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5 Tips for Making a Debt Payoff Plan
Student Loans

5 Tips for Making a Debt Payoff Plan

5 Tips for Making a Debt Payoff PlanNow that I’m finished with my grad degree, my loan payments are about to begin. This might sound crazy, but I’m actually really excited to start this journey. As I shared in my student loan story I have about $200k in student loan debt, mostly from my undergraduate studies. When it all really hit me how much I owed, I quickly began searching the internet and Pintrest to find out as much information as possible about debt payoff. This was almost a year ago now (Fall 2014) and I can’t wait to put my plan into action. Through the process I found these helpful tips that I have been using throughout grad school, and will really start using next month when my first bill comes in the mail!

1. Budget

Find a budgeting system that works for you, and stick with it! I was shocked to find how much I was carelessly spending each month, mostly on going out to eat. The easiest way I have found to budget is to use Mint to track all my spending. I have all my banking accounts linked up to my Mint account and created a budget for the things I spend money on each month, like gas and groceries. Also, it reminds you of the bills you have to pay and you can get a free credit check with advice on ways to improve your score! They even have an app to make it super easy to check and edit your budgets whenever you want.

2. Manage your Loans

For me, this meant using ReadyForZero to manage my loans. This tool allows you to enter in all of your loans and create a plan to pay off your debt. It even has this nifty tool that lets you see how much faster you would pay off your debt and how much your would save by making larger payments. Also, it shows you how much your daily interest is, talk about motivation!!! I have to say I am not planning to follow my plan completely that they mapped out for me because I don’t love the order that they pay loans off in. They go by the smallest loan with the highest interest rate, and that just isn’t something I want to do. However, this tool is wonderful to see your progress and easily calculate daily interest rate, how much is left, etc.

3. The Snowball or Avalanche Method 

Look into Dave Ramsey, the man is a financial genius. He has some great tips about managing your finances in general, but has a debt repayment plan called, the snowball method. This method has you focus paying down one specific loan by putting all of your extra money towards this loan. All your other loans you should make a minimum payment on. When your focus loan is paid off, you apply that payment to your next focus loan. How you pick your focus loan should have some reasoning, either you are focusing on loan amount, interest rate or a combination of both. If you’re focusing on the smaller loans first, this would be the snowball method. This method plays more to emotions because you get small victories in the beginning to motivate you through the end. If you focus on your highest interest loans, this is the avalanche method. This method is purely mathematics and allows you to pay less in interest. Personally, I am focusing on my highest interest rate loans first, if I have more than one loan at a certain interest rate, I focus on the larger one.




4. Get Organized

This is going to look different for everyone, but it is important to find an organization method that works for you. Personally, I use a combination of ReadyForZero and a binder. ReadyForZero allows me to keep track of the bigger picture of my plan, how much I’ve paid off, my daily interest amount, etc. While a binder keeps all those pesky bills organized because they tend to go missing if they don’t have a home, and it helps me keep track of each individual loan I have.

5. Have Fun

During grad school I said no to doing a lot of fun things because it would cost me money. At the beginning, I was in hardcore debt payoff mode, and wanted to put as much money as possible to my loans. But I sacrificed having fun with my friends, and eventually the stresses of going to grad school full time and working full time weighed down on me. I realized I needed to enjoy myself and quickly found ways to do that without spending a lot or any money. My personal favorite is having a potluck with friends. What’s better than great food, great friends, and wine. It’s a lot of fun, and pretty cheap, too.

The goal of paying off student loans is pretty hefty, with a plan it makes it much more manageable. I hope these 5 tips help you as much as they have helped me to plan my debt payoff. What are some tips you have for making a debt payoff plan?

How I Paid Off $23,000 of Debt During Grad School
Student Loans

How I “Paid Off” $23,000 of Debt During Grad School

How I Paid Off $23,000 of Debt During Grad SchoolYou might be wondering why I wrote “paid off”, because I didn’t truly pay off that amount during grad school. Like I shared in my student loan story, I created a strategy to make grad school work and pay down my loans during it. Some of the $23,000 was truly paid off, but most of it was just redistributed I guess you could call it.

I highly suggest poking around on Pintrest if you have large amounts of debt. It’s what I did when I first started realizing I needed a plan to pay my debt off. There is nothing quite like reading other people’s success stories to motivate you to get serious about debt pay off and money management. Also, I recommend looking into Dave Ramsey, he is brilliant when it comes to debt pay off and money management. I’m planning to use his snowball method to pay off my debt.

