Balance? Paid

How I paid off my study loan debt in less than 4 years

Young, Gifted and Black (YGB). This is not only a title to a song by American singer-songwriter Nina Simone, but it is a title to an album by the quintessential definition of “Black Girl Magic” herself, Aretha Franklin. When one is referred to as YGB, it comes with a sense of pride and fulfillment. However, it does come at a cost.

In a system of normalized averages (read “world”) as fondly put by Vusi Thembekwayo, society sets a benchmark for every individual to fit into one or more of those brackets. Now, in order to break out, education becomes a distinguishing factor. As Dibs (read “Madiba”) put it, “Education is the most powerful weapon which you can use to change the world”. However, if you’re a senior member of the missing middle, access to education can be an Achilles heel.

According to Times Higher Education, tuition fees in one of the United States’ colleges ranges from $ 5,000 to $ 50, 000. According to Top Universities, a full year of study at the illustrious University of Cape Town in 2017 would have set you back roughly R 65 000. My point, the cost of being Young Gifted and Black for majority of missing middle individuals is the cost of education.

Fast forward 3.8 years later, I have managed to pay off my study loan debt. Whilst this is not earth shattering by any stretch of the imagination, these are things I did to ensure that I reach this goal. If you are looking for a pay R 200 000 off in one-year scheme, then in the famous of Ariana Grande “Thank You Next”.

  • Evaluate your finances and set a realistic time limit on when you want the debt to be settled. When analyzing the smart way of setting S.M.A.R.T objectives, T is for time – bound. It is not a goal until it has an expiry date.
  • Ensure that your loan has a variable interest rate. When the economy is in trouble and the central bank cuts rates to stimulate spending, nominal interest also decreases which means your loan payments are less. Though, the opposite applies, should the central bank increase rates, your instalment will increase. Fixed interest rates force you to pay the same rate regardless of the change in rates from the central bank.
  • Pay a little more than what is required. This not only reduces the payment period, but it reduces the overall interest paid as it is calculated on the principal amount.
  • Request your bank statement every single month. This helps evaluate progress and seeing the debt decrease is good for morale.
  • When you get bonuses allocate at least 25% of that bonus towards reducing your debt. This handsomely reduces your principal amount and overall interest paid on loan over its lifetime.
  • Be disciplined in your payments. “Varbs” will not end because you’re not around.
  • Find a confidant that you can complain to when you start getting frustrated. Preferably, someone who is understanding. This helps you to stay the course.
  • Bonus point. If you have multiple debts like most people do use the snowball method or the avalanche method. Snowball method means that you payoff the least debt first, gain momentum and what you’re now saving from that debt is redirected to the second – smallest debt. On the other hand, the avalanche method is making minimum payments on all debts then using the money that remains to target the debt with the highest interest rate.

Education in any country is important. However, the loans associated with this education can be an emotional rollercoaster. However, take heart in that applying certain rules and disciplines go a long way.

Your introvertly extroverted guy,

Thebtalk

References

https://www.topuniversities.com/student-info/student-finance/how-much-does-it-cost-study-us

https://www.timeshighereducation.com/student/advice/cost-studying-university-united-states

https://www.managers.org.uk/~/media/Files/Campus%20CMI/Checklists%20PDP/Setting%20SMART%20objectives.ashx#:~:text=An%20objective%20is%20a%20statement,(or%20time%2Dbound).

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