20 Ways to Save Money and Pay Down Student Loans
October 20, 2015


Save money, pay down student loans

In college? The more economically you can live, the better off you’ll be. If you have to borrow to get an education, you want every dollar you borrow to be going toward your investment. That is, tuition, fees and books. Every ski trip you take, every beer you drink, every meal you eat out rather than cooking inexpensively at home will hurt you, because that’s money you’ll eventually have to pay back – even though you’ve received no long-term value for it.

Out of school? Then your expenses may be going up, but it’s just as important to save money. The reason: Opportunity cost. This economic term refers to the investment you could have made with any given dollar – whether buying assets that will have long term value, or paying down debt. The opportunity cost is the difference in profitability between the best reasonable use of the money and what you actually do with it.

So saving money to invest, or pay down debt is of critical importance – especially if you’re struggling with student loans or other kinds of debt. Here are some of our favorite money-saving tips – designed with the recent graduate, the young family, and the newly-minted professional in mind.

1.) Have a plan. If you fail to plan, you are planning to fail. If you are married (or otherwise coupled), this needs to be a joint plan, with buy-in from both sides.

2.) The best is the mortal enemy of the good. It is much better to have a decent spending plan you can live with now, and energetically execute it now than wait until you have a perfect plan next month.

3.) Visit a fee-only financial planner for some help with budgeting. Nothing against commissioned advisors, but they only get paid if you buy insurance products or securities. Their advice might reflect that. That might not be what you need.

4.) Buy term life insurance, guaranteed convertible. Term insurance gets you the maximum face amount of life insurance for the smallest premium. The downside is that it goes up as you get older and eventually becomes unaffordable. “Guaranteed convertible” means you can convert the insurance to a permanent, cash value insurance policy in the future.

5.) Use budgeting apps. Or if you’re a Luddite at heart, use a workable paper system. It doesn’t matter which one you prefer. Adopt the system you’re most likely to actually use! As the holidays approach, check out some of the mobile apps like CardStar that consolidate many rewards and loyalty programs from 350 major retailers to help you maximize your savings. CellFire pushes coupons right to your phone or tablet. RedLaser lets you point your phone camera at a bar code to find out if the item is being sold for a lower price elsewhere.

6.) Plan for disability. Who will pay your student loans if you get sick or hurt? You can’t bankrupt on federal loans unless you are very severely disabled. But even minor disabilities can have a major effect on your ability to earn an income. If you don’t have disability insurance from work, consider buying your own private disability income plan from an agent or broker.

7.) Go without cable. That’s as much as $50 to $100 bucks per month you can save right away. Especially if you have high-speed Internet separate from cable. Yes, this might be difficult for hard-core sports fans. So invite some friends over to watch games and have them help you with cable costs! Meanwhile, you can Hulu or Netflix plenty for $10 or less per month.

8.) Go to Starbucks a lot? Convert from mochas and other pricey espresso drinks to iced coffees. And get a card. Here’s how that works, in practice:

Option 1

Study at Starbucks three days per week

Buy two mochas at $5 each ($10 per day, or $30 per week)

Monthly Starbucks expense: $120

Option 2

Study at Starbucks three days per week

Buy an iced or hot coffee at $2.50 per day.

Use your Starbucks card. Once you use it enough, you’ll be a Gold Member and get unlimited free refills.

Expense: $7.50 per week

Monthly expense: $30 per month.

Difference between Option 1 and Option 2: $90 per month


Swapping coffee drinks could save you $90 per month.

9.) Choose your groceries wisely. Pay attention to deals grocery stores close to your home are offering. When you walk into a grocery store, see which produce is on sale. Buy seasonal produce – it is often the cheapest and the tastiest in the market.

10.) Buy condiments at discount resellers. They’re about half the price you’ll pay in a traditional grocery store.

11.) Stop buying CDs. Unless the artist is a friend of yours. But for the big label pop stuff, it’s almost all available on services like Spotify. And if you are willing to listen to an occasional ad, Spotify is free.

12.) Cancel all your subscriptions. Lots of people save $100 per month or more on subscriptions they just don’t need anymore. These can be websites, fitness club memberships, magazines, monthly services, etc. Go through your monthly statements and identify everything coming out of your account automatically. If it’s not rent, a mortgage, a car payment, a utility, insurance premium or cell phone bill, consider shutting it down.


Let someone else food the bill on the first few years of depreciation on your car.

13.) Don’t buy new cars. “The worst auto accidents happen on the showroom floor,” says Dave Ramsey, a popular radio talk show host, author, television commentator and passionate advocate of debt-free living. Instead, let someone else take the depreciation of the first few years.

14.) Buy Tupperware, a crockpot and a good freezer. Use them every week.

15.) Take a cooking class. Sure, it will cost money. But do it while you’re young and it will pay financial and personal dividends for the rest of your life. Plus, it’s a wonderful thing for young couples to do together. Single? Cook for your dates. Guys: Demonstrating great cooking skills is catnip for women!

17.) Get a home energy audit. Most local utility companies will do this for free – and help you find ways to save money.

18.) Skip the glossy shopping malls. Buy clothes at strip mall discounters.

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Skip the mall.

19.) Write out all your debts, including school loans, on a sheet of paper, listed in order from smallest to largest, along with the payment. This will help you keep track of everything you owe.

20.) Then use a ‘debt snowball.’ This means pay the minimum on every debt except the smallest one. Attack that smallest one with a vengeance. Hit it with the white-hot anger of a thousand suns until it is gone. You’ll get a goose-egg soon, and a quick success on the board. That will give you the emotional energy and encouragement to redouble your efforts. Then take everything you were paying on the first one and apply it to the next debt, until that’s gone.

This technique – another one advocated by Dave Ramsey, though he’s not the only one – is called the “debt snowball.” It’s not mathematically optimal. A mathematician might pay the high-interest debt first, or the secured debt first. The advantage to the debt snowball technique is that it harnesses an incredible amount of emotional energy. You get the human element working in your favor. Have kids? Children don’t understand compound interest, but they understand crossing off debts on the refrigerator. Do something for the kids every time you cross off another debt, and you’ll be amazed at how they will quickly become your best cheerleaders!