Tell All Tuesday ~ Half Debt / Half Savings In Action
A few weeks ago, I made the decision to, for a short time, change our financial focus from primarily debt reduction to a mix of debt reduction and saving. Until our emergency fund is at $2000, all my snowflakes will be split evenly between our emergency fund account and our student loan payoff fund. This was the first month I have put that into action (since everything last month went towards the purchase and installation of the new furnace), so yesterday I snowflaked $446.33 to my spouse’s student loan, and put the same amount in our emergency fund. The emergency fund now stands at $1446.41. Gotta love the $0.08 in interest I earned last month. :) Added to the debt snowball minimum of $437.59 I pay to that student loan every month, my total payment was $883.92.
When I went to redo my numbers, and recalculate the percentage of debt we have paid off, I saw that we are now at 39.95% of the original debt (as of June 2007) paid off. It made me wish a little that we were more flexible in our payment ability for these loans, because I wanted to go pay another $19 and throw us over the 40% mark. But I found when I did the payment from my Revolution Money Exchange bonuses last month, that for the Sallie Mae loan online, my payment has to be assigned to a “payment group” which is a minimum monthly payment - so if I make more than one payment in a month, I advance my payment due date by a month each time I make at least a full monthly payment. I don’t want to do that, so I will only be making payments to the student loan once a month.
With that, here are the numbers:
Debt at start of blog (6/19/07) : $36,451.71
Current total as of 05/12/08: $21,888.57
Principal paid to date $14,563.14
Broken down into:
- Credit Card: PAID OFF 2/7/08
- Student loan (at 7%): $11,467.76
- Spouse student loan (at 9%): $7940.54 (made payment of $883.92)
- Car loan (at 4%): $2480.27
NCN Network Chart %: 39.95% (last week 37.65%)
When I think about the fact that we have paid over $14,000 to the principal amount of our debt in the past 11 months… well, that is great but it is also depressing. That is a LOT of money we could have done a lot with. Yikes. But hey, the spouse’s student loan is now under $8000! And only about $22,000 let to pay before we are free of non-mortgage debt…
Someone asked me earlier if I thought we’d get to the debt halfway point by the blog’s first anniversary. Then I was slightly hopeful, but now after the furnace, I think it will be a bit later than that. We’d have to pay about $3700 to debt in the next month… hey - just about exactly what the furnace cost… heh. But soon! I have some survey income I just received that will go towards debt for the next month, and I’ll have some blog-related income and another check from taekwondo before next week. We will definitely be over 40% paid off next week - just by paying the minimum payments on the car and my student loan!
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May 13th, 2008 at 10:21 pm
That’s very awesome progress PT. Your progress is very inspiring. Keep up the good work!
May 14th, 2008 at 9:42 am
I am working on a similar strategy with regards to paying debt and saving. Mine is not a 50/50 split because I am focusing more on paying the high interest debt down than building up the lower interest savings.
I guess you could say my split is about a 20/80 split, in favor of paying down the debt. It is good to work on both goals at once so that you can see the progress and not feel overwhelmed by one situation.
May 14th, 2008 at 12:00 pm
Ugh….Sallie Mae. I am dealing with the same kind of screwy stuff with dear old Sallie. I wish it was as easy to apply extra on it as it is to CC’s. I feel like I have a learning curve going on to figure out how to pay this down! Next month will be a big snowball since I missed it this month, I didn’t do it right and only paid the minimum and can’t pay extra without advancing next months payment…UGH….I feel your pain!
May 18th, 2008 at 7:19 pm
I made the same decision recently with both my tax refund and “stimulus” payments and a few other windfalls. All my debt is student loans save for a small car loan, so it’s relatively low interest. What’s interesting now with the recent decreases in the Fed funds rate is that my varible (private) student loans are now at a lower rate than my federal student loans and car note. However, I’m still paying the variable balances because of uncertainty with future interest rates.