Debt Pay Off Updated – January 2013

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Debt Pay Off UpdateIn December 2012 we decided it was time to open up to you, my readers, and gave our very first debt update.

As a quick review, I originally wrote Our Debt Pay Down Strategy to explain where my girlfriend and I are in terms of debt. Currently we only owe for her student loans and the townhouse mortgage.

We aren’t married yet so we keep our finances separate but I intend to help her pay her student loans down in a major way. We plan on paying off her student loans as fast as we can.

However, 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 – January 2013

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

Private Student Loan 1 – 8.0% Variable (-.125%)

The interest rate on this loan decreased .125% since the last update.

The current balance on this student loan is $8,615.10. This is a decrease of $808.78 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 $7,890.90. This is a decrease of $51.53 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 $7,415.75. This is a decrease of $48.67 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 $4,077.90. This is a decrease of $28.48 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 $22,866.07… ouch! This is a decrease of $93.65 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 $8,343.43. This is a decrease of $25.27 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 – $59,209.15 (-$1,056.38)

As of the last update I was saving money in both a savings and investment account to help my girlfriend pay off her student loans. Since then I have sold all of my investment over a couple different transactions and this money is currently all in savings. I’ll use this money to help her pay her student loans when we combine our finances after we get married!

In total I have saved $31,591.78 to contribute toward this goal. This is an increase of $9,211.29 over last month… well, kind of… This money is 100% going to be used for the student loan pay off when we get married.

A couple things have changed in the way I have made this calculation from last month. First, I put all of my side gig earnings (after my estimated tax payment) from 2012 in this fund. I also decided to use my house improvement money into this fund. I don’t think we’ll need this before her loans are paid off and if we do we can always withdraw from this fund or one of my other savings accounts.

We have a long way to go but if everything goes according to a pretty aggressive plan we hope to have the student loans all paid of by the end of this year! That only leaves us a little tiny bit less than a year… Aggressive, but completely possible!

Net Student Loan Debt – $27,617.37 (-$10,267.67)

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

photo by: Images_of_Money

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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. Yeah.. You guys have a mountain of student loans to slice through, Lance.. But it is clear that you are the man with the plan!

  2. Looks like you have a great plan to get these knocked out. Great work on saving up a good chunk to get rid of them.

  3. Makes me glad I finished up school before they fixed the Federal loans at 6.8%. Mine are at a very reasonable 2.4ish% so I’m in no real hurry to pay them off. If push came to shove I could cut a check but I would prefer to maintain liquidity.

    You have a solid plan in place and in no time those loans will be gone!

  4. Other than a mortgage the only thing we have is one car loan. That rate is just 1.99% so I am not in a big hurry to pay it off as long as the stock market is still in good shape. I would rather invest the money.

  5. Wow, I really do hope you can smack that down by the end of the year! Student loan debt simply sucks since it’s hard to move on with life with them hanging over your head. Good luck!

  6. I have my mortgage and some student loan debt, but I don’t plan to pay much more on the student loans than $50 over minimum because the interest rate is locked at 1.625% for life!

  7. I only have a small mortgage and a car loan (1.99%). I an making additional principal payments to have them both paid off by the time I retire in less than 5 years.

  8. It looks like you have a pretty solid plan Lance. Good luck on getting rid of the debt.

  9. Jamie Dickinson @ YourSavingAngels says:

    There’s a lot of discussion here in the UK about growing student debt – it’s a really contentious area. But clearly we’re no way near the US…yet!

    Big thing here is that you have a plan of action…best of luck!

  10. First congratulations on having a well thought out plan that you are both moving toward each day. It was not that long ago that I too was paying down a significant debt and one of the things I did was celebrate all the milestones. The day I was able to pay off the last loan item was a phenomenal feeling. Just remember don’t put every cent towards debt repayment as those who do tend to bounce right back into the world of debt feeling like other parts of their lives have been ripped off!

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