October 2020 – Student Loan Balance(s): -$113,667.51
November 2020 – Student Loan Balance(s): -$113,191.59
Difference: $475.92
Nothing to see here. I continue to make minimum payments on all of my student loans as I take a respite from accelerated debt repayment to beef up my emergency fund to $5,000.00, which I will achieve in December.
As I stated last month, the current interest rate abatement on federal student loans means this is a bit less painful than it could have been as I don’t have to watch my overall balance increase from interest accruing on my federal student loans. The other bright-note is that interest rates continue to drop, which isn’t great for saving, but it means my minimum payments go that much further each month.
On election day (cause I’ve already voted and need a distraction), I will come clean about October spending (yikes) and my November budget forecast.
Okay, this is the post I have been dreading. The one where I have to reflect on making negligible student loan debt repayment progress because I am focused on beefing up my emergency fund to cover three months worth of expenses ($5,000.00).
Ugh. To the numbers…
Account
Debt
Min. Payment
Interest Rate
Private Student Loan 1
$0.00
$110.46
0.000%
Private Student Loan 4
-$10,642.35
$245.40
3.750%
Private Student Loan 3
-$11,536.88
$153.82
6.670%
Private Student Loan 2
-$7,420.84
$93.30
5.400%
Federal Student Loan 1
-$21,440.37
$0.00
6.800%
Federal Student Loan 2
-$13,946.84
$0.00
5.310%
Federal Student Loan 3
-$11,184.47
$0.00
6.800%
Federal Student Loan 4
-$7,748.09
$0.00
4.450%
Federal Student Loan 5
-$5,561.12
$0.00
4.450%
Federal Student Loan 6
-$3,147.30
$0.00
5.600%
Federal Student Loan 7
-$2,863.10
$0.00
4.660%
Federal Student Loan 8
-$2,457.12
$0.00
6.800%
Federal Student Loan 9
-$2,307.18
$0.00
6.800%
Federal Student Loan 10
-$2,003.02
$0.00
5.600%
Federal Student Loan 11
-$1,639.01
$0.00
6.800%
Federal Student Loan 12
-$1,144.25
$0.00
5.600%
University Student Loan 1
-$4,171.83
$60.41
8.000%
University Student Loan 2
-$3,250.02
$42.43
5.000%
University Student Loan 3
-$697.64
$30.00
8.000%
University Student Loan 4
-$506.08
$30.00
8.000%
Total
-$113,667.51
$765.82
September 2020 – Student Loan Balance(s): -$114,144.74
October 2020 – Student Loan Balance(s): -$113,667.51
Difference: $477.23
So…yea. That does not inspire the warm and fuzzy feelings I had on September 1st after having my second largest debt payoff month to date. To be fair, it could be a lot worse. I am very fortunate to be taking this savings respite from debt repayment during the continued interest rate abatement for federal student loans. Were that not the case, there is a very real chance I could have seen my overall student loan balance grow this month. *shudders*
There really isn’t much else to say this month about my student loan debt repayment. However, on the heels of a meaningful change in income, questions about savings, and some reflection on my blog, I’ve decided I probably need to share my budget again. 😨 That will happen…tomorrow.
The U.S. is still a mess, blah, blah, blah. I’ve made some changes in my life recently in terms of eating, exercising, and creating space, and it has paid immediate dividends in terms of my physical and mental wellness (mood). I am perhaps as well as I could be under the general circumstances. For that, I am grateful.
This is my first student loan balance update in my new digs and I’m kinda geeked. So, to the numbers!
Account
Debt
Min. Payment
Interest Rate
Private Student Loan 1
$0.00
$110.46
0.000%
Private Student Loan 4
-$10,854.06
$245.40
3.875%
Private Student Loan 3
-$11,628.07
$153.82
6.670%
Private Student Loan 2
-$7,481.42
$93.30
5.410%
Federal Student Loan 1
-$21,440.37
$0.00
6.800%
Federal Student Loan 2
-$13,946.84
$0.00
5.310%
Federal Student Loan 3
-$11,184.47
$0.00
6.800%
Federal Student Loan 4
-$7,748.09
$0.00
4.450%
Federal Student Loan 5
-$5,561.12
$0.00
4.450%
Federal Student Loan 6
-$3,147.30
$0.00
5.600%
Federal Student Loan 7
-$2,863.10
$0.00
4.660%
Federal Student Loan 8
-$2,457.12
$0.00
6.800%
Federal Student Loan 9
-$2,307.18
$0.00
6.800%
Federal Student Loan 10
-$2,003.02
$0.00
5.600%
Federal Student Loan 11
-$1,639.01
$0.00
6.800%
Federal Student Loan 12
-$1,144.25
$0.00
5.600%
University Student Loan 1
-$4,204.61
$60.41
8.000%
University Student Loan 2
-$3,278.96
$42.43
5.000%
University Student Loan 3
-$723.02
$30.00
8.000%
University Student Loan 4
-$532.73
$30.00
8.000%
Total
-$114,144.74
$765.82
August 2020 – Student Loan Balance(s): -$117,823.78 (Adjusted: -$116,605.43)
September 2020 – Student Loan Balance(s): -$114,144.74
Difference: $2460.69 – 2nd highest debt payoff month to date!
