Now that we’ve settled on my spouse’s student loan as the next serious debt reduction target, it is time to set some goals related to how we want to accomplish that. The student loan is our highest interest rate debt left, at 9%, so for us we feel it makes sense to attack it next with intensity.
First – the basics on how much money is budgeted available. Our debt snowball is $810.41, and that includes the minimum payments on both student loans plus the car loan, as well as another $200 that previously went to the credit card. Now that the credit card is paid off, that $200 gets moved automatically towards paying off the student loan. Added to the minimum payment on the student loan ($237.59) that makes at the very least, $437.59 available every month to reduce the student loan.
Of course, I look to the snowflakes to help me here. I think, based on past performance, it is reasonable to shoot for an extra $300 per month added to that total through snowflakes, be it through selling things, tutoring, blog revenue, surveys, or a combination of those. That brings the total target per month to the student loan debt to $737.59. According to the snowball calculator, if that is obtained from March to December, in December we should have a bit over $5000 left on the student loan, and the remainder would be paid off by June 2009. This forms the basis of my goal. I am aiming to have the student loan be under $5000 by the end of 2008.
I could set the bar a little higher, but because I need to also save for my wisdom teeth removal, I want to play it a little bit conservatively. If I could manage to earn enough snowflakes to consistently pay $700 more than the budgeted paydown amount (so $1137.59 total per month) then I could actually pay off the entire student loan this year. I don’t think that likely, but it is of course possible. I’ll keep that as a sort of “dream goal”, but it is a little too far out of reach to even label a stretch goal.
But June 2009 for elimination, if we can reach that, would be a great thing regardless. On with the debt paydown!