“M” is for Mom.

How I Paid Off $55k of Student Loans in 4 years — Part II (Tools)

In last week’s article*, I shared a number of different strategies and tactics I used to help pay off my student loans. This follow-up introduces the specific spreadsheet I used to stay on top of the various dollar amounts overall as well as month to month.

*I don’t mean to imply I’ll be posting weekly, but as of right now, that’s my goal — albeit a stretch.

First and foremost, I consolidated all of my separate loans shortly after graduation. My services provider was Great Lakes, and I was very happy with them. If you have a number of different loans at separate interest rates, your provider will consolidate them all together at one rate (calculated as a blend of the various loans involved). I recommend consolidation, if available, purely based on the simplicity it adds to your life.

If you have some extra money you want to put towards loans upon graduation, I recommend putting that money towards the loan with the highest interest rate BEFORE consolidating. Finally, should you elect not to consolidate your loans, you should be able to replicate this tool for each of the loans outstanding.

Google Sheet Here

Now, on to the fun stuff. To get started, open up the Google Sheet above. The link should direct you to copy a publicly available Google Sheet to your own drive account; you won’t want to enter your personal data into the public document.

Moving down the page, variable fields are highlighted in grey:

1. Cell B2 — Enter your total outstanding loan balance
2. Cell B3 — Enter your loan’s interest rate
3. Cell D5 — Enter any annual bonus(s) you receive or expect to receive
4. Cell E5 — Enter the numerical month you expect such a bonus
5. Cell D6 — Enter your expected monthly payment amount
6. *Cell D7 — Enter your expected monthly payment amount increase
7. Cell A10 — Enter the next payment date

*Median starting salary shown here.

$48,400 * 0.05 = $2,420 (rough estimate 5% salary increase)

$2,420 * 0.7 = $1,694 (rough est. 70% after taxes and benefits)

$1,694 / 12 = ~$141 (monthly salary increase)

You can leave the spreadsheet as is from month to month if you plan on paying your loans consistently. I liked to find ways to pay additional amounts when I’d find ways to save extra cash — e.g. credit card rewards cash back or if you use cash, try randomly put a 5, 10, or 20 in a jar from time to time and deposit the total every few months.

Breakdown of Information

1. Cell B4 — monthly interest rate calculated from annual
2. Cell B5 — number of years until loans are paid in full
3. Cell B6 — number of periods until loans are paid in full
4. Cell E2 — total amount paid including payments and interest

Row 9 and Below

1. Column A — Date of payment
2. Column B — Period since the beginning
3. Column C — Principal or Loan Balance before a payment is made for that period
4. Column D — Your payment amount for each month
5. Column E — Interest calculated on your loan balance for that month
6. Column F — The amount of principal you’re paying off each month

Pay close attention to:

1. Cell E2
2. Columns D, E, and F

Assuming you haven’t entered your own information yet, cell E2 is over $13,000 more than the starting loan balance, and that’s with a rate of only 5%. I don’t know about you, but paying $13,000 for no tangible value in return is LUDICROUS. I realize you can apply the same argument to the full cost of tuition for 4 years of college, but that’s an article for another time.

Moving on to columns D, E, and F, notice that while your monthly payment is $400 — no small amount for someone who just graduated — the actual amount subtracted from your principal is less than half that. Again, with only a 5% rate, your first payments of $400 on a loan of this size will be paying more in interest than they will be paying off the loan.

When developing and using this Google Sheet throughout the years, I made it a habit to review at least once a month. Seeing how much interest you’re paying each month ($200 is a lot of Chipotle and Corona) may not be the most exciting thing in your life. However, remember that shitty feeling will help compel you to take ACTION. Don’t forget, once those loans are paid, you’ll experience the opposite through saving and investing. Be on the lookout for a future article about how this spreadsheet can be flipped in your favor.

Part 1 Here.

Please feel free to share, comment, ask questions, and more. I’m more than happy to engage on specific topics if folks have specific feedback, questions, or different experiences. The goal here is not to solve the entire student loan crisis but simply to help a few people tackle their own personal loan crises.

DISCLOSURE: The author is self-described as “Merely a Dude on the Internet.” He does not possess any legal or financial qualifications that incur liability for the advice contained herein (he’s merely seen enough television to use “herein”). Any idea, advice, or otherwise that is portrayed in this article is limited to the direct experience of the author and is shared under the heading of “possibly helpful to others” and is not intended as specific legal or financial advice (or any other advice for that matter).