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Let’s talk about student loan payments. Woo-hoo! OK, it’s not the most thrilling topic, but know what is serotonin-boosting? Paying off that very last loan.

How to Pay Off Your Student Loans

It’s the unglamorous work that goes on behind the scenes that make or break every business owner, athlete, or creative person. It is helpful to think about student loan repayment like any other big feat worth accomplishing.

It begins with knowing that paying down student loans in a smart and effective way can take a lot of planning, budgeting, and adapting.

While there is no single smartest way to pay off student loans, because everyone’s situation is different, there are steps that will put most borrowers in a position to pay off their student loans without too much pain and on a timeline.

Another goal could be to create a financial plan that includes your loans.

Strategies to Pay Off Student Loans

Here are nine steps to consider including in your student loan repayment plan.

1. Organizing All Of Your Debt, Including Student Loans

Keeping track of your student loans and other sources of debt can be tricky, especially if you are a recent graduate. Consider listing them. Include the student loan servicer, amount of the loan, monthly payment, interest rate, and when the loan should be paid in full.

If you aren’t sure what your monthly payments will be, you can use this student loan calculator to get a rough idea, or you can call your loan servicer.

If you have credit card debt or personal loans, include them on your debt list. With all of your sources of debt, you can then mark on a calendar the date that the monthly payments are due.

While you always need to make the monthly minimum payments on all debts (unless your student loans are within their grace period or are in forbearance), listing them allows you to identify which debts you may want to pay off first.

If you have high-interest credit cards adding up each month, a credit card consolidation loan may be a great option to look at, too.

Once your credit cards are paid off, you’ll want to think about whether your goal is to pay your loans off quickly, or to simply make the monthly payments until the loans are done. The former is one way to save on interest over time.

Some folks do prefer to pay only the minimum monthly amount on their student loans so that they can save a little for other things.

2. Budgeting to Include Loan Payments

It can take time and effort to develop a monthly budgeting system that works for you, but it is doable, and totally worth it.

To get started, track your monthly cash inflows and outflows for two months. Total how much money you spent in each category, including debt payments like student loans.

Once you have a general idea of what you’re spending in each category, you can begin to build a budget framework. For example, if you spend $300 on groceries one month and $350 the next, you can now set a realistic grocery budget. Leave room for annual and quarterly expenses as well as incidentals.

With a budget that is built to include student loan payments, you’ll be more equipped to make all of your payments on time and know how much is available to spend on other wants and needs. Also, understanding how you’re spending will allow you to identify the areas where you’re overspending.

3. Setting Up Automatic Payments

Hopefully your student loan payments are set up to be automatically deducted from your bank account. If they aren’t, you can contact your student loan servicer to set up autopay. That way you won’t miss a payment because you forgot or are somewhere where you can’t access the internet.

Remember, missed or late payments will negatively affect your credit score. Damaged credit could preclude you from opportunities in the future, such as being able to refinance your loans.

Many loan service providers offer a discount if you arrange to autopay. When you sign up, ask if such a discount is available.

4. Paying More Than the Minimum Monthly Amount

Paying more than the minimum monthly payment can be a great strategy if your goal is to pay off your loan faster than the stated term. You’ll also save on interest over the life of the loan by paying it off sooner. Even small amounts can make a difference.

To do this, instruct your loan servicer to apply any extra payments to the loan principal, or adjust your automatic monthly payment to a higher amount and clarify that you want that extra money dedicated to the principal.

Make sure, after the next month’s payment, that the money was indeed put toward the loan’s principal.

Recommended: Why Making Minimum Student Loan Payments Isn’t Enough

5. Paying a Lump Sum Toward Student Loans

Increasing your monthly payment isn’t the only way to put a dent in your loans; at any point, you are allowed to make a lump sum payment toward the principal.

You could put your tax refund, holiday or birthday money, work bonuses, or inheritance money toward your student debt.

6. Adjusting Your Repayment Plan If Needed

Most federal student loans come with a 10-year repayment plan unless you choose otherwise.