NOTE: I know. I know what you are thinking. You’re thinking, “Hold up, AfroPenny, the difference between -$117,823.78 and -$114,144.74 is $3679.04 not $2460.69.” I know. But some of you other eagle-eyed readers probably noticed that my table no longer has the line “Car Lease.” That’s because my car lease will come to an end in December and I haven’t figured out what happens then. There is a world where I just return the car (only pay wear-and-tear and a mileage overage), buyout the lease (~$9000.00 – my car is a 2018 with less than 35,000 miles so I couldn’t buy a car in similar condition for that much), or, take a hand-me-down from my parents. All are worthy options and I haven’t decided exactly what I will do yet…
Because this blog focuses on my student loan debt, I don’t really feel guilty about removing this line; the adjusted amount above reflects the removal of the car lease from the August 2020 balance. I will provide an update about the car situation at some point in the future but whatever option I choose, it has to support the long term goal of having zero debt as I end my 30s in 5.25 years.
That aside…not bad! As I shared above, this makes it my second biggest debt payoff month to date. This came down to a couple of predictable things: the continued interest rate abatement of federal student loans, lower interest rates on private student loans, and the fact that I had to hus-tle to pay off Private Student Loan 1 before the balance transfer ended on August 16th.
From now until January 2021, I am focused on building my emergency fund up to $5000.00. I hemmed and hawed as to whether or not I would use my side job money to help me reach this goal. I realized later that I am not as interested in “saving” as I am in debt repayment and that I needed a mindset shift. For now, the goal is to get $5000.00 in my emergency fund by December 31st, 2020, or earlier, by any means necessary. (That sounds far more dramatic than it actually is because I will reach this goal as long as I stay employed).
3 Things for which I am grateful:
1) Being under $115,000.00 in student loan debt. 2) Second highest month in terms of debt repayment. 3) First student loan I have paid off since I started blogging.
And finally, I am grateful for folks who have continued to check in with me and lend support (C and DoubleDebtSingleWoman) and for new folks who have recently stopped by to say hello (Hello Ellen!). Paying off a debt this big is very isolating in real life (way before COVID-19) and I am so very grateful for your support along the way.
When I logged in this morning to pay off the remainder of Private Student Loan 1 (PSL1), I didn’t really “feel” anything after I paid off the remainder of the balance transfer. So then I logged into the original creditor’s website and saw the above landing page. A year ago when I saw this when I transferred the balances from my lender to two separate credit cards I felt excited to have a plan but the image above didn’t really resonate with me. My loan wasn’t actually “paid in full.” Today, it feels a bit different. This was the last student loan I took out (will ever take out!) and it felt significant to pay it off. Not like I erased the years and made better decisions significant, but significant to the extent that it represents me recovering from my poor financial choices and moving forward.
Private Student Loan 1 Payment Recap
This loan was targeted for repayment first because while it had an average balance with respect to my other student loans, it had a ridiculous interest rate for a student loan. From January to March of 2019, it peaked at 10.115%! To highlight how ridiculous this student loan rate was, consider that the credit card to which I transferred most of the balance, my Discover It Card, only has a interest rate of 11.99%. Yes, my student loan interest rate was within two percentage points of my credit card interest rate.
As this was significantly higher than any of my other student loans and combined with the emotional pull of it being the last (and in my eyes the most frivolous) student loan I took out, it was an easy choice.
Minimum Payment: $110.46
-$10,231.32 – Balance on July 4th when I started this blog AND began targeting this loan -$9,812.49 – August 1, 2019 balance –$10,145.50 – Balance after balance transfer to credit cards; new amount includes balance transfer fees of $295.50 (and an over-payment of $32.21) -$9,919.10 – September 1, 2019 balance -$9,550.00 – October 1, 2019 balance -$9,225.00 – November 1, 2019 balance -$8,800.00 – December 1, 2019 balance -$8,600.00 – January 1, 2020 balance -$8,400.00 – February 1, 2020 balance -$7,200.00 – March 1, 2020 balance -$6,100.00 – April 1, 2020 balance -$3,700.00 – May 1, 2020 balance -$2,800.00 – June 1, 2020 balance -$2,350.00 – July 1, 2020 balance -$1,900.00 – August 1, 2020 balance $0.00 – August 3, 2020 balance; will be reflected in student loan balance update on September 1st
Total interest saved: $522.00 Balance transfer fee: $295.50 Actual amount saved (interest saved – balance transfer fee): $226.50
Was the balance transfer worth it?
