If you’re a current reader of my blog, you know that I’m not the most prolific blogger. I post whenever something (financial or otherwise) happens, or when an idea strikes me. And so I guess my life has been boring, and I have no new ideas? No, that’s definitely not true. My younger sister just graduated from MIT, and I’m so incredibly proud of her!
But in terms of financial things happening, I feel I’ve sort of just let things mellow. Even though it’s important to get everything on autopilot (direct deposit, auto-transfers to savings, 401(k) and IRA auto-withdraw into funds, etc.), I feel like I’ve gotten TOO hands-off with my money.
I’m not aggressively paying off my debt. I know I should be, but I’ve just been letting my student loan and car loan automatically withdraw the monthly payments. What I should be doing is paying more than the monthly payment (i.e. more than the minimum). I feel kind of ashamed that I haven’t been working harder at paying off my debt. I think I felt more compelled to aggressively pay my student loans off back when my interest rates were hovering around 8.5%. But now that they’re around 3.5%, I don’t feel that same urgency.
I think I need a plan. A goal. A due-by date. If I’m following the general mantra of: 1) Start emergency fund, 2) pay off all debt, 3) finish emergency fund, then I have probably already taken care of 1 and 3. My only other option besides (or in addition to) accelerating my debt payoff is further increasing my 401(k) contribution. So that’s comparing a guaranteed return of 3-5% (if I pay off my debts) or a possible 8% return (the supposed return people quote on investments if I invest more).
And so I’m reaching out to you, my dear readers. Help me! How did you set your goals? I was thinking if I figure out how much extra money I have each month, I could direct that at loan payoff, and keep going until the loans are gone. Or I could set an end date (that is achievable) and make sure it’s all paid off by then. Or I could split the “extra money” into half (or some other fraction) leaving my paycheck to go to my 401(k) and put the other amount against the loans. I just don’t know! Advice, please! How did you pay off your debt loads?