evaluating goals for the student loan payoff

February 29th, 2008

Evaluating Goals for the Student Loan Payoff

Now that we’ve settled on my spouse’s student loan as the next serious debt reduction target, it is time to set some goals related to how we want to accomplish that. The student loan is our highest interest rate debt left, at 9%, so for us we feel it makes sense to attack it next with intensity.

First – the basics on how much money is budgeted available. Our debt snowball is $810.41, and that includes the minimum payments on both student loans plus the car loan, as well as another $200 that previously went to the credit card. Now that the credit card is paid off, that $200 gets moved automatically towards paying off the student loan. Added to the minimum payment on the student loan ($237.59) that makes at the very least, $437.59 available every month to reduce the student loan.

Of course, I look to the snowflakes to help me here. I think, based on past performance, it is reasonable to shoot for an extra $300 per month added to that total through snowflakes, be it through selling things, tutoring, blog revenue, surveys, or a combination of those. That brings the total target per month to the student loan debt to $737.59. According to the snowball calculator, if that is obtained from March to December, in December we should have a bit over $5000 left on the student loan, and the remainder would be paid off by June 2009. This forms the basis of my goal. I am aiming to have the student loan be under $5000 by the end of 2008.

I could set the bar a little higher, but because I need to also save for my wisdom teeth removal, I want to play it a little bit conservatively. If I could manage to earn enough snowflakes to consistently pay $700 more than the budgeted paydown amount (so $1137.59 total per month) then I could actually pay off the entire student loan this year. I don’t think that likely, but it is of course possible. I’ll keep that as a sort of “dream goal”, but it is a little too far out of reach to even label a stretch goal.

But June 2009 for elimination, if we can reach that, would be a great thing regardless. On with the debt paydown!

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10 Responses to “Evaluating Goals for the Student Loan Payoff”

  1. That’s an excellent plan Paid Twice! You’re both reaching high and staying realistic. I only wish my student loan numbers were as low as these…

  2. Good luck! Given your excellent track record, I wouldn’t be at all surprised if you are able to pay off your student loan by the end of the year.

    I thought this was an excellent planning example, so I stumbled it!

  3. That sounds good. I’ll bet that your blog income and such will go up and that’ll add to your snowflake too. :)

  4. Congrats! Sounds like you have a great plan. And lots of patience!

  5. Congrats! Sounds like you have a great plan. And lots of patience. And shouldn’t the car be paid off by March 09 too? Just think of how fast that last student loan will go!

  6. You inspire me…now if I can do just as well!

  7. Wahoo! And congratulations :) Doesn’t it feel good to have a plan? Even if debt seems a long way off, I know how awesome it feels to have a set target and to aim for it. I know I’ll be out of debt in April/May, all depending on snowflakes ;) It’s such a RELIEF for me to be able to look at my income and look at the debt and know that it will be taken care of. That was a lot harder to do two years ago. Granted, I didn’t have nearly as much debt to work with as you did, but nonetheless – I’m excited for you!


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