6 Smart Student Loan Moves To Make Before the End of 2018


The new year is right around the corner, and if you’re anything like most Americans, you’ve already picked out a resolution (or two) to start pursuing after the ball drops.

One of the most popular resolutions that we make is to save more money and pay off our debt—resolutions that apply perfectly well to the millions of Americans with student loans and which, if we follow through with them, can have a monumental positive impact on our lives.

And yet, despite approximately 53% of Americans making a resolution to save more money in 2018, it’s estimated that somewhere around 80% of all resolution-makers fail their resolutions and give up by February.

What’s with all of the failure? According to Psychology Today, there are five key reasons we fail our New Year’s resolutions:

  • Our expectations weren’t realistic
  • Our resolutions weren’t properly defined
  • We didn’t have the right mindset when setting our resolutions
  • We don’t have the right time management (and other) skills
  • We’re living distracted lives

While all of that is true, I think that the reason we fail our resolutions (regardless of whether they’re related to money or health or whatever) is a whole lot simpler.

We fail at keeping our resolutions because we don’t put a plan in place that will lead to success.

The lesson is clear: If your New Year’s resolution is to get smarter about your money so that you can pay off your student loans faster and live a happier, debt-free life, you need to have a plan.

Whether you’re a new graduate who just started making loan payments after your grace period ended in November or you’ve been making payments for years, below are some easy steps that you can take now to set yourself up for success in the new year.

1. Audit your student loans.

If you’re going to make any progress whatsoever paying down your student loans, you first need to have a clear picture of what you owe and to whom you owe it. Without this overarching picture, it’ll be nearly impossible for you to create a plan of attack.

Don’t know how many loans you have, who your lenders or servicers are, what your monthly payments are, or how much you owe in total? You can find out in one of three ways:

  • Check the National Student Loan Data System (NSLDS) to find all of the information you need about your federal student loans.
  • Check your free credit report (through a website like Credit Karma or FreeCreditReport.com) to find information about all of your student loans, both federal and private. (While you’re at it, it’s probably a good idea to check on your credit and make sure everything is in order.)
  • Contact your school’s financial aid office to find information about all of your federal and private student loans, as well as information about grants or scholarships you may have received (if you want to know that information). Important: If you went to multiple schools, you’ll need to contact each one separately.

2. Keep track of your loans in a spreadsheet.

Once you’ve found all of your student loans, you need to find a way to keep track of all of the information so that keeping track of your progress is as easy as possible. Creating a student loan spreadsheet is one great way to do just that.

Need help keeping track of your student loans? Download our free Student Loan Spreadsheet!

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By creating a student loan spreadsheet, you’ll have a single document that you can turn to whenever you have a question about your student loans, or whenever you want to check the progress that you’ve made as you pay down your debt. Having that information on hand is by far one of the simplest steps that you can take to dramatically increase your chances of success.

At a minimum, the spreadsheet that you create should include the lender’s name, the interest rate, your monthly payment amount, and the total debt. After creating your spreadsheet, you should be sure to update it monthly (or, any time you make a payment).

Don’t feel like manually creating and updating a spreadsheet each month? There are a number of apps out there that will keep track of your accounts for you. If that sounds like you, Personal Capital is one app that I personally use, love, and recommend.

3. Figure out your goals for the new year.

Before you actually start aggressively paying down your student loans, you need to understand your motivations for paying off your debt. Why? Because those motivations will ultimately influence which debt repayment strategy you should use. Without having a clear strategy, you’ll just be applying your extra payments at random, not making as much progress as you could be.

So, what do you hope to achieve by paying off your student loan?

  • Do you want to pay off your loans to save as much money as possible?
  • Do you want to pay off your loans in order to free up money in your budget that you can use for other goals?
  • Do you simply want to pay off your loans so that you have the peace of mind that comes with being debt free?

