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The Chick Who Trusted Me With Her Purse… And I Left it With Two Dudes.
When I envisioned Financial Wellness Week, one of the first people I invited was Kimberly Hamilton, Founder of Beworth Finance because her story is so inspiring. I met her at FinCon19 at the meet up for Latino content creators. We started chatting and instantly hit it off. I was impressed that Kimberly was finishing an online course and in that course she was going into detail about student loan debt.
We rode the bus together to the mixer after the conference. I asked her a bunch of questions and we genuinely connected on a lot of different topics. I was so stoked to add her to the Wellness Grind community and quickly asked her to do a piece on student loan debt and well-being.
After that fateful bus ride, we entered the Robin Hood Welcome Party with a band, doughnut wall, food, drinks, and fun at the National Museum of the Native American. As we chatted more, Kimberly asked me to watch her purse as it was tucked under a nearby table. I of course said “sure”.
When it had been a few minutes I finally figured she got caught networking and asked the two gentlemen at our table to watch it for me/her until she got back. Luckily Justin Progue is a wonderful gentleman and did, now both have been invited to be guest authors during financial wellness week in gratitude for the safety of Kimberly’s purse.
I’m No Stranger to Student Loan Debt
When I graduated from Columbia University with my Masters in Social Work in 2006 I had $106,000 in private student loans. I felt like I would be working to pay off my education for the rest of my life. I was so impressed by Kimberly’s story of how she paid off her debt so quickly I wanted to make sure she was available as a resource so we can all learn how to deal with our student loan induced stress.
Now here’s Kimberly Hamilton to tell you all about how to deal with the emotional baggage that comes with student loan debt.
5 Ways to Tackle Student Debt Stress
Don’t let your stress get to you!
Money is a topic that lives and breathes emotion because it is linked to so many parts of our lives. Even more basic than a pumpkin spiced latte, you need money for your food, housing, transportation and healthcare costs. At a deeper level, money touches every relationship you have in your life, including your family, friends, partner and employer. But just because money is everywhere we look, doesn’t make it any easier to manage.
The story of student debt is no different.
Americans now hold over $1.5 trillion in student debt, more than twice the amount they owed 10 years ago. The term “student debt crisis” isn’t being dramatic — it’s real — and so are the emotions you experience when paying it off.
If you’re debt-free, money can be linked with feelings of success, excitement, control and stability, but not everyone is in that position. If you’re one of the 44 million Americans that have student debt, you likely associate money with feelings of anxiety, stress, insecurity and fear. I know because I’ve experienced all of these.
Back in 2012, fresh out of grad school, I moved from New York to Washington, DC with over $40,000 in student loans. At the time, my student loans were higher than my starting salary, causing daily anxiety and stress about how I was ever going to “make it”.
You know what I mean.
I thought I would always be chasing the lifestyle of my friends. I thought I would never be able to afford a home or a family. The idea of retirement made me laugh out loud, before cringing if I ever really thought about it. I wanted a financial advisor but could barely afford Netflix. I spent a lot of time feeling helpless and confused.
Until I decided to get educated about money.
It was the same day I found out my interest would cost me an additional $20,000 in interest to pay off my loan if I took the full 10 years. I thought the calculator I had Googled was broken (it wasn’t).
From that point forward, I read everything under the sun I could find about personal finance, and developed a system of managing and automating my finances that allowed me to not only pay off my student debt in three years, and also buy my first home in five. Now I teach others to master their finances so they don’t have to deal with the stress or learning curve that I did.
But none of this helps you with your debt. I get it. So here are five ways you can tackle your student debt stress during your debt-free journey.
1. Budget in Pick Me Ups
If you have a large amount of student debt, combined with 10-20 year repayment periods, it can be easy to feel like your debt is calling the shots. This often discourages people, making it difficult to stick to a budget over time, only adding to your stress. To stay motivated (and have some fun!) budget in a quarterly gift or pick me up to treat yourself for progress made along the way. You’ll set aside a small amount in your budget every month, and once a quarter, celebrate all the work you’ve been doing to crush your debt!
2. Start With the Highest Interest Debt
Worried about all the money you’re paying in interest? Use the avalanche method to save the most money over time. To do this, list all of your student loans from the highest interest debt to lowest, regardless of the balance. After making the minimum payment across all of your loans, apply any extra payment to the principal of your highest interest debt. Make sure the payment is applied to your principal, and NOT the interest or future payment (if you’re not sure where the payment is being applied, call your lender). Once that debt is paid off, you move to the next highest interest debt, and so forth. It may be a bit intimidating to start this way, but you’ll be happy with all the money in the bank you save later!
3. If You’re Intimidated, Start Small
Another way to pay down student debt quickly is by using the snowball method. Using this method, you ignore all interest rates, and list all your debts from lowest balance to highest. Then, after making your minimum payments across all, you apply any extra payment to the principal on the lowest balance debt, regardless of the interest rate. When you knock that one out, move to the next lowest debt. While you’ll spend more money than the avalanche method, getting some small debts out of the way will help keep you motivated as you work your way to the top.
4. Automate Everything
To reduce stress and to avoid missing a payment, put as much of your finances on autopilot. This includes contributions to your minimum loan payments, retirement and savings contributions, utility bills and credit cards. This will save you time and peace of mind in transferring funds, so you can focus on the big picture of being debt-free.
5. Remember, It’s a Long Game
Unless you hit the lotto, it is very unlikely you are going to pay off your debt overnight. This is OK! Start small if you have to and make bigger payments over time, which may include figuring out ways to generate more income. Can you negotiate your salary or benefits at work? Can you work for a “side hustle” company like Uber, walk dogs for Rover, or teach something you already know? Keep in mind that any extra payment made to your principal balance will help, whether you start with just $25 or $250 per month.
Overall, it’s important to keep in mind that you are in control of your debt, not the other way around. While it may be a longer journey than you’d like, no one is in a better position to take control of your student debt than you. Keep in mind that by making extra payments, you’re making leaps and bounds in your financial future over time.
I’ll be pushing for you every step of the way.
Thanks to Kimberly Hamilton, Founder of Beworth Finance for participating in Financial Wellness Week along with all the other amazing authors. If you want to read more posts like this about financial wellness you can also check out Wellness Grind’s financial wellness page.
Guest Author Bio:
Kimberly Hamilton is the Founder of Beworth Finance where she teaches millennials and women to make smart money moves.
Student debt saga turned financial educator, she has been seen in Forbes, Business Insider and The Everygirl. For free tools and to learn more, check out the Beworth Finance at www.beworthfinance.com/freebie.
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