Tackling Student Loan Debt with a Plan — Step 2 of 4
Ready to make an exponential impact to your financial situation?
In our last article, we kicked off our Tackling Student Debt with a Plan series by starting at a smaller, micro-level with budgeting. Becoming disciplined with budgeting and making a number of adjustments to your budget can add up savings that you can then apply to make larger student loan payments. This will, in turn, lead to you paying less overall interest and help you finish paying off your loans faster. Today, we’ll cover the first of two larger, macro-level ways that can dramatically help pay down that student debt. Now up, increasing your income.
2) Increasing Your Income (Macro-level)
Option 1: Landing that higher-paying job
The quickest way to pay down your student debt will be to increase your income while keeping your cost of living the same as before the income increase, and use the extra income as additional loan payments to shorten your payoff timeline. Here are some keys to position yourself towards landing a higher-paying job.
Know Your Market Value
Do you know if you’ve been underpaid for all you bring to your employer? Glassdoor, Indeed, and PayScale are great websites to find the salary ranges and averages of similar jobs. With a little bit of research and comparison shopping, you can find out whether or not you’ve been paid fair market value for your skills and experience. If you have been paid under the average going rate for your type of job in the area, you can use these resources to bolster your position when it’s time to have that raise/promotion conversation with your boss. For some, that conversation needs to happen ASAP.
Use and Leverage your network
Once you know your market value, update your resume and your LinkedIn profile (create one if you don’t already have one). Get your friends involved and ask them to review and help you edit it. For the job search itself, reach out to your network to help you get a leg up in the job application process in addition to using the usual job sites. Many jobs aren’t necessarily posted to the public. Your friends and network will have access to internal postings at the companies you want to apply to. They may also know of positions that are about to open up and can often be a referral. Use and leverage your network to position yourself for that next step in your career.
However, keep in mind that it’s not always about that higher-paying job. There may be a tradeoff, whether it’s a crazy amount of hours the employer expects of you, a horrible work environment, or other employee benefits they may not offer. You have to weigh all the options but for the purposes of this article the key is to know what your market value is and leverage that knowledge to help you get compensated higher in order to pay down that student debt more quickly.
*Big related tip: Anchoring in negotiating salary
Usually, a potential employer who is making an offer is the one who first puts down a number in a salary negotiation. More often than not, people just take that first number or negotiate around that first number, even if what you expected was significantly more. Anchoring is a cognitive bias that places too much emphasis on that first number that’s offered. What often ends up happening in salary negotiations is that the company (and you) are still using that first number as the main reference point. That’s why it’s so important to know your market value. If you already know what other companies are paying for your skills and experience you can leverage and use that as a reference point rather than getting sucked into negotiating around their anchor, especially if it’s a salary much lower than you expect.
Option 2: Side gig
Having a side gig can also dramatically increase your monthly income, and thereby helping you pay off your student debt more quickly. Experian says that 50% of millennials in the US have a side gig (Source) while only 37% of Americans overall do (Source). In this day and age where job security is uncertain and wages have stagnated for years, more and more people are realizing that having multiple sources of income is financially necessary. Depending on the side gig, it’s quite possible to more than cover your monthly student loan payment amount and even substantially add to your usual monthly payment.
A side gig can also be a way to pursue a passion in a practical way. You may not yet be in a position to change careers that you’d find more fulfilling but a side gig may be able to offer you an opportunity to explore the possibility while not having to sacrifice your current income.
Whether it’s to supplement your income in order to help make ends meet, get out of credit card debt more quickly, or accelerate cutting the time down on paying your student loans, having a side gig can provide a major boost in achieving your financial goals.
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Thanks for reading and stay tuned,
James
Disclosure: Opinions, recommendations, and analyses provided in this article are those, solely of the author and have not been reviewed, approved, or endorsed by any financial institution. The contents of this article are also not provided or commissioned by any financial institution.
