identity theft,” says Estok. “Each of these types will affect your credit score because this cybercrime will result in unpaid bills, debt from loans, and balances due on credit lines, even though they are not legitimately yours.”

Recovering from identity theft is a lengthy process, and the time to recover will depend on the severity and type of fraud. But overall, the quicker you react, the better.

One of the first things you should do the minute you confirm identity theft is freeze your credit with all three credit bureaus, as this will help you prevent further damage.

Estok, who was a victim of identity theft, actually keeps her credit permanently frozen. Then, you can unfreeze it when you need to (like when a lender needs to access your information to help you qualify for a home loan) and then refreeze it once you’re done.

“It is an additional step, but I like that I have control of when I allow access to my credit while also protecting myself from cybercriminals affecting my credit score,” says Estok.

In almost all cases, it’s wise to file an identity theft report with your local police and file a report with the Federal Trade Commission. There are also guided steps you can follow for how to report identity theft on USA.gov.

Finally, gather evidence—like past-due bills you don’t recognize, collection entries in your credit history, unauthorized charges on your bank accounts, or even social media impersonations—to prove you are a victim of identity theft. You will likely need to submit these to your financial institutions and also your credit lenders as you work to repair your record.

How to recover after identity theft

While fully recovering from identity theft can take years, this does not mean that your homebuying dreams have to stay on hold the whole time. First, keep checking your credit reports to see if your fixes have gone through and are reflected in a higher credit score. Once that happens, you should be ready to resume your house hunt and apply for a mortgage, although there are still some added precautions you’ll want to take.

For instance? While routine mortgage applications often undergo an automated underwriting process, problems with identity theft may remain on your credit report for years (even if your credit score has improved). As such, it behooves identity theft victims to ask lenders for manual underwriting, which would give you a chance to explain to a professional what’s happened in your credit history so any crime-related issues can be taken into account.

Plus, even with lenders, it’s important to stay alert to any potential security issues.

“When selecting a lender, the security and privacy of your information is as important as getting the best interest rate,” says Estok. “Ask them how they will protect your information. After you purchase the house, will they securely store your files, or would they shred documents that aren’t needed? Would they share your sensitive data with a third party?”

It is equally important to validate with your real estate agent, mortgage lender, and any other party involved in your home purchase how your financial documents will be shared. While transferring paperwork in email attachments might seem safe, it is far better if you add another layer of security such as encryption.

“Request a secure option to manage the transfer of your sensitive documents, or do it in person if possible,” says Estok. When sending your information electronically, it is best to use a Wi-Fi network you trust like from home (rather than at work or a coffee shop).

Also consider creating a dedicated email account to use for your home purchase.

“This will help you respond to inquiries promptly and reduce fake emails,” says Estok.

If you are unable to purchase a home as a result of identity fraud, there are places you can go for help, which you’re entitled to under the Fair Credit Reporting Act.

“Consider consulting a consumer protection attorney at the National Association of Consumer Advocates or your state attorney general’s office,” suggests Estok.

Learn more on Realtor.com

Related Links

• 7 Signs You May Be Falling Victim to a Home Improvement Scam

• 7 Home Office Trends That Are Outdated, According to Designers

• 6 Emerging Real Estate Trends in 2021

If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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