Can you believe that 2015 is nearly over? Just two weeks left, tick-tock. For many years I shunned the idea of New Year's resolutions—if I have the forethought to come up a new goal starting January 1st, why shouldn't I just start the moment I think of it? While that may good reasoning for some goals (e.g. fitness), certain things do require a bit of planning and just make sense to start at the beginning of a new year (or a new month, at the very least!) One of my big goals for 2016 is to pay off my student loan debt faster—so today I'll be sharing a few of my strategies for how I plan to do that.
Last year I wrote about how I planned to save an extra $1000 in 2015. I actually managed to exceed my goal because I set up a whole strategy ahead of time and was able to easily see where/when I could sock away a little bit extra. The end result? I was able to pay for a class I wanted to take that I might not have been able to afford otherwise, yay!
If you set out to accomplish a similar goal but didn't quite make it, don't feel too bad—a recent Capital One survey found that only 1/3 of Americans felt they accomplished their financial goals in 2015. The good news is that the beginning of 2016 represents a clean slate, and there's no reason you can't spend the next couple of weeks organizing your goals and strategies for a fresh start in the new year. So with that in mind, here are three things I plan on doing to help pay off that (seemingly never-ending) student loan debt faster:
- Create an "envelope" budget
- Reduce unnecessary spending
And to elaborate....
I've been seeing a lot of blog posts and books about decluttering lately. Personally I don't feel like I'm headed for full-on minimalism, but when you're counting pennies, there are two major ways in which decluttering can really help:
- You can make a little bit of money selling stuff in good condition that you're not using.
- Even if the only things you're divesting yourself of are unsaleable bags of tattered rags, having them out of your physical space will allow you to see and understand what you already own better, making unnecessary purchases less likely.
Some of you may have heard of envelope budgeting before—it's a pretty old-school concept. Every time you get paid, you take cash and split it into multiple envelopes based on the categories in your budget—food, rent, utilities etc. By putting a fixed amount of cash in each envelope and using only that, you can't overspend. A very clever idea. The only problem is, in the 21st century paying with cash isn't always practical... I probably pay 90% of my bills online and I know many others are the same way. Plus I really, really don't want to keep thousands of dollars in cash in my apartment, go figure. The solution: Use my Capital One 360 Savings accounts as "envelopes" to better organize my finances.
|That's one way of doing it....|
I've had Capital One 360 Checking and Savings accounts for several years. Even if you're not doing an envelope-style budget thing, 360 Savings is great for saving up towards various goals—they currently bear a very generous interest rate, and you can have up to 25 accounts (which can be given custom nicknames), making it extremely easy to keep track of which funds are going towards which goals. One can also utilize their Automatic Savings Plan to automatically transfer specific amounts of money from checking to savings each month (if one is the forgetful sort). In addition to monthly savings goals (e.g. student loan payments) I also have longer-term annual and semi-annual goals—things like travel, a holiday gift fund, savings for the eight million domain registration fees I have to pay every year, etc. So whether you have a "big" goal or just want to organize your money better, 360 Savings is very, very useful.
|Some of my "envelope" categories.|
REDUCE UNNECESSARY SPENDING
Easier said that done, right? This will probably be the toughest part of my goal: Deciding how much "stuff I don't need" I really need. That may sound ridiculous, but I don't think extreme austerity is really the happiest way to live long-term... I may not need 100 lipsticks, but if I want to buy an occasional book or coffee out maybe that's not such a bad thing? The first step I've made towards this is creating a "frivolity" envelope in my budget—a little bit of money I can spend on whatever I want without worrying about it. And if I don't end up spending it all it will continue to sit in the savings account, earning interest. Not a bad strategy. But in the long term, I think I need to give my bank statements from 2015 a more careful look and try to figure out why and when I tend to spend more on certain things, and how to stop it when it's truly unecessary... an ongoing process.
By using the steps outlined above, I will be able to spend less and pay off more debt in 2016. And the sooner I pay off my student loan debt, the sooner I can save up for travel and other cool stuff. I'd sure like to visit this place again:
|Beautiful, expansive New Zealand.|
Make sure to check out 360 Savings from Capital One! And if you're a fan of traveling like I am, be sure to check out the Capital One Venture Card and its host of travel benefits too!
What are your goals/resolutions for 2016? Do you plan on revamping your budget and/or spending habits this coming year? Let me know in the comments!
Disclosure: I was selected for this opportunity as a member of Clever Girls and the content and opinions expressed here are all my own. For more information, check out my full disclosure policy. #LetsTalkCents