Yahoo Finance I Have $35K in Student Loan Debt: Here’s My Monthly Budget
The student loan crisis is real. According to the Education Data Initiative, 43.2 million Americans currently have federal student loan debt, with the average federal student loan debt balance sitting at $37,088. The total average balance, including private loan debt, is even higher — at $39,981. Today, student loan debt is the second-highest consumer debt after mortgages.
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We interviewed Cameron Allen, owner of Grapplers Graveyard, a combat sports media brand focused on helping martial artists become better athletes, to see what his monthly budget looks like while managing $35,000 of student loan debt that he accumulated after graduating from the University of Arizona in December of 2020. Here’s a look at how he’s managing his debt and budget.
Monthly Budget Breakdown
Student loan payments aren’t Allen’s only expense. Here’s what the rest of his monthly budget looks like:
Rent: $2,031
Student loans: $279.96
Groceries: $400
Gym: $40
MMA gym: $180
Car insurance: $200
Phone Bill: $75
Wi-Fi: $70
Personal subscriptions (music, apps, etc.): $100
Electricity: $250
Amazon: $120 per year
Allen explained that since he lives in Scottsdale, Arizona, which has a lower cost of living compared to other major cities, he’s been able to keep his monthly spending somewhat under control.
“I’m very lucky to only have $35,000 in student loan debt because I know tons of other people with much more. Thankfully, I had scholarships and in-state tuition that helped out,” he said.
He explained that he’s currently only shelling out around $280 per month toward his student debt because it’s the lowest amount he can pay to keep his loan in good standing while staying within budget.
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Strategies for Managing Student Debt
Managing student debt can be a real challenge, especially when you’re trying to keep up with all your other expenses. Allen has found a way to handle this by taking a close look at his spending habits and figuring out where he can cut back.
“I ran a financial audit on my spending habits. Basically, took all my bank statements from my checking account and went through all my purchases to find things that could be cut down or completely eliminated,” he said.
Allen explained that though it took him a while to go through his bank statements, it was worth it since now he has a better idea of where his money is going each month.
Balancing Debt Repayment and Financial Goals
“When student loan repayment restarted in late 2023, it was stressful for me since coming up with an extra $300 per month meant I had to make adjustments in my spending habits,” Allen said. “I haven’t been able to save as much as I would like each month but I’m optimistic that things will work out in the long run. Starting a family and retirement are kind of out of the picture for me at the moment.”
Currently, Allen is focused on making a bit more money outside of his day job so he can save money for retirement or possibly starting a family. He believes that side hustles and online businesses are going to be the only way for him to get ahead, and is working hard on building his combat sports media brand.
Tips for Paying Off Student Loans Faster
According to the Education Data Initiative, 6.87% is the average student loan interest rate among all existing borrowers. The higher the interest, the quicker your debt grows.
If your student loan is hindering your financial progress, consider these tips to get rid of it faster.
Make extra or above-minimum payments. If you can afford it, the most straightforward way to pay off your student loans faster is by making larger payments to cut the principal quicker. So, instead of using your tax refund to fund a vacation, put it toward your student loans.
Make bi-weekly payments. Another effective way to chip away at your student loan debt is by making bi-weekly payments instead of monthly. Here’s how it works: You’ll divide your monthly payment in half and pay that amount every two weeks. If your monthly payment is $600, you’ll make bi-weekly payments of $300. And when you pay bi-weekly, you make 26 half-payments each year, which equals 13 full payments. That’s one full payment more than if you were to make one payment per month.
Pay while you’re in school. Unsubsidized federal student loans and private student loans typically start accruing interest from the date of disbursement. So, even though you aren’t required to repay your student loans while you’re still in school, paying off some of that interest early can help you better manage your overall loan balance once you graduate.
Activate autopay. Autopay automatically deducts your student loan payments from your bank account on the due date so you don’t have to worry about missing payments. Though autopay is optional, most federal and private student loans offer an interest rate discount of 0.25% if you enroll.
Look into consolidating your loans. Consolidating your federal student loans can make debt repayment more manageable by rolling several balances into one. It could also lower your monthly payments. But remember, if you consolidate your federal student loan, you may lose access to certain benefits, such as interest rate discounts, principal rebates or some loan cancellation benefits.
Find a secondary source of income. If you don’t have any room in your budget for making larger or extra student loan payments, consider taking on a second job or starting a side hustle. By funneling those extra earnings straight into your student loans, you’ll chip away at that debt faster and give yourself more financial breathing room in the long run.
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