During my one year of graduate school I truly paid off about $3,500 of the $23,000. I did this by working 2 jobs while going to school full time. It was definitely a lot, but with some organization and time management I was able to pull it off. If you’re going to work almost full time (I roughly worked 30-35 hours a week), I highly recommend working jobs that require minimal take home work. What I mean by this is, work jobs that allow you to do very little work at home once you leave work. For me, that involved working in a toddler half day classroom, babysitting afterwards, then going to class at night. The toddler classroom required minimal take home work and babysitting never required any work at home. Actually, babysitting worked perfectly because I could do work during the toddler’s nap time. Also, I lived by a budget and cut spending wherever I could, while still making sure to save 10% of my income every month.

The other $20,000 was paying off some of my private loans with federal loans. Even though I only needed a couple thousands to make it through graduate school, I still took out the maximum amount of federal loans they would offer me. I know, this sounds crazy and when I first decided to do it, I thought I was crazy too. But, I’m a teacher, meaning there are a lot of great federal loan forgiveness programs in place for me. This didn’t help me much since I had a ton of private loans (with super high interest rates) from my undergrad. By taking out federal loans to pay down my private I was kinda swapping the same amount of debt for a better interest rate. My particular private loan I worked on paying off with my federal loans carried a 8.05% interest rate and the federal loan had a 6.21% interest rate. I was very pleased 🙂 It might not seem like a big difference, but interest is the absolute worst, so getting a lower interest rate is always better.

What are some strategies you used to pay down debt while still in school?

 

Student Loans

My Student Loan Story

When I first got accepted to Syracuse University as an undergrad, I was over the moon excited. It was my first choice school and had one of the best programs in the country for what I wanted to study, inclusive elementary and special education. Of course, it came with a hefty price tag, about $200k to be exact after the 4 years.

I applied to every scholarship I could find, but unfortunately got nothing. I received a small grant from SU, and work study, but nothing that made much of a dent in the cost of attendance. This continued for all 4 years. During my senior year, I began to look into graduate programs, and took a closer look into my actual amount of debt. My stomach turned when I saw the number that I had accumulated. My dreams of graduate school seemed impossible and I quickly arranged a meeting with the graduate recruiter at my school. She’s hands down the best human being on this planet and has helped me through all of my troubles throughout undergrad and grad school.

I walked out of her office with a meeting set up with a financial aid adviser, scholarship applications started, switched to a new, less credit grad program and emails sent out to all contacts within my school to get me scholarships. I had done a lot for the School of Education through my undergraduate career, so she hoped this would help me get the scholarship I needed. The process was slow, but I felt better knowing that I was doing something to hopefully be able to go to grad school that upcoming summer.

When I met with the graduate financial aid adviser she immediately asked what my major was currently and what I planned to study as a grad student. As soon as she heard teacher, she questioned why I had an ABSURD amount of private loans. Here’s a tip: Get as many Federal loans as possible before private. Federal loans offer much lower interest rates, more payment plans and more opportunities for forgiveness, especially for teachers. She recommended only taking federal loans for graduate school and to make whatever kind of payments I could during school.

I began graduate school studying literacy education, and took out another federal loan to cover the cost for that semester. As much as I didn’t want to take out even more loans, I figured I was so much in debt already, what was a few extra thousand? Then, everything quickly changed during the first week of classes.

While break during one of my night classes, I got an email that I received a scholarship that would cover half of my credits that semester and the following semester. Then, I found out my teaching job at a preschool would give me 4 free credits. That meant I would have 10 credits paid for completely out of my 12. I immediately emailed the financial aid adviser and asked if there were any other grants available to teachers. She said that the TEACH grant was still available to me as a grad student, it would cover the rest of my credits (if you’re going into teaching, look into it! It’s not much, but it’s better than nothing)!! I couldn’t believe that my entire fall semester would be covered!

My spring and summer semesters I didn’t receive as much aid, but in comparison to what I thought I was going to pay, it was a huge relief. You’ll probably find it to be funny, but I ended up taking out the maximum amount of federal loans they would offer me each semester of graduate school, even though I didn’t need much. I’ll save that for another post though 🙂

What’s your student loan story? How did you make higher education possible for yourself?