Income-driven repayment plans base payments on discretionary income and family size. The plans lower monthly payments by extending the length of repayment to 20 or 25 years, after which any remaining loan balance is to be forgiven.

Even though your monthly payments are lower, you will pay more interest over time (longer loan terms mean more interest payments, after all). So it’s not a great choice if you want to pay off your student loans quickly or pay as little interest as possible, but it is available to those who are having trouble making their monthly payments.

If you are planning to use the Public Student Loan Forgiveness (PSLF) program for your federal student loans, you will need to select one of the income-driven repayment plans.

7. Considering Refinancing Your Loans

When you refinance one or more student loans, a private lender like a bank, credit union, or online company pays off your current loans and issues one new student loan, ideally at a lower interest rate. A lower rate could mean substantial savings over the life of the loan.

With federal student loan consolidation, on the other hand, the government bundles your federal student loans into one, using a weighted average of the interest rates, rounded up to the nearest one-eighth of a percentage point.

It’s important to note that by refinancing your federal student loans to a private student loan, you will not be able to access federal programs like income-driven repayment plans, PSLF, and government deferment or forbearance. If you don’t need any of those benefits, a lower rate gained by refinancing could be worthwhile.

Exploring refinancing with a private lender takes little time and doesn’t cost anything.

8. Knowing Your Worth and Asking for a Raise

With any pay raise, you can use the extra income toward your financial goals. This could mean increasing the monthly amount you pay toward your student loans or making a lump sum payment.

How much money you earn is an important factor contributing to your financial stability and ability to pay down your student debt. While budgeting is important, so is knowing your worth and asking for more when you deserve it.

If you haven’t already, start keeping track of your successes so that at your next compensation conversation, you have concrete examples on why you deserve a salary bump.

9. Understanding Your Employment Benefits Package

Although student loan repayment help is not as widespread as retirement or health care benefits, more employers are offering that perk to attract and retain employees.

Whenever you’re comparing job offers, it’s a good idea to compare benefits packages; although they’re not flashy like a big salary or company equity, benefits can be just as valuable.

If you’re looking for a new job, you could include student loan repayment help in your search. While it obviously shouldn’t be your only consideration, it’s great to have an idea of what you’re looking for in an employer.

Recommended: Finding Jobs That Pay Off Student Loans

Refinancing Student Loans

Refinancing is among the ways to pay off student loans, and SoFi is a standout in that field. SoFi refinances federal and private student loans with fixed or variable rates and a range of loan terms.

Take a close look at your student loan balance and the rates you’re paying, and then check your refinance rate in two minutes.

FAQ

What is the smart way to pay off student loans?

To pay off any loan, it’s smart to look at the interest rate and repayment term. If you can manage the monthly payments, a short term and a low rate is a winning combo.

If the payments are too painful and a longer term is needed, it could be smart to make extra payments of any amount whenever you can.

The PSLF program forgives any remaining Direct Loan balance after 10 years of on-time payments and qualifying employment. That could be seen as a smart way to pay off federal student loans if a graduate commits to working for a government or nonprofit employer, but the program has had a 98% applicant denial rate.

How can I pay off $100k in student loans in five years?

Say what? Well, it has been done. It might take sacrifice (moving in with relatives, no eating out, no new car), putting chunks that would normally go to rent toward student loan debt, staying motivated by watching and listening to others’ stories of debt repayment, refinancing one or more times, and getting aggressive about payments.

Most refinance lenders will offer a lower rate for a shorter loan term. Of course, the shorter the term, the higher your monthly payments will be, but the less costly the loan will be. A borrower might find that a variable rate, which usually starts lower than a fixed rate, pays off with a short-term loan.

How do I pay off a five-year loan in two years?

By paying extra toward the principal, in dribs and drabs or in a lump sum, and/or refinancing to a lower rate. Federal law prohibits prepayment penalties for federal or private student loans, so that’s not a worry.

To keep your student loan servicer from applying extra amounts to the next month’s payment, tell your servicer, by phone, mail, or online, to apply any extra payments to the loan principal.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

Yes. The main point of a refinance is to get a lower rate, and graduates who qualify can save serious money.

