In 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?
Lance Cothern, CPA holds a CPA license in Indiana. He’s a personal finance, debt and credit expert that writes professionally for top-tier publications including U.S. News & World Report, Forbes, Investopedia, Credit Karma, Business Insider and more.
Additionally, his expertise has been featured on Yahoo, MSN, USA Today, Reader’s Digest, The Huffington Post, Fast Company, Kiplinger, Reuters, CNBC and more.
Lance is the founder of Money Manifesto. He started writing about money and helping people solve their financial problems in 2012. You can read more about him and find links to his other work and media mentions here.