The time has finally come…
As a result of meeting my three (3) month emergency fund goal on December 1st, today, with my first part-time job paycheck of December, I get to return to aggressive student loan repayment. I. AM. SO. EXCITED! Earlier this year I asked the readers of this blog which student loan(s) I should payoff next. The answer was pretty clear:
With my emergency fund full, and the decision made, I will now direct all of my energies towards paying off Private Student Loan 3 (PSL3).
Balance as of 12/4/2020: -$11,207.28
Minimum Payment: $153.82
I hate this student loan for so many reasons.
1) I hate this student loan because it has terrible terms and I have no way of pausing payments or requesting forbearance should I encounter financial difficulty.
2) I hate this student loan because it has an obnoxious interest rate; as seen above, the current interest rate for this loan is at 6.65% despite a current U.S. Federal Reserve funds rate of 0.25%. At its zenith, the interest rate for this loan was 9.01% (as recent as December of 2019).
3) I hate this student loan because I have paid almost $10,000.00 in interest since it was disbursed.
4) I hate this student loan because, up until the drop in interest rates brought on by the pandemic, almost half of my minimum payment each month went towards servicing interest.
5) I hate this student loan because the balance owed has always been greater than the amount originally disbursed.
6) I hate this student loan because its balance, relative to the amount disbursed, and my debt-to-income ratio, mean that I can’t currently refinance it.
And finally, I hate this student loan for how its continued existence makes me feel about my past financial choices…and myself.
That…that felt good.
Well, today marks a turning point in my relationship with this student loan. Today, I used my entire (ha!) first part-time paycheck of the month to put $166.20 towards this student loan. While it doesn’t seem like much, and it isn’t much, this payment was significant in terms of the change it represented. For the first time since this loan has been disbursed, the balance owed is less than the original amount disbursed.
Original amount disbursed (more than ten but less than fifteen years ago): -$11,049.72
Balance before payment: -$11,207.28
Balance after payment: -$11,041.08
I hate this student loan ., I have, and will continue, to work my tush off until this student loan is a thing of the past. While I will discuss it a bit more in-depth when I talk about my financial goals for 2021, it is my hope to have this student loan paid off in the first half of next year.