Interest Rate, Explained

An interest rate is the rate charged to borrow money. Interest is calculated as a percentage of the unpaid principal amount. Federal student loans have a fixed rate, while many private student loans have a fixed or variable rate.

Student loans generate interest daily. Lenders typically add the accrued interest to the balance each month when the bill is generated.

The interest rate paid on any loan may make a big difference. If you have $75,000 in student loan debt and 20-year repayment term, the difference in interest paid with a 6.5% rate and a 4% rate is over $25,000.

To refinance student loans, people with excellent credit and a healthy income — or a solid cosigner — will generally qualify for the lowest rates.

Lowering Your Interest Rate With Consolidation vs Refinancing: How They Differ

For Federal Student Loans

Consolidation is a term reserved for federal student loans and is different from refinancing. Student loans are combined into one loan with a longer term (up to 30 years), reducing the monthly payments. The rate is the average of the existing loans’ rates, rounded up to the nearest one-eighth of one percentage point.

Opting for a Direct Consolidation Loan allows borrowers to retain access to federal programs like deferment, forbearance, and income-driven repayment plans.

But because the new interest rate is the average of the existing rates, rounded up a hair, consolidating loans and drawing out the term usually results in more total interest paid.

Normally, if you had started paying toward Public Service Loan Forgiveness and then consolidated your loans, you’d have to start your qualifying payments over. But a waiver through October 31, 2022, will count repayment on loans before consolidation.

For Private Student Loans

Refinancing means paying off your private or federal student loans with one new loan with a new rate and, sometimes, term.

Refinancing with a private lender may lead to substantial savings.

Then again, it might not be the right move for every borrower. For those with federal student loans, refinancing means losing access to federal student loan forgiveness and income-driven repayment plans.

But borrowers with higher-interest student loans may find the allure of a lower rate — fixed or variable — tempting. If you qualify, you could reduce your payments or save a lot on total interest paid.

Recommended: Can Refinanced Student Loans Still Be Forgiven?

Understanding Your Options to Lower Interest Rate

Federal student loan consolidation is meant to make your monthly payment more manageable by lengthening your repayment term, but it will not lower your rate.

Only by refinancing with a private lender can you try to lower your current private or federal student loan rates. This student loan refinancing calculator can give you an idea of how much you could save by refinancing.

Before you start browsing interest rates, take a look at your current loans. How much do you owe? What are the rates? Are you enrolled in any federal benefits, eligible for any, or hoping to be?

Having this information at the ready can provide valuable insights as you start comparing the rates and terms you might qualify for from different lenders. A rate quote is usually quick and entails only a soft credit pull.

After you’ve determined how much you could potentially save by refinancing, consider looking at other benefits offered by the lender.

Refinancing With SoFi

Refinancing student loans to a lower interest rate makes sense for borrowers who are able to do so and who don’t qualify for or need income-driven plans or other federal programs.

SoFi offers student loan refinancing with low fixed or variable rates, as well as access to member benefits at no cost.

There are no fees when you refinance with SoFi, and the application process can be completed online. If you’re ready to take the next step in paying off student debt, get a rate quote in two minutes.

FAQ

What is federal student loan refinancing?

If you refinance federal student loans, a private lender pays them off with one new private student loan that ideally has a lower rate. Federal student loan consolidation is different.

Do low interest rates apply to student loans?

Federal Direct Subsidized and Unsubsidized Loans for undergraduates have a fairly low fixed rate for all borrowers. The rate for Direct Unsubsidized Loans for graduate and professional students is higher. The rate for Direct PLUS loans, for graduate students and parents of dependent undergrads, is yet higher. Most federal student loans also have loan fees that are a percentage of the total loan amount. The fee for PLUS loans has run over 4% in recent years.

Private student loan rates generally are higher than federal student loan rates, but refinancing rates may be quite low for those who qualify. There’s never any cost to refinance, and you can do so as many times as you want.

Can you refinance a student loan for a lower interest rate?

