Breaking Down Student Loans, Part 2

In my last post, I talked about the first step to organizing and paying back my student loans. Here's picking up where I left off. 

STEP 2: SET GOALS AND BUDGETS

Now that I've got my loans broken down and sorted by amount, I can set goals for how quickly I'd like to pay them off. Tomorrow is impossible, and even within a year is unlikely. After all, I don't want to give up all of the things I enjoy, confine myself to my cold apartment with holes in my clothes and suffer because of impatience. So I've set reasonable goals for myself, ones that I know I can easily maintain. 

Here's what my goals look like as laid out in a spreadsheet: 

What this chart shows are the same loans and total amounts as the previous list with the goal dates added to column E. As you can see, I've spaced my goals about 6 to 7 months apart. That means I'm aiming to pay off all loans in just under three years (by October 2017). The smallest loan on my list is only $527.58, so I've allowed myself 2 months to pay this one in full. 

Column F is the most important part of this step. Once deciding the when, you need to calculate the how much. Even someone with my limited math ability can figure this part out. If I want to pay Loan 1 by April 1st, 2015, that leaves me two months (more specifically, two paychecks) between now and then. The total ($527.58) divided by the pay periods (2) equals the required monthly savings (in this case, $263.79). I rounded up to the nearest multiple of 5 each time to ensure a small buffer. 

There's a couple of things to be aware of when looking at this chart. 1) The totals for each loan will go down over time as I continue to make monthly minimum payments, so they will need to reevaluated at each 6-month period to find accurate numbers; 2) The money set aside each month looks drastically different from Loan 1 to Loan 6, but in addition to going down over time, the total paid in MINIMUM PAYMENTS will also decrease. Here's an adjusted total of how much I need to set aside from my paycheck each month to loan purposes: 

Column G represents my current TOTAL minimum payment, based on the total amount of loans at each interval (i.e. I now have 6 loans and pay $273.39 a month, but once I pay off Loans 1 and 2, I will only owe $214.56/month). 

The totals in Column H represent the combination of my monthly savings and minimum payments, and the differences between each 6 month period are less drastic when viewed in this light. 

Nevertheless, it will be a gradually uphill struggle, and so it's important to stay motivated, focused, and accountable. The hard part is up next...