How to Become Debt-Free From Student Loans, American Financial Benefits Center Encourages Borrowers to Save More, Spend Less

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Americans with debt from credit cards and student loans live paycheck to paycheck. They aren’t alone. The average amount of credit card debt in America is over $15,000 and 20 percent of student loan borrowers owe more than $50,000. Accruing interest isn’t the only negative side-effect of debt: a person’s mental health can also take a toll. A possible solution to this problem is to pay down the debt as quickly as possible. That’s what Emily Shutt accomplished with her $30,000 of debt. However, even borrowers who struggle to make their minimum payments may have options, such as lowering their payments. American Financial Benefits Center (AFBC), a document preparation company, suggests that a long-term plan for student loans can lead to similar financial stress relief and encourages borrowers to look into income-driven repayment plans (IDRs) offered by the Department of Education.

“Although getting out of debt at a young age is wonderful, not everyone has a job that pays them well enough to do this,” noted Sara Molina, manager at AFBC. “Yet, this doesn’t mean they shouldn’t look into being savvier with finances. Cutting down on expenses could allow them to save for a rainy day or fun getaway.”

Another reason to take care of one’s finances relates to mental health. Debt can cause severe anxiety for 29 percent of people with high debt stress. Two-thirds of graduate students with debt report they are always worried about it. The obsession has a negative effect on their performance at work and school. Other side-effects of debt are stress, depression, anger and frustration. It seems that becoming debt-free as soon as possible could ease a person’s mental burdens.

Although getting out of debt at a young age is wonderful, not everyone has a job that pays them well enough to do this. Yet, this doesn't mean they shouldn't look into being savvier with finances. Cutting down on expenses could allow them to save for a rainy day or fun getaway.

Sara Molina

Manager at AFBC

“Debt freedom isn’t freedom from debt. It’s freedom from worry,” Trent Hamm, founder of The Simple Dollar, wrote in a blog post. Being debt-free sounds wonderful, but how does a person go from high debt to zero debt? Emily Shutt’s story is an excellent example of how someone can face her problems head-on. She worked on a plan to pay off her loans and debt and then stuck to it with determination and perseverance. Shutt realized she was spending on things she didn't need, which many of her fellow millennials also report doing. She also cut back on many other expenses, such as cable, gym membership and reducing her phone plan. While these actions led her to a debt-free life in a relatively short time, they can also help those who cannot or would prefer not to tackle their student debt head-on like that.

Borrowers who struggle to make their minimum payments may find some financial relief in federal income-driven repayment plans (IDRs). Such plans base payments on income and family size and may end in forgiveness after 20 to 25 years of enrollment. While IDRs may reduce payments to a more affordable level, cutting spending can help enrolled borrowers to further tackle their other financial goals, such as paying off other debts or putting funds aside for various savings goals.

“Get smart about your finances. If your goal is to become debt-free, start cutting down on monthly payments - start somewhere. It's the first step in the right direction,” said Molina. “Changing your student loan payment plan could increase your funds and happiness. At AFBC, we hope our clients experienced just that and that they find our continued support with the yearly IDR recertification paperwork helpful in keeping to their long-term goals.”

About American Financial Benefits Center

American Financial Benefits Center is a document preparation company that helps clients apply for federal student loan repayment plans that fit their personal financial and student loan situation. Through its strict customer service guidelines, the company strives for the highest levels of honesty and integrity.

Each AFBC telephone representative has received the Certified Student Loan Professional certification through the International Association of Professional Debt Arbitrators (IAPDA).

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Contact

To learn more about American Financial Benefits Center, please contact:

American Financial Benefits Center
1900 Powell Street #600
Emeryville, CA 94608
1-800-488-1490
info@afbcenter.com

Source: American Financial Benefits Center


Categories: Financing and Student Loans, Financial News

Tags: credit card, hardships, income-driven repayment, millennials, over spending, pitfalls, student loan repayment, student loans


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About American Financial Benefits Center

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American Financial Benefits Center works to align each client with the different U.S Department of Education programs available to them based on their income and occupational situation.