Yes, if you qualify to do so.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

If you’re like most borrowers, particularly those with six figures’ worth of student loans from graduate or professional school, you might find that looking at your student debt square in the face is a downer, but repayment can be managed.

Is refinancing a good idea? It can be. When? When you can snag a lower interest rate and in a few other situations.

Student Loan Repayment Plans

Chances are you set up a student loan repayment plan after graduation and figured you’d revisit it later — when you’re making more money, when your career is more secure, when you have more time. The standard repayment plan for federal student loans is 10 years. Direct Consolidation Loans have a repayment period of 10 to 30 years.

Putting off the repayment thought is understandable. After receiving your undergraduate or graduate degree, your focus is on other things (like building a career).

But if you let that nebulous “later” turn into “never,” the repercussions can be costly. At some point, refinancing your student loans could potentially save you a significant amount of money. You just need to figure out if it is the right move for you.

When to Finance Your Student Loans

1. Your Current Student Loans Have High Interest Rates

Look at the interest rates you’re paying on your student loans, particularly federal Direct Unsubsidized Loans (graduate or professional), federal grad PLUS loans, and/or private student loans.

Depending on how high your loan balance is and how much you could reduce the interest rates by refinancing one or more loans, your cost savings may be significant.

2. Your Financial Situation Has Improved Since You Took Out the Loans

Maybe you were a starving student when you took out federal or private student loans, but ideally your financial situation has improved with time. This is great news for your bottom line, because a higher credit score and income help a borrower qualify for lower interest rates.

If you expect to stay on an upward financial trajectory, you might even consider refinancing to a variable-rate student loan, which will have a lower starting interest rate than a fixed-rate loan. Variable rates are tied to market fluctuations, though, which means rates that are very low today are likely to go up at some point.

The upshot is that a variable-rate loan could be a good option for a qualified borrower who intends to pay off the loan at a relatively fast pace.

3. You Don’t Plan to Use Certain Federal Student Loan Benefits

Borrowers who go to work in the public sector may qualify for the Public Service Loan Forgiveness program. Some federal programs also offer relief for borrowers who experience financial hardships (such as student loan deferment and forbearance, income-driven repayment plans, and the graduated repayment plan).

If you expect your income to be unpredictable or you’re looking into qualifying public service employment, it probably wouldn’t behoove you to refinance federal student loans. But refinancing could make sense if you don’t plan to tap into any of the federal programs listed above and you can gain a lower rate.

Recommended: Looking for more guidance on your student loans? Explore SoFi’s Student Loan Help Center for tips, resources, guides, and more!

4. You’re Going to Take Out a Large Loan

For loans like mortgage loans, lenders will look at your debt-to-income ratio, among other things. DTI is your monthly debt payments per month, including your future mortgage payments, divided by your gross monthly income. A low DTI generally signals better odds of loan approval and better interest rates.

Decreasing your monthly student loan payment by refinancing, with, say, a long loan term, could lower your DTI.

It might make sense to refinance your student loans at least six months before buying a home or making any other large purchase. That will give you time to recoup the points lost after a hard credit inquiry.

Once the mortgage or other big loan has been secured, you could refinance again, this time picking the lender offering the lowest rate, not just the lowest payment. You can refinance student loans as many times as you wish.

If you think student loan refinancing may be a good option for you, the next step is to check out several refinancing providers to compare interest rates and other features.

Refinance Student Loans With SoFi

You can refinance both federal and private student loans into one new loan with SoFi in an easy, all-online process. You can get your rate in two minutes.

SoFi also offers access to an extensive member network through complementary member experiences like happy hours and dinners.

Which means you could gain more than cost savings when you refinance student loans.

FAQ

When should I refinance my student loans?

It might make sense to refinance as soon as you have a stable income and good credit that can usher in a lower rate.

Can I refinance student loans after buying a house?

Buying a home creates new debt, and that can make refinancing student loans more difficult. But by waiting several months or even a year to refinance, the dust can settle on the mortgage decision.

