Friday, April 25, 2014

Action Steps

Last Wednesday I wrote a piece entitled A Generation of Student Loan Stories and left you with a question, How will our generation mold this problem into action?

Here are 5 Ways we are molding our student loan frustration into action today:

Loan Repayment: We will continue to pay back our student loans, but will move to an interest rate model, to save more money in the long run. However, we reserve the right to pick-up a few low hanging principal loans on our list if we need an emotional boost :)

Continue to Live Life: We are cutting back on a lot of activities, but we also can't miss out on the next 10 years of our life. We would like to use all of our extra income towards loan repayment, but are also going to be realistic and take a one month hiatus now and again to use that money for a long-weekend away or to go do something fun. We also may need a new computer, so there are expenses that are going to come up, but we will do our best to stay ahead of the needs vs. wants.

Retirement: I think this is worth noting as an active financial goal in our lives and a way to take action on our long-term financial growth. We are currently investing in our companies 401 plans. The benefit of putting away retirement savings early, based on compounding interest, means that over time our money is invested longer and therefore has time to grow. To give us a guiding post on the investment percentage, we are going to use our companies' match percent and hopefully be able to increase this amount periodically to at least 15%.

Income: The current numbers for repayment do not take into account any change of income over the next ten years. That simply will not be the case, we are two highly motivated individuals that don't plan on decreasing our salaries in the next ten years, so that keeps me smiling! We looked into taking on second jobs, but determined that for now we are going to make do with the income we have unless a second job would assist in our personal growth. We are happy with our standard of living, plus we need time to complete action #2, Continue to Live Life :)

Savings: We used part of our safety net to pay off our credit cards at the beginning of what we though to be a 5 year journey. We now see that with a ten year time frame, we will need to build this back-up to ensure that we can take care of any emergencies that may arise in the next few years. This is an action step that we haven't yet determined how to build into the full budget, but we are going to work on this piece!

Being able to list action items highlights that we are working towards a larger goal and grateful that we have the ability to make additional payments towards our student loan. No matter how soon we pay off our loans, we will save ourselves money in interest. My Sallie Mae payment, after one month of principal payments, has already gone down by $10. Little victories WILL win this long race :)

If you have an extra 10 or 50 bucks this month, do yourself a long-term favor and pay it towards any of your debts principal balance. JUST DO IT :)

Any action step little or big helps to save you more in the long-term, and this is a long-term game we are playing!

Where are you putting your extra $20 this month?? 


  1. Sounds to me like you have found a good balance. I especially like your comment about continuing to contribute to your 401k even when you are in debt. If your company matches 50% for example, then that is the equivalent of making a 50% return on your investment right away. As long as you don't have any debt with an interest rate close to 50%, then you should always take advantage of this free money since your investment is earning more than what paying debt off could have saved you.

    1. Thanks Andy for the breakdown! I attended a 401k meeting this past week and realized how silly it was for us to not have our percentage up to at least the matching rate. Take the free money we can get and the compounding interest that goes with this early investment!

  2. I would suggest you look into setting up a DRIP account. A DRIP is an account were you can buy stock in a company and all dividends are reinvested into the account. You can make optional purchases of as little as $25 at a time. Because you buy the stock from the company you don't pay brokerage fees. The initial set up can be pricey but once its up and running it's very cost effective. I started this in the early 90's with a couple of companies and used that money to pay the closing costs when we bought a house in 2005. At that time it was about 3-4 thousand dollars. A nice sum that I accumulated in $25 dollar increments.

    1. Thank's Jay for your comment :) I absolutely agree that direct reinvestments of our stock dividends is important. Nick has been investing in the stock market since he was a kid and we had been doing a $25-$50 monthly investment until about a year ago. We should start throwing money back into this investment portfolio. Thanks for the tip :)