Fitting Student Loan Payments into Financial Plans

There is no question that, as a married, working mother of two under four, I have a lot of balls in the air. My husband and I are great at splitting the chores around the house; I'd prefer to fold 14 loads of laundry to washing dishes and picking up toys at the end of the day. We have found our way around managing the household and where our strengths fit, and how to prioritize what should get done, when, and what can be put off for a few days without causing the entire house to crumble.

When we got married, we were required to sit through some pre-marital courses that forced us to discuss these types of things. And I was surprised how much of these conversations seemed to foot back to a five-letter-word that many are uncomfortable talking about: money.

And I get it. It's uncomfortable talking about money; what you can afford, what your income is, and how much money you have left over at the end of the month. When we got married, our financial obligation no longer had a single owner; his debts became my debts, and mine his. Likewise, our financial goals became one. A beautiful marriage of dollars and cents; after all, if one of us had something to pay, we were both going to benefit from achieving our financial goals.

We got into a rhythm of how to manage our budget, pay the bills, pay ourselves, and sock the rest as extra payments toward student loans or other debts. Once we had our first child, the financial obligations increased, and our priorities had to shift; from diapers, to swim classes, to sitters, to daycare. And now that we have two, I've seen the shift happen again, figuring out what is a priority and where the money should go.

One of the biggest things, for us, has always been to look at the musts, the needs, and the wants. We must have our basic needs met, and our children must never go without. We need to have our bills paid on time, and we want to be rid of all of our debt, and we also want to ensure we were saving for the future, both for ourselves, and for our children.

When we first made our financial plan and got to the "wants" of it, it seemed difficult to decide if we should chunk extra cash at the student loans, or if we should put that money toward college savings. What makes the most sense? My colleague Jonathan Hughes offered up some helpful guidance on this topic in his blog post, Saving for College While Paying Off Student Loans. There is no one way to manage your finances, and it's important to focus on how your money management will affect your family. You have to create a family budget, and determine where your dollars will stretch farthest.

For some, it's savings. For us, it was student loan debt. We looked at our financial obligations, interest rates, and payoff dates, and created a budget that wasn't restrictive, but also put us in a place where we could see an end to our student loan debt. We decided how much per month we wanted to save, and decided that, at the end of each month, once we put that savings aside, and all monthly loan minimums were paid, we would determine what we had extra to allocate toward our student loan debt, and prioritized extra payments by highest interest rate. And that plan has worked well for us.

When we come into extra income, be it from tax refunds, a raise at work, or an unexpected insurance refund or monetary gift, we immediately allocate that money toward our student loans, before we can spend it on other items. And we regularly check our decreasing student loan balance to keep ourselves motivated, and remind each other why we were working so hard to stick to our monthly budget.

For us, speeding up our payoff dates and being rid of our student debt will create opportunities for our children. Once we have fully paid off our loans, we will be able to allocate the money that once went toward our student loans to other things, like more college savings, projects around the house, family trips, etc. We see it as financial freedom; our money will be ours at the end of the pay period, and we'll have less that will need to go out each month. For us, it's the best and wisest plan toward planning for the future.

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