For the last two years, my primary goal was to pay off $20,000 in student loan principal. Thanks to wedding gifts, and some help from my man working, and six rent payments, I was able to accomplish this in 2015. Thanks to a good bonus, some extra from savings, and two months of rent payments, I was also able to meet my goal for 2016.
In 2017, my goal will be to pay off $30,000 in principal. A pretty significant jump. Here’s why I think it may be possible:
- A small point: my interest rate is lower. Every penny counts. Because my rate was cut in half, only about $100 a month is currently going towards interest. That’s $100 more a month than last year, so over an additional $1,000 for the year. Total reduction from my minimum monthly payments should be over $10,000.
- Most of my bonus will go towards loan repayment. The last two years, a big chunk has gone to stockpiling my HSA. Shout out to my little man, on a complication-free birth. Hoping for around $10,000, but let’s say $8k here, to try to be conservative. (Running total: $18k)
- I’m hoping for a raise/promotion.
An extra $100 in payments a month wouldn’t hurt.Either way, I hope to bump up my 401k contributions at least 1 percentage point. Edit: I can confirm a raise (and promotion!) is happening. But instead of stockpiling my HSA from my bonus, I decided to add a bit from every paycheck, so my paychecks have gone down a bit so far this year (raise isn’t effective for another few pay periods). So post-raise, and bumping up my 401(k) contribution, I don’t expect my take home to increase much, if at all. I won’t plan on anything here as far as loan payoff goes.
- Barring a house emergency/major issue, most (if not all) rent payments will go toward loans. That’s an extra $8,000+ (Running total: $26k)
- Our tax refund was lower in 2016, because of the man working in the back half of 2015. Now he’s mostly staying home with little man, so I expect we’ll get more because of that. We also have little man, and hopefully an associated tax credit. Again, most of this will go to loans. Hoping for about $3,000 (Running total: $29k)
That gets me conservatively (hopefully) to $29,000, so I’m really hoping that $30,000 is doable, and I’m open to reevaluating halfway through the year to see if there’s a “stretch goal” I can achieve.
I will, of course, have a couple of mini-goals as well. I’m not looking to load up my HSA by a ton this year with my bonus, but I am contributing some from every paycheck. My employer contributes $600 a year, and I’m hoping I can add $2,000-$2,500 net to that over the course of the year (barring actual medical emergencies requiring me to actually use some of this money). In 2016, I had a mini-goal to add $10,000 to my 401(k). I’m thinking that I should make $13,000 my goal for personal contributions to retirement this year. My employer contributes about 5% (some matching, some unrelated to my contributions), which I’m not counting here.
I’m not going to lie to myself this year about increasing savings for the year. Things come up throughout the year, and if I have extra, I’m going to want to use it to meet my aggressive student loan payment goal. My goal has been to pay this off by the time I’m 35, and that means I need to make major progress. Once this is paid off, I can really shift my focus to savings.