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.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate|
|2.57% – 6.97%1||Undergrad & Graduate|
|2.51% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.50% – 7.24%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|