Debt Pay Off Update – March 2013

Debt Pay Off UpdateIf you’re new to the blog, in December 2012 we decided it was time to open up to you, my readers, and shared our very first debt update.

I originally wrote Our Debt Pay Down Strategy to explain where my fiancee and I are in terms of debt. Currently we only owe for her student loans and the townhouse mortgage but that will be changing in the coming months… We just recently got engaged, but we aren’t married yet so we keep our finances separate. 

We aren’t going to go into crazy insane debt payoff mode where we only eat rice and beans, never go out to eat and cancel our cable. We’ll be taking a more balanced approach. We also do not plan to pay our mortgage off prior to its due date, but that may change later down the road.

Student Loan Debt Update – March 2013

A lot has changed since our last debt update in February. The main change is that we decided to use my cash horde for a down payment on the new house we’re buying!

We realize this may be a let down for some of our readers, but it made the most financial sense to us after we took emotion out of the equation.

We’re still working to aggressively pay down the student loan debt, but we won’t be able to have it disappear before the end of 2013… unless we get INCREDIBLY lucky. We’re now shooting for the end of 2016 as a realistic goal. Now we’re on to the update!

Currently there are six groups of student loans that have balances on them.

Private Student Loan 1 – 8.0% Variable

The current balance on this student loan is $5,610.75. This is a decrease of $594.45 since the last debt update. We are paying this loan off first because it has the highest interest rate and is also a variable rate. It originally was well over $20,000 when my girlfriend began paying this down after college in 2011.

Federal Student Loan 1 – 6.8% Fixed

The current balance on this student loan is $7,781.22. This is a decrease of $57.82 since the last debt update. This will likely be the 4th student loan we pay off.

Federal Student Loan 2 – 6.8% Fixed

The current balance on this student loan is $7,312.16. This is a decrease of $54.59 since the last debt update. This will probably be the 3rd student loan we pay off.

Federal Student Loan 3 – 6.8% Fixed

The current balance on this student loan is $4,001.21. This is a decrease of $29.77 since the last debt update. This will be the second student loan we pay off because it has the second highest interest rate AND the lowest balance. On top of that, we hate the bank this loan is through so it gives us even more reason to pay it off.

Private Student Loan 2 – 5.75% Variable

The current balance on this student loan is $22,667.12… ouch! This is a decrease of $198.95 since the last debt update. This is the highest balance loan but it has a lower interest rate for now. Unless interest rates start rising we’ll wait to pay this loan off until the federal loans are paid off.

Private Student Loan 3 – 4.75% Variable

The current balance on this student loan is $8,289.49. This is a decrease of $28.64 since the last debt update. This is the lowest interest rate loan and, unless interest rates rise, this will likely be the last loan to be paid off.

Total Balance – $55,661.95 (-$870.35)

As I had mentioned in the past, I had saved a large chunk of money help my fiancee pay her student loans when we combine our finances after we get married! Then plans changed and we decided to use it for a down payment on a house.

In total I had saved $36,863.99 to contribute toward this goal. However, since plans have changed this is now $0 until after the house purchase goes through and we figure out how much of the cash horde we have left.

We had hoped to have the student loans all paid of by the end of this year but with the changes of plans this has changed to the end of 2016. Hopefully we can beat this goal, but for now 2016 seems most realistic.

Net Student Loan Debt – $55,661.95 (+$35,993.64)

Do you have any debt you’re trying to pay off? Do you have a goal for when you want it paid off by?

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About Lance Cothern

Lance Cothern, a Certified Public Accountant (CPA) licensed in the Commonwealth of Virginia, is the founder of Money Manifesto. You can read more about him here or connect with him on Facebook, Twitter, Google+ or Pinterest.

Comments

  1. I think you have to do what makes the most sense for you. It’s funny, I’m in the opposite boat. I have NO debt and yet there is no way I an afford a house/condo/shack around here. Everyone is at a different place….:)

  2. Hi Lance,

    I agree with you about not going into crazy debt payoff mode. I know it works for some people but not all. My wife and I still try to do a few things here and there to have fun, but don’t go overboard which is what got us in the position we are in. Anyways, keep up the good work and hope you continue paying it down.

  3. Looking at those interest rates makes me glad I don’t have student debt! Yesterday, I put together my taax information for my CPA. Not exactly my idea of fun, but at least I am done for another year.

  4. Nice work on still keeping an eye on this goal, even though the excitement of buying a house is before you. I’m working on our loans as well. I had to adjust, as our monthly extra is not what I thought it would be, and we may not be able to kill the loans this year. I’m still motivated to kill them ASAP, but won’t be too put off if I don’t hit it by the end of the year.

  5. You’ll probably get more satisfaction out of using your savings to purchase a home rather than paying down student loan debt, although either way you would be moving forward financially. I wish you all the best with your home purchase. That is definitely exciting.

  6. Good work Lance! Keep it up and good luck with the home purchase.

  7. Does paying off my kids’ future college expenses count? Ha! But you know, Lance, that’s not a bad idea….you could totally pay my kid’s college. Houses are grossly overrated. You ever try camping? Fun!

  8. I really feel for young people today with $50K+ in student loan debt. I was paying back my parents for 5 years, but it didn’t really feel like a big “debt hanging over my head”. It was interest free and a few hundred bucks a month which was quite doable. Kudos to you for putting such a huge dent in it!

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