Personalize Your Debt and Pay It Off Faster

Do you have a ridiculous amount of debt that doesn’t seem to be anything but a soul-crushing number you grudgingly throw a few hundred dollars at each month? I feel you, friend. When I had $20,000+ of student loans, it appeared to be little more than a big fat bill from the government.

But YOU racked up your debt buying something. Why not remember what that was?

To cope with my own balance, I allocated every penny of my student loan debt to the recorded costs of my education. This isn’t a crazy strategy. In fact, going back and figuring out exactly what every dollar of my debt bought helped me both to accept it and to pay it off faster. If you’ve been reading Money After Graduation for a few years, you might remember me writing posts like “financially I’m still in my first year of university” because I was measuring my debt-payoff progress by where the money had actually gone.

My tactic was simple: I retrieved my tuition statements from past years and added up all the balances. My first relief? My student loan balance was less than I had actually paid for school. This means even though I took out loans to fund my post-secondary education, there was still some evidence working part-time and during the summers had spared me from worse financial straits. Nevertheless, I still owed tens of thousands of dollars. But after realizing that each course had cost about $500 and there were miscellaneous fees here and there for $100 or $30, I suddenly knew where all the money had gone. Because I had just graduated, most of my courses were still fresh in my mind. I could remember my first year biology professor, I knew my second year calculus final exam nearly killed me. I could see where my student loans had gone. I knew what each dollar and cent had bought. So I immediately started paying it off in that context.

If a class cost $505.23 and I was ready to make a student loan payment, I paid exactly $505.23 against my $20,000 balance, and then I crossed that class off my list.

It worked for everything. An extra $10 to my second year transcript fees. $58.13 to athletics and recreation. Suddenly no dollar amount seemed to small. I never waited to have a complete $200 or $500 or $1,000 to make a student loan payment, if I had an extra $5 I used it to hack off those charges for lab supplies. Not only did it make my debt go down faster by throwing every bit of extra money at it, I hated the process so much less.

The money was going to something I had experienced or used, it wasn’t going to the black-hole government creditor that had loaned me the cash.

What about interest?, you ask. I took that off the top. My online student loan system had this horrible torture device where you could log in and see your balance go up with interest from that day. It was really depressing, but it was accurate. So if I was making a payment, I tacked on a bit of interest to pay for the lag time between my bank payment and the time it would actually show up against my balance. Once my payment credited to my account, I went back to my spreadsheet where I was keeping track of everything my debt paid for, and crossed an item off the list.

Since paying of my debts, my habits haven’t changed much. Whenever I charge things to my credit card, I rarely wait for the bill to arrive in the mail before I start making payments. As I’ve mentioned before, I keep track of my money in an app called Money by Jumsoft. At any given time, my credit card spending will look something like this:

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a snippet of my credit card spending!


You can see my strategy at work here: various charges, payments in odd and inconsistent amounts, and way way of keeping track! The blue dots are next to items I haven’t paid for yet, whereas if a charge has no dot, it means I’ve paid it off.

This is how I maximize my credit card rewards without ringing up a giant debt: I pay down everything I charge before the bill even arrives. I love this strategy because I’m never stuck looking at a statement for hundreds, or even thousands, of dollars and wondering, “what did I buy??”.

If you’re fighting debt fatigue and feeling frustrated by how much you owe, remember what you bought.

Pay it off in bits and pieces, one shirt, one coffee, one class, one textbook at a time. 

What if your student loans are more than your tuition bill? Estimate the monthly costs of things like rent and groceries when you were in school, and add them to your list. Managing things this way lets your personalize your debt. It no longer becomes just a big number you owe, it is all the things you bought. When I saw things like a small charge for $30 for whatever fee, I just thought in my head, “I only need $30 and that charge is gone” — which made me look for extra money to throw at my debt all the time.

This, of course, doesn’t mean your happy with your choices. Maybe you overspent on clothes or beer or made mistakes and a good portion of your debt is interest. This isn’t easy to admit, but the sooner you deal with it, the sooner you can move away from it.

When you pay off your debt, you erase most of the evidence of those bad decisions. But if you leave the balance lingering on your credit card, your mistake continues to follow you.

What is your debt-busting strategy? What do you think of my method? Any tips for other new grads struggling with student loans and credit card debt?