Yesterday, I received both the federal stimulus check (deposit) for $1200.00 and a $300.00 reimbursement check (deposit) from my employer. While I had already written a post about what I would do with the money when I received it (Note: I expected to receive it much, much later), as I sat there looking at my unusually flush mid-month bank balance, I began to obsessively review my debt repayment plan to make sure I was making the “right” decision. After some hemming and hawing, I put the entire $1500.00 towards Private Student Loan 1 (PSL1). With this payment, the Citi portion of PSL should be paid off of June 1st and the Discover portion of PSL1 should be paid off on August 1st.
While I sat on my couch filling out an application for a side-gig, I began to think about how my goals would need to be readjusted given that I wouldn’t be able to make the kind of money I had expected to make this summer from academic enrichment activities since University B, and the surrounding public school districts, announced that they would be cancelling in-person activities for the summer. As I began to do this, I also began to think about the upcoming months, through the end of the year, and what I could successfully achieve with respect to debt repayment. At some point, I was reminded that my car lease is ends in early January and that I need to either buy the lease out now ($12, 176.18), buy the lease at the end of the lease period in early January ($10, 282.50), or return the car at the end of the lease period and buy another vehicle.
Initially, I began Googling “Auto Loan Calculator” tools to figure out how much the car payment would be if I took out a loan for the amount of my vehicle. Of course it only made sense to buy my car at the end of my lease because it is a 2018 and will only have 32,000 miles on it and you can’t purchase a late model vehicle, with so few miles, for that price. However, at some point, while I was doing all of these calculations, I just stopped for a minute. I thought about exactly what I was doing. And then I went on the following internal rant to myself:
No, YOU can’t purchase a late model vehicle, with so few miles, at that price because YOU can’t afford it. If you could afford it, you would be able to pay cash. But YOU can’t afford it. Which is why you are looking up auto loan calculators. You might as well be looking up $12,000.00 in additional debt calculators.
This was my ah-ha moment. The moment I realized that I will never be rid of debt if I always allow myself to justify borrowing money and if I don’t look at borrowing as adding debt to my already massive total. So, I came up with the following revised financial goals for the remainder of the year, assuming my income does not change:
1) Pay off PSL 1 on August 1st
2) Pay off University Student Loans 3 ($847.42) & 4 ($663.35) on September 1st Updated: Next day
3) Push the $60.00 minimum payments from USL3&4 to PSL3 Updated: Next day
4) Save $ to purchase a used vehicle at the end of the year (~$3,500.00)
I decided to payoff USL3&4 because their minimum payments are large in proportion to their balances. For example, PSL2 which has a balance $7,854.39, only has a minimum payment of $93.30 a month. Additionally, more of the current minimum payment for PSL3 goes to interest than to principal and as I would be pausing additional debt payments for the remainder of the year, I wanted to still be making some progress. Updated: The very day after I wrote this…I know, I know.
I know that was a lot but…thoughts?
I really just want to end the debt cycle once and for all. That was an important moment and decision for me.