On December 31, 2015, my husband and I talked about our goals for the new year. In the past, I had made some common resolutions about losing weight or being more productive. But this year, I wanted to set a goal that would mean the most to my family: paying down our debt.
My husband and I settled on a goal of paying down $20,000 worth of credit card, medical, and student loan debt by the end of 2016. Little did we know that not only would we keep that resolution, we would smash that goal by an additional $5,000!
Paying off debt is a common goal that many people make each year — in fact, it’s the most popular financial resolution, according to Student Loan Hero’s recent survey.
But even with the best intentions, reaching that goal rarely happens. While 45 percent of Americans make resolutions each year, only eight percent make their resolutions a reality.
While there were many times my family risked failure, we beat the odds. Here’s how we did it.
How we crushed our $20,000 New Year’s debt resolution
Link it to major life transitions
In late 2015, my husband accepted a new job in Wyoming. We would be moving from Chicago in early January. We downsized our possessions, stopped our regular upscale dining out, and canceled all future travel plans — all of which made dramatic, positive impacts on our personal finances.
Mental shifts don’t happen easily. We were never the best budgeters, but when you’re forced to face a new situation head-on, you can’t fight against it so hard. For us, going from urban to rural life forced us to spend less, stay in more, and learn to value our money.
Find someone to be accountable with
I write about personal finances for a living. Because of my job, tracking my debt payoff progress online meant fessing up to thousands of strangers whenever I splurged on a fancy coffee drink.
Blogging about your resolutions is one idea, but it doesn’t have to be that public. My sister and mom were great accountability partners, too.
They regularly asked how much I had paid off and where I was in my progress. I often went to them when I was feeling frustrated or angry about having to transfer so much money to a medical bill or credit card debt without getting to spend any of it first.
Break down common resolutions
Twelve months is a long time, especially when you’re staring down an unknown path right at the start. I remember looking at my debt payoff spreadsheet in February and thinking, “My daughter could get sick. There goes that payment!” or “What about my birthday in June? Will I get to treat myself then?”
I was very overwhelmed, but when I sat down and did the math in pieces, the picture looked much clearer. Instead of paying off $20,000 in a year, it became $1,667 per month, $385 a week, or $55 per day.
Seeing everything in smaller, manageable pieces additionally helped when I had months where I couldn’t make that goal. As long as I could pay a little more than my minimum monthly debt payment, I knew I could split the remainder up in other months.
Cut yourself some slack
No matter how dedicated you are to achieving your resolution, there will be times where you will fail. Life will intervene with an unexpected hiccup, and you’ll be momentarily pushed off track.
There were four months of the year in which we paid only a few hundred dollars extra towards our debts. Sometimes we were traveling, other months we had emergencies come up. Even when it was out of my control, I wanted nothing more than to beat myself up over it.
Those months sometimes brought me to tears, but I reminded myself how much I had already accomplished, and how much time I had to turn things around.
There are 365 days in a year, and not all of them will be 100 percent perfect. Accept it and forgive yourself.
Use what is given to you
Here’s a secret: Most of those months where we paid off large chunks of debt (such as $3,000+) were from cash windfalls. We used a returned security deposit on our past apartment to pay down a credit card. Our tax refund went to clearing out my daughter’s medical debt.
Not all of your resolution work has to be hard effort. If you’re given an advantage, prioritize your goals so they are tackled first.
For example, we negotiated our lease to be $300 less per month. Instead of spending that $300 on holiday gifts or travel, that money was put in a direct deposit to our debt payoff checking account. We never saw it or thought about it once, and because of that we made a sizable impact on our debt goal.
Put it into words
Paying off debt is one of the most common resolutions, especially for those looking to become financially independent. But having debt can feel shameful, even if it was incurred for a good reason.
One of the hardest parts of setting our family’s goals for the new year was simply saying it out loud. No one wants to admit that they have that much debt, but it was an essential part of the puzzle for us. We needed to recognize and face the problem head on.
Be specific and honest about your resolutions. If you need to lose weight, put it in actual numbers. If you want to run a race, pick a distance. And if you’re like us and want to conquer your debt, pick the number and stick to it.
What happens next year?
After meeting our goal of $20,000 in early October, we increased it to $25,000 — and we’re not stopping in 2017. Our official New Year’s resolution for 2017 is to pay down another $15,000, mostly focusing on private student loans and the remainder of our car debt.
By focusing on what worked for us and targeting new strategies that could help us go farther, I’m confident that we‘ll have another year of making our financial goals a reality.
Need help setting your own financial goals? Check out these five New Year’s resolutions to pay down your student loan debt.
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