It’s Christmas Eve today and many of us already have an eye on the New Year, which is just a short week away. If you’re saddled with student loans, now is the perfect time to formulate your resolutions for 2014 – including developing some meaningful strategies to get your finances in order, deal with your debt and make the coming year your best ever. Here are five resolutions to consider:
#1 Get a grip on what you owe to whom
If you don’t already have a solid grip on exactly how much you owe, who you owe it to and how much of your earnings are going to principal and interest on your educational debt, now is the time to get with it! Sign up today for Tuition.io’s free student loan tool, which will let you get a snapshot of your debt (both federal and private student loans) in one simple dashboard that will update every time you make a student loan payment. Track your prospective payoff date and how much of a dent extra dollars to principal can make.
#2 Get on a repayment plan
If your student loans are too high and you are at risk for falling behind or you are unable to pay other debts as a result, it’s time to consider a more affordable repayment plan. Depending on when you graduated, you should qualify for either Income Based Repayment (IBR) or Pay As You Earn (PAYE). These will limit your payments to either 15% or 10% of your disposable income, respectively, and offers forgiveness after 20-25 years of affordable repayment. Visit our Student Loan Help Center for How-To guides on how to apply to these plans.
#3 Set financial goals
Student loans can’t be the sole focus of your financial plan for 2014 – although your debt can certainly feel so overwhelming that you may feel like your life (and finances) revolve around it. Read our recent blog on saving for retirement while paying off your student loans. Whether you want to buy a home, need a new car or want to start up your 401(k) to address your long-term financial needs, now is the time to set goals to get you there. Think beyond your monthly student loan payments and to what you want for yourself in 2014 and beyond.
#4 Spend and save wisely
Even if you’re making your student loan payments easily each month with no stress (or even if you’re not), you should be spending and saving strategically to protect yourself long-term so that you can afford to buy a home, send your own children to college and invest in your retirement (even though that may seem far, far away). Consider where you can cut back to put more into savings or your 401(k). And for every few dollars extra you can put toward your student loan principal, the faster you’ll be shed of your debt. Cutting back on partying, clothes shopping and other extraneous expenditures is smart.
#5 Follow through
It’s one thing to set goals and make New Year’s resolutions, but quite another to follow through on them. Think how many people resolve to get to the gym, quit smoking or shed that muffin top only to be back on the couch, puffing away or munching chips by mid-January… Visit your Tuition.io loan dashboard once a month to see your progress so you can stay motivated on dealing with your debt. To keep your resolutions, you need to set realistic goals in smaller increments (I will save $100 a month or I will pay an extra $75 on my loans each month) and then congratulate yourself when you make them. And if you fail one month, resolve to do better the next.
Merry Christmas, Happy Hanukkah and a jolly holiday to all!