Boy, has it been a while since I’ve blogged. It’s been a really busy summer for my family, and while some of our activities haven’t all been fun, these past few months have been really good for us, both on a personal and financial level. As I previously mentioned, we were working on getting our solar panels up and running and I have good news on that topic, but today, it’s about the thorn in the sides of millions of degree holders: Student Loans!
I decided that now would be a good time to do an update as I am 3 months shy of the 1-year anniversary of when my loan went into repayment and 3 months past the 1-year anniversary of my graduation from Business School. I have been super aggressive about paying my loans as well re-amortizing my balance to update my minimum monthly payment and it has paid off. Here are the results.
|12/18/2015 (initial terms)||3/29/2016||9/27/2016|
|Monthly Payment||$ 395.00||$ 305.00||$ 290.00|
|Principal Balance||$ 39,748.00||$ 27,301.00||$ 24,656.00|
|Repayment terms||120 months||114 months||109 months|
Monthly Payment: I have decreased my monthly payment by over $100/month in less than a year. I am free to continue making the $395 payment, however, the extra now goes towards paying down the principal which will save me a bundle on interest. It is particularly important for me to save money on interest (besides the fact that it’s good money habit), as my income rises and my ability to deduct the interest phases out. In addition to interest savings, if I run into difficulty and I need to redirect those funds elsewhere, that’s fine!
Principal Balance: That’s good old discipline and self-control at work. Every windfall whether it was a tax return, bonus or raise, it was directed to making payments in excess of principal. That’s a nearly 40% pay day and an average payment of over $1,600/month! Has it been easy? No, but I will reap the rewards 10 folds when I’m free in less than 2 years.
Repayment Terms: That’s how long my loan servicer planned for me to take to repay them: 10 years. I don’t think so. Besides a loan securing tangible, real assets, I will never have a decade-plus loan. I have not only cut my monthly payments, I have cut down on my official repayment time! The original terms were predicting I would be making my last payment in December 2025. The extra payments I made in as of March 2016 had cut that estimate by 3 months and put my final payment in September 2025. And that’s the servicer’s estimate, not accounting for any additional payments I might make. I’ll let you in on a little secret: we’re less than 6 months away from “tax season”, what do you think I’ll do with any refunds I may get?
Interest Rate: This one is easy and I can’t take any credit for it. By setting up automatic payments for the minimum amount due, they give you a discount of 0.25%, which will save me a bit more money over the life of the loan.
I hope your debt repayment plan is on track, and if you’ve fallen off the wagon, don’t worry. Better late than never. We’ve all stumbled.