Is refinancing my student loans a good idea?

If you’re struggling to repay federal student loans, you might consider an income-driven repayment plan or federal student loan consolidation.

But if you can qualify, your income is stable, and you would save money by refinancing federal or private student loans, that might be a smart move.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

It may not be a fun thing to think about or talk about, but it’s important to get your estate planning organized. Unfortunately, death doesn’t just happen to other people. We should all get our affairs in order so that our loved ones can focus on grieving and moving on once we pass.

Of course, a “getting your affairs in order before death checklist” may not rank as the ultimate way to kick off a relaxing weekend, but you will rest easy once it’s all said and done. Luckily, it’s not nearly as painful as you might think. It can be less painful than doing your taxes every year. Here, we break it down for you into 12 steps.

12 Estate Planning Must-Haves

Estate planning isn’t just something for retirees or people with multiple homes. All of us need to take this step and determine how and by whom decisions will be made if we are incapacitated or near the end of our life. We also need to funnel our assets to the appropriate people when our time on earth is over.

It can sound grim, we grant you that, but it’s actually a gift to your loved ones to get all of this taken care of. So let us take you through the dozen items to wrangle so you know your affairs are in order.

1. Last Will and Testament

This is super-important because it outlines how your estate (your assets) will be divided. A will is a legal document that serves a couple of important functions. Wills are mainly used to specify how you want to distribute your assets. Assets can include things like personal property, real estate, cars, bank accounts, art, jewelry, or stocks. Despite what some people think, you can give your assets to anyone. You aren’t limited to immediate family. You can even donate your assets to charities or nonprofits if you wish.

A will also ensure that the people you care about are taken care of after you have passed away. If you have any children, a will can name whom you intend to become their guardians if you die. It can also do the same for pets.

You can create a will online using digital tools (you will need it signed and witnessed, though) or work with an attorney, often for under $1,000, to create one.

Recommended: What Happens If You Die Without A Will?

2. Proof of Identity

When the time comes for a will to be put into effect, an executor of the estate plays a crucial role. This individual, who you can name in your will, carries out your will’s instructions. To help this person do their job, make sure you have all of your IDs in one place. Documents you will want to have may include:

•   Birth certificate

•   Social security card

•   Armed forces discharge papers

•   Marriage certificate

•   Prenuptial agreement

•   Divorce certificate

This will make following your directives that much easier.

3. Digital Logins and Passwords

In recent years, our digital lives have become inextricably woven into our “real life.” It’s not uncommon for people to have dozens of digital accounts, containing vital information about our assets. Should you fall ill or suddenly die, your loved ones will likely need to access some of them. For example, you may have financial account information there, and email may be how you interact with some of your closest friends and colleagues. Fortunately, there are many ways to properly document and keep track of your online accounts. Whether you use a digital vault, an integrated password manager, or simply pen and paper, you should establish a system for your loved ones. You can pass this information along to your financial power of attorney to deal with, or you can name a digital executor to close your accounts and distribute your assets.

4. Property Deeds and Titles

Any titles you have for cars, homes, or real estate need to be gathered and put in a safe place. Details on that “safe place” need to be shared with one or two key people in your life, like your next of kin and/or your will’s executor. However, just gathering these items doesn’t mean you can necessarily spare your loved ones the process known as probate. Probate is a potentially complicated and expensive process in which a deceased person’s property is reviewed and allocated. Having a will is of course an important step, but with real estate, for example, things can get complicated even with that document in place. To skip the probate process, you can create a revocable living trust (which is discussed below), and then transfer ownership of your properties to it and list the trust as the current owner.

It’s important to remember that any names on titles or deeds will overrule anything you write in a will. For example, if you bought a car with your ex-wife a few years before you got a divorce and her name is still on the title, it won’t matter whose name you write in your will. She will inherit the car because it is her name that is on the title.

