End of year debt payoff checklist

Your One-Minute Checklist To Eliminate Debt (And Make 2017 Really Payoff)

As the year draws to a close, it’s a great time to reflect on your finances—especially if you’re a recent grad who’s newly employed. You’re likely bringing home a significant paycheck for the first time in your life, but also have big-time monthly bills to pay, including student loans. Without proper planning, that debt can easily drag you down.

So how can you balance paying your bills, eliminating your debt, and saving for your future while still allowing yourself a few bucks for fun?

Start achieving your 2017-and-beyond financial goals by asking yourself these key questions:

1. What is my monthly cash flow?

You know how much money you make, but are you paying attention to how you’re using it? A close examination of your spending will help you get a handle on your cash flow, and over time, you can reduce your debt and have more disposable income.

Try this: Subtract your fixed expenses, including rent, transportation, medical expenses, utilities, student loans, and other debt obligations from your monthly take-home pay. Ideally, there will be some money left over, but resist the urge to head out on a shopping spree or blow it all on a night out. Once you determine how much of your paycheck is available to knock out debt, you can be more purposeful and consistent about paying it down.

2. How much is my debt costing me?

Here’s where you’ll want to really drill down into the specifics of your monthly bills. First, understand the terms of your current student loans, including your principal balances, interest rates, and how many years you have left to pay. Do a similar analysis if you’re carrying credit card debt. This deep dive can help you determine if your current student loan debt repayment plan is working for you, and if you’re in over your head with plastic debt.

Related: How to Plan the Ultimate Debt Payoff Strategy

Try this: Student loan refinancing or credit card consolidation may be worth exploring. Refinancing can drop your average interest rate a couple of points to allow you to save money. If you’re struggling, consider extending the life of your loan to lower your monthly payments. Although extending the loan term will likely cost you more over time, it ‘ll reduce some immediate financial pressure. Debt consolidation can simplify your life because you can turn several monthly payments into just one. The key is to crunch the numbers to find a what works for you.

3. What’s my credit score?

Just as you had a GPA in college, in the adult world, your credit score is your grade for how well you manage your finances and use credit products. And it matters, since most financial institutions examine your credit history to determine if you qualify for favorable loan terms, get approved for a credit card or a mortgage loan, or enjoy a host of other financial advantages. Landlords and employers often look at credit scores, too.

Although SoFi takes a unique approach in that it looks beyond your credit score, other major lenders consider it a key factor, even if you haven’t done anything wrong simply because you haven’t used credit long enough. So building a strong credit file and understanding how credit score works is wise, especially if you’re a young professional.

Try this: Start by pulling your credit score to see where you stand. Catch up first on any past due accounts, then set up auto payments to ensure you won’t forget any due dates moving forward. Utilizing too much of your available credit can also add a ding to your score. So if you’re close to reaching your credit limits, bring balances down as quickly as you can by paying more than the minimum due.

4. Do I understand how taxes work?

Getting a surprise tax bill in April due to a mistake you’ve made or a benefit you overlooked the year before can be devastating. Talk to your HR representative at work to make sure enough taxes are being withheld from your paycheck. If you’re part of the gig economy doing freelance work, it’s also very important to set aside money for Uncle Sam since taxes aren’t taken out up front.

Finally, don’t miss out on tax credits, such as those you might get from paying student loan interest. You could also be eligible for tax incentives on retirement plans—another reason to start saving for your future early. Check your progress with the SoFi retirement calculator every once in awhile to stay on top of your savings goals.

Try this: Although there are plenty of tax-software companies that claim doing your own taxes is simple, it’s not a bad idea when you’re starting out to speak with an accountant or tax advisor to discuss a tax plan, especially if you have any self-employment income.

5. What are my financial goals for 2017 and the years beyond?

Think about where you want to be in a year. Your 2017 goals might include everything from saving a few thousand dollars for a car to growing an ample emergency savings account to reducing your student loan debt.

Read Next: Should I Refinance My Fed Loans? Here’s What You Need To Know

Try this: Aim to save up 3-6 months worth of living expenses in an “uh-oh” fund so you’re prepared in case of a layoff or other cash calamity. Make saving a no-brainer by automatically transferring a percentage of your paycheck into a separate account. Once you squirrel away an emergency cushion, you can begin working toward other goals, even saving up for your dream home.

6. Am I thinking enough about the future?

It may not feel natural to think about retirement when you’re just beginning your career, but don’t postpone planning for your long-term goals. Play around with an online calculator to see the power of compound interest when you start saving for retirement in your 20s as compared to your 40s, and you’ll see why.

Try this: Commit to setting aside at least a few bucks every pay period toward a retirement account—especially if your employer makes a matching contribution. Sacrifice a couple of take-out meals or work some overtime if you must. If your student loans are overshadowing retirement goals, consolidating or refinancing debt is a great way to free up some extra money to invest in your future.

You can spend years struggling with student loan debt or you can make smart decisions that will help you escape its grip. By learning how to manage your finances and stick to a 2017 debt payoff plan, you’ll be able to look back a year from now and realize how far you’ve come.

Take the first step toward demolishing debt, and refinance your student loans.

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