If you are currently working on paying off debt, have you set a “debt-free date” yet? I’m not talking about going out with your spouse without using a credit card. I’m talking about a date on the calendar when you plan to be completely out of debt.
If you haven’t set a goal for when you plan to be done paying off your debt, I encourage you to set one now! If you are married, sit down and do this with your spouse. In order to be successful, you need to decide together and both be invested in the goal.
First, take a peek at the total number, but don’t have a heart attack.
I know some of you prefer not to look at the total regularly because it makes each effort and payment feel like a tiny drop in the bucket. Normally that is fine, but if you want to set a date to be completely debt-free, you are going to have to look at it all. If you would rather just set a smaller goal (like a date for paying off one of your loans) that’s an option too.
Crunch some numbers.
Instead of just choosing a random day (or significant day), crunch some numbers first. A well thought-out and researched goal will be easier to achieve. Play around with a calculator like this one.
You can go about it in two different ways: time frame or payment amount.
- If you have a time frame already, you can start there. Enter your debt information (totals, interest rate, minimum payment, etc) and see what the payment schedule is like. Will the monthly payment be manageable? Will it be manageable for the entire time frame.
- The other option is to look at how much you can pay each month once you cut all the fluff. Enter those numbers in the calculator and see what the time frame looks like. Experiment with different payment. What if you pay just $100 more each month? Play around with the payment amounts to get an idea of how adding to your monthly payment will shave time (and interest) off of your loan. If the time frame is much longer than you expected, you will want to do whatever you can to pay more than the minimum payment.
What we did
When we set our goal (debt-free by the end of 2016) we did a combination of the two. Time is a big deal for us, not just to save loads on interest, but because we are currently living in my in-laws’ basement. We want to make the most of our time here by putting as much as we can toward our loans. We experimented with the monthly payments required to be debt-free in different time frames.
We decided being debt-free in 3 years would be a goal that would challenge us. We have to put $3,000 toward our student loans each month to stay on track. We have been close some months (Sept, Oct) and pretty far off other months (Nov), but that’s okay. Our income has potential to increase and that’s what we are working toward. For our motivated and positive personalities, having an extra challenging goal pushes us. If you are easily discouraged, then you can set a more reasonable goal
WRITE down your debt-free date and TELL someone about it.
You can write in your journal, on your blog, or put it on the fridge. Writing down a goal makes it real and helps you be personally accountable. Telling someone will contribute to the accountability and will hopefully get you some cheerleaders! If you’d like, you can comment below what your goal is.
Get pumped– this is going to be great!
I’m excited to have met so many of you who are eager to payoff your debt too. I feel encouraged when I read your comments. I am rooting for you in your struggles. Let’s work hard to do great things!
For more on how to get started paying off debt, see this post!
It’s Your Turn
- Do you have a debt-free date? Feel free to share!
- How did you choose it?
- Tell us about your progress!
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