5. Revocable Living Trust

Above, we mentioned the potentially drawn-out and expensive process of probate and why you would want to take steps now to help your loved one’s avoid it later. Let’s drill down on one way to do just that. A revocable living trust is a type of legal instrument that allows you to use and control your property while you’re alive, but also change who inherits it at will. If you have one legally established, it allows all of the assets you entrust to it to skip probate, meaning your beneficiaries can receive your assets much more quickly.

After you’ve created a revocable living trust, you must also name a ‘successor trustee’ to manage your trust. This person will be responsible for distributing your assets to the proper beneficiaries.

Recommended: What Is A Trust Fund?

6. Debts

It would be nice if all debts vanished when our lives ended, but, sorry, that’s not how things work. Your beneficiaries are going to need to know about and potentially address your debts (these are often paid out from your estate before the remaining assets are distributed). To smooth the process, compile a list of all your debts. This may include things like:

•   Auto loans

•   Credit cards

•   Mortgages

•   Personal loans

•   Student loans

On your list include contact information for the lender, your account number, login information, and approximate debt amount. For credit cards, include a list of frequently used credit cards and ones you simply have but rarely use. If you have a lot of open cards in your name, and aren’t quite sure how many you have, you may want to get a free credit report from Annual Credit Report .

7. Non-probate Assets and Beneficiaries

If you have assets that are able to skip probate, meaning they can be transferred directly to the named beneficiaries after you die, then you should keep up to date on naming beneficiaries (say, if a death or divorce has occurred) and keep a list of these assets with account details. Which details exactly? Details like where any paperwork or policies are, account numbers, and contact information for the issuing entity are a good place to start.

Non-probate assets include such things as:

•   Insurance policies

•   401(k) accounts and IRAs

•   Pensions

Non-probate assets should not be listed in your will because any designations you make with each institution will override anything you write anyway.

8. Financials

While you are gathering all of your estate materials, make sure to keep a neat list of all your login and password information for the following:

•   Bank accounts

•   Car insurance

•   Credit cards

•   Health insurance

•   Home insurance

•   Life insurance

•   Loans

•   Pension plans

•   Retirement benefits

•   Tax returns

If everything is online, you may want to make sure every account is listed along with your other digital accounts in your password manager or digital vault.

9. Advance Healthcare Directive

An advance healthcare directive (also known as an AHCD) allows you to decide, in advance, how medical decisions should be made on your behalf if you are unable to communicate your wishes. AHCDs typically have two parts: designating a medical power of attorney (you may also hear this called a healthcare proxy; we share more on this below) and a living will.

A living will describes and outlines your medical care wishes just in case you are ever unable to communicate them to your healthcare providers or loved ones. It can describe any aspect of healthcare preferences, and can include things like:

•   End-of-life requests

•   Medications

•   Resuscitation requests

•   Surgeries and surgical procedures

10. Power of Attorney

This is an important part of putting together your estate-planning checklist. The goal here is typically to make sure that, if you were incapacitated (say, due to dementia or a medical emergency), someone could act on your behalf. When you give someone power of attorney, that person then has legal authority to manage all of your affairs. There are two types of power of attorney: financial and medical.

A financial power of attorney is responsible for:

•   Accessing your bank accounts to pay for healthcare, bills, groceries, and any other housing needs you have

•   Collecting upon any debts you have

•   Filing taxes on your behalf

•   Applying for benefits, such as Medicaid

•   Making investment decisions on your behalf

•   Managing any properties you own

A medical power of attorney (also sometimes referred to as a healthcare proxy) is responsible for:

•   Choosing which doctors or care providers you see

•   Deciding what type of medical care you receive

•   Will advocate if there are disagreements about your care

It’s not uncommon for one person to be designated as both a financial and medical power of attorney, but they don’t have to be the same person. It often provides tremendous peace of mind to know you have designated who will look after your best interests in the situations outlined above.

11. Funeral Wishes

Okay, take a deep breath for this one. It may sound morbid at first, but wouldn’t you want your earthly remains and any celebration of your life to reflect your wishes? So it can make sense to spell out what you want to happen to your body (say, burial, cremation, organ donation).

You can also detail funeral wishes. This typically includes things like what type of music you want to be played or passages to be read, and you can even specify that you want charitable donations instead of flowers.

