"I can't afford to make extra payments on my student loans!"
If you have ever found yourself saying, (screaming), or thinking this, we're totally with you and completely understand. With so many things going on in life it's sometimes hard to free up extra cash to put towards student loans. So many people we talk to everyday start off the conversation with something very similar to exactly this. And if that's you too we have good news... there are still MANY ways you can save money, pay off your loans faster, and get out from under the weight of student loans.
In this piece, we wanted to share one simple thing you can do to accelerate your debt-free timeline as well as save you a bunch of money in the long run.
In short, the Roll-over concept is simply taking the payment that was used for a previous loan (that's now been paid off) and applying it to another loan. Period - that's it. Simple, right?
Here's how it works
First, be sure that you’ve budgeted enough to cover the minimum monthly payment for every loan.
Note: If you plan to at any point in time make extra payment(s) you'll want to first arrange (or order) your loans by the strategy you think is best for you (read more about strategies here).
Here's where it really starts: Once you have repaid a loan in full, take the entire amount you were paying towards it (monthly minimum plus any extra money) and completely allocate it to the next loan. Notice here that you aren't necessarily increasing the total amount of money you are putting towards your loans, but simply "rolling over" that money into another payment/loan. From there keep knocking off debts and then diverting all the freed-up money toward the next debt in line.
Can you explain a bit more?
Sure thing! Below is an example of how it's played out.