4. Choose a student loan repayment strategy that you’ll follow.

Once you understand the motivations behind wanting to pay off your student loans, you can choose a debt repayment strategy to follow. Three popular strategies include:

  • The Snowball Method, in which you’ll start by paying off the loan with the lowest balance first before moving on to the loan with the next lowest balance. Doing this will free up extra money in your monthly budget. You can use this money to work towards other goals (like starting an emergency fund or investing for the future) or to pay down your other student loans.
  • The Avalanche Method, in which you’ll start by paying off the loan with the highest interest rate first before moving on to the loan with the next highest interest rate. Doing this will save you the most money, since you’ll be tackling your most expensive debt first.
  • The Benefit-Focused Method, in which you focus on paying off any private student loans first before moving onto your federal student loans. Federal student loans have a number of benefits that can help you if you ever find yourself unemployed or otherwise unable to pay your debt, which private student loans typically don’t have. This makes this method ideal for anyone who wants to pay off their debt for some extra peace of mind.

Make sure you understand the difference between these three repayment strategies before choosing one, as they are very different. While none of them is inherently better than the others, each will appeal to a person with slightly different goals.

5. Look for opportunities to save.

Now that you have a strategy to follow while paying off your student loans, you need to make it happen.

If you’ve already got plenty of extra cash, the how is easy: Just apply that extra cash to your debt according to your repayment strategy and watch your balances drop. If you’re like most of us, though, you don’t have extra cash just lying around. In order to make your repayment plan work, you’re going to need to find ways to trim your budget so that you can use that extra money to pay down your student loans.

The end of the year is a great time to sit down and take a look at your spending habits to see where you’re spending your money and whether or not there’s any way for you to trim your expenses. Chances are, you’ve got plenty of opportunities to cut back and save.

Need some inspiration? Some cuts might include:

  • Eating out less and cooking more at home
  • Having friends over for Netflix or a board game instead of a weekly movie
  • Dropping your thermostat by a few degrees to cut your heating costs
  • Taking shorter showers to conserve water

You should also really evaluate any recurring expenses (like magazine subscriptions, Netflix, Spotify, gym memberships, etc.) to figure out whether you’re getting enough value out of them. If you’re not, drop it like a hot potato.

Now here’s the important part: Once you’ve cut the expenses, you need to make a habit of actually using the money to pay down your debt. If you don’t, the money will just sit around in your checking account until you spend it elsewhere.

6. Break your goal into smaller milestones so that you can celebrate along the way.

Overwhelmed by a seemingly insurmountable amount of student debt? When you’ve got tens of thousands of dollars of student loans, it’s easy to feel like you’ll never actually succeed in your payoff plans. But allowing that sense of despair to creep in won’t do you any favors: You need to stay motivated over the long haul if you’re going to be successful.

One way to stay motivated over the long term is to break your larger goal into smaller, more manageable milestones. Instead of working towards the larger goal, you’re just working towards the smaller goal; and once you reach it, you celebrate your success before moving on to the next milestone.

For example, if you have $20,000 in student loans, you might break it into four chunks of $5,000. Since $5,000 feels more manageable to most of us than $20,000, this is an easier goal to work towards, and we’re able to stay motivated as we make progress towards it. Once you pay off that first $5,000, you might then treat yourself with a night out or a (reasonable) reward before moving onto the next chunk.

This is a strategy that I’ve personally always followed as I’ve worked to pay off various debts, and I can attest to the fact that it truly helps you stay motivated along the way. Remember, the fight against student loans is a long-term battle.

The Bottom Line

If your 2019 New Year’s resolution is to finally get serious about paying off your student loans, you need to start laying the groundwork for success now. Otherwise, your chances of success go down pretty substantially. Luckily, we’ve outlined the exact steps you should take.

About Tim Stobierski

Tim Stobierski is the founding editor of Student Debt Warriors. A freelance writer and editor with a passion for teaching people about all things personal finance, his goal is to help parents and students tackle their student loan problems so that they can live happier, healthier lives. Tim's writing has appeared in a number of publications, including The Huffington Post, The Hartford Courant, Grow Magazine, and others. His first book of poetry, "Chronicles of a Bee Whisperer," was published in 2012 by River Otter Press.

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