Whatever you decide, just make sure you communicate your wishes. Unlike other things on this list, there isn’t a formal, legal document you need to sign, but you can usually include your wishes somewhere in your will.

12. Speak with an Estate Planner

Now that you’ve read almost all of this estate planning checklist, you should still consider getting some skilled guidance. Even if you’re completely comfortable writing up legal documents, it’s a good idea to visit an estate planner to make sure you’ve covered all of your bases. He or she may have recommendations for you that can save everyone money and better protect your beneficiaries.

Recommended: Estate Planning 101: The Basics of Estate Planning

The Takeaway

While it can be a difficult topic to think about, estate planning takes time and patience. If you have children, dependents, or a spouse, clear up a weekend and do it as soon as possible. Life happens fast even in the best of circumstances

Estate Planning Made Easier: SoFi and Trust & Will Partnership

Now that you know the steps involved, here’s a super-simple way to approach some of these to-do’s: with a digital estate planning partner. No in-person sales pitches or long phone calls required! SoFi has joined forces with Trust & Will^*, a leading provider, and offers a 10% discount to help you purchase Guardian, Will, or Trust-based estate plans.

Interested in the easy and reliable route to estate planning? Check out what’s offered by SoFi in partnership with Trust & Will.

Photo credit: iStock/Kerkez

^*Trust & Will, a leading digital estate planning platform, is offering a 10% discount specifically for SoFi members. No promo code required. The 10% discount is automatically applied at checkout to the initial purchase of any Guardian, Will, or Trust-based estate plan.
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To legally drive in most states, you need to have car insurance, with the minimum amount determined by your state of residence. We should really refer to “car insurance minimum coverages,” in plural, because requirements can exist for liability insurance, property damage, medical expenses, uninsured/underinsured coverage, and personal injury protection, among other possibilities. This post will provide a general overview using the most current information available. Verify information for your particular state to make sure you have the appropriate requirements for car insurance.

Car Insurance Requirements By State

Take a look at Alabama’s requirements for car insurance: 25/50/25. This means that the state requires $25,000 of bodily injury liability insurance per person with $50,000 for all bodily injuries that take place within a single accident and $25,000 in property damage per accident. This is the general format we’ll use while adding other insurance information about a state when available and applicable.

Which States Don’t Require Insurance?

You may notice that two states are not in this list: New Hampshire and Virginia. That’s because they don’t require car insurance, per se, although they do have laws on the subject.

In Virginia, if you don’t have car insurance, you pay a $500 fee, which is more than the average cost of liability insurance in the state.This fee does not, though, provide the driver with any coverage. So they are responsible for any damages they inflict when at fault in an accident and for compensation for any medical injuries and/or property damage.

In New Hampshire, there are no fees associated with not having car insurance but the at-fault driver is responsible for paying for any damages when they are at fault in an accident.

If a driver decides to buy car insurance in either state, then the car insurance minimum coverage in each is 20/50/25.

Recommended: How to Get Car insurance in 5 Simple Steps

Understanding Required Coverages

Here are definitions for key auto insurance terms connected to coverages:

•   At fault: A driver is “at fault” when an action they took or didn’t take caused the collision.

•   Liability insurance: This pays for the other driver’s/drivers’ car repairs (property damage) and medical bills (bodily injuries) if you’re at fault in an accident.

•   Uninsured and underinsured motorist coverage: This protects drivers and passengers alike if the other motorist has little or no car insurance. The bodily insurance portion covers medical costs while the property damage portion pays for vehicle repairs.

•   Personal injury protection: This helps to pay for accident-related medical expenses for the insured driver and the passengers, regardless of who is at fault.

Liability auto insurance may also cover loss of income, legal fees if a lawsuit occurs, and/or funeral costs. The property damage coverage can go beyond paying for vehicle repairs, also covering a fence, bicycle, shed, or building — as just four examples — that was damaged in an accident.

Exceptions to State Minimum Car Insurance Requirements

As already described, New Hampshire and Virginia take a different approach to car insurance requirements. As another approach, in the state of Kentucky, a driver can have 25/50/25 coverage or a policy with a $60,000 limit. In Maine, as another example, you can have the menu of coverages as described above or a $125,000 policy. Because each state is different, it’s best to verify what insurance is required by law where you live and what options exist.

In more than half of the states, a driver can decide to purchase a bond from the state instead of buying car insurance. Specifics vary by state (but none of the bond amounts are small) and these funds are used if you cause an accident. Any time that the state pays an injured party (from an accident where you are at fault), the money must immediately be reimbursed by you to the state along with interest. The bond is connected to the driver, not the vehicle, so it provides coverage to any vehicle driven by the bondholder.

Recommended: How Does Car Insurance Work?

Going Beyond Car Insurance Minimum Coverage

So far, this post is focusing on what insurance is required by law. But how much car insurance do you really need? That’s another question entirely.

For example, even when your state doesn’t require comprehensive coverage, if a vehicle is being financed or leased, the lender will likely require that you have this type of coverage. This covers physical damage to a vehicle that isn’t caused by an accident. This can include weather damage, theft or vandalism, hitting an animal, and other damages. Even if a vehicle is paid off, it often makes sense to include this coverage in your policy because the cost is small in comparison to what repair or replacement costs would be if the vehicle is damaged or stolen.

Collision coverage goes beyond accident-related damage and can cover costs if you run into a tree or building, hit a pothole, for example. If paying for damages out of pocket would be challenging or your risk tolerance is low, you might consider having this coverage.

Then there’s guaranteed auto protection (GAP) that can protect you as your vehicle’s value depreciates. If that car is totaled in an accident or stolen, then GAP would pay the difference between what you owe on it and its actual cash value. This allows you to pay off your loan or lease and then get any remainder from the insurer. Typically, you need full auto insurance in order to add the optional GAP.

Lowering Car Insurance

To lower your car insurance, here are tips to consider:

•   Get quotes. Using an online comparison tool can make your search especially efficient. The Insurance Information Institute recommends that you get at least three quotes. To check out the insurer’s financial health, you can use Standard & Poor’s, AM Best, or another rating service — and/or contact your state insurance department to see if there are any complaints about them.

•   Talk to your current insurance provider and ask them what discounts they can offer you. They may give you a better premium to keep your business.

•   See which discounts you may qualify for: a good driving record, a vehicle with anti-theft features, carpooling/remote working, going paperless with statements, or other strategies.

•   Find out how much you can save if you bundle other insurances with your car insurance. This can be homeowners or renters insurance, for example, or perhaps you can combine car insurance policies for multiple vehicles.

•   Consider a higher deductible, which is the out-of-pocket amount you’d have to pay before your insurance kicks in to pay a claim. This can lower your premium significantly, but if you have an accident, you may need to use your personal savings before the insurer pays your claim.

•   Reevaluate coverage needs. If your car is older, you may not need all of the coverages you once did. That said, you’ll want to balance what you can save today on premiums with what might happen tomorrow if an accident or other covered event occurs. You’ll need to keep state minimum car insurance in mind, of course.

The Takeaway

Most states have minimum requirements for car insurance (and when they don’t, they still have coverage parameters that must be met). This post shares insight into the types of coverages as well as the amounts that each state requires. To find the right insurance policy for your needs, you can compare multiple car insurance rates from top insurers and see quotes in just a matter of minutes.

Photo credit: iStock/Weekend Images Inc.

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¹SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc’s service. Vehicle Identification Number is confirmed by LexisNexis and car values are provided by J.D. Power. Auto Tracker is provided on an “as-is, as-available” basis with all faults and defects, with no warranty, express or implied. The values shown on this page are a rough estimate based on your car’s year, make, and model, but don’t take into account things such as your mileage, accident history, or car condition.

Insurance not available in all states.
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SoFi is compensated by Gabi for each customer who completes an application through the SoFi-Gabi partnership.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

This article is not intended to be legal advice. Please consult an attorney for advice.

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