In the grand scheme of things $226.50 doesn’t seem like a lot of money. However, that is also $226.50 of my own money that I didn’t have to give someone else. And if I was asked to spend $226.50 on something at this very moment, I could not think of what I would spend it on… So financially, was it worth it? The answer has to be “yes.”
However, unless I paid of my loan really quickly, then that was always going to be the case. There was more than likely going to be some savings from the balance transfer. In an earlier post, I reviewed the benefits both financially and psychological to the balance transfer. In that post, the take-a-way is that most of the benefits of the balance transfer would appear to be psychological, and in reality, I found that very much to be the case. If you look at my repayment log above, I didn’t really get serious about paying off this balance and pushing myself hard to make big payments until February/March of this year. Why? Because I realized the balance transfer would be ending soon and that I needed to make big payments if I had any hope of paying it off (AND being a balance transfer “failure” and avoiding the embarrassment of having to write a post about it). This forced me to make sacrifices and adhere more strictly to my budget to make those big payments. While this was good for my student loan balances, it also had the additional psychological benefit of making $1,000.00/month additional debt payments seem “doable,” whereas before they were just something I could do in theory. Now, every dollar spent that takes me further away from being able to make a $1,000.00 payment on the first of the following month feels real and like I failed a bit. So when I make that $700.00 additional payment, I no longer think about getting a reward for my sacrifice, instead, I now think, “I could have paid more. I have previously paid more.” That shift in mindset is invaluable. So, was it worth it from a psychological perspective? An emphatic “yes.”
Would I do it again?
I don’t know. While that might seem a bit surprising given my answers above, it really shouldn’t be. The current financial environment is much more fraught that it was a year ago. I didn’t feel like I had the flexibility to decelerate my student loan payments toward this debt because of the balance transfer which means I didn’t start to increase my savings in response to the pandemic. While that is now my plan, had I not had the balance transfer, I think I would have done this much, much sooner. While the current pandemic is unprecedented, it highlights how drastically your financial situation can change very quickly and highlights the principle downside to the balance transfer method: the loss of financial flexibility.
The U.S. is still kind of a mess, but I am feeling a bit more like myself this month in terms of my finances. I think making the decision to stay in my current apartment reaffirmed my commitment to getting rid of my student loans as soon as possible, and getting a part time job also helped me feel like I was making progress towards that. So, to the numbers…
July 2020 – Student Loan Balance(s):-$119,119.98
August 2020 – Student Loan Balance(s):-$117,823.78
Difference:$1,296.20 Not my best month, not my worst. The continued administrative interest forbearance for federal student loans means my regular minimum payments continue to go a bit further. I didn’t pay a lot extra in July on my student loans but August should be considerably better and result in me paying off my first student loan, Private Student Loan 1 (PSL1), since I started blogging. Prior to beginning this blog a little over a year ago, I paid off one of the smaller loans.
I’m excited about my new part-time job and my ability to save and pay down my debt a little bit faster. Once PSL1 gets paid off next week (only a week prior to the balance transfer ending), I think I will begin putting all of my additional income towards beefing up my emergency fund to $5000.00. I will achieve this goal by the end of the year assuming I remain employed. After that, I will once again throw any additional income towards my student loans. I keep going back and forth on what the payoff order will be. While part of me would love to switch to the Ramsey method for the instant gratification of paying off some of those smaller loans, the other part of me wants to start paying off my first federal student loan, the largest of all of my loans by far, and the one that accrues the most interest each year. I will see how I am feeling in December once my emergency fund is beefed up and make that decision then.
I will be back sometime next week once I pay off the balance transfer to celebrate dispatching my first student loan on this blog and calculating whether or not the balance transfer was “worth it.”
So, if I allow myself to step back from the current social-political moment in the United States, and only focus on my finances, June was a good news/terrible news kind of month.
The terrible: June was expensive. Between car repairs, apartment repairs and pest management (another post), and a bit of money spent driving half-way across the country to spend time with my best friend (Okay…more than a bit. I’m still here and it’s doing my soul a world of good), June was expensive.
The good: As of July 1st, my overall debt is now under $120,000. Yea! While I will do a more extensive update tomorrow on my 1-year blogging anniversary, for now, I’ll just get to the numbers…
June 2020 – Student Loan Balance(s):-$120,292.48
July 2020 – Student Loan Balance(s):-$119,119.98
Difference:$1,172.50
Other than my balance finally dipping below $120,000.00, there is nothing particularly exciting to report. The current historically low interest rates mean student loans at variable interest rates are the lowest they have ever been. I really wish my DTI was better and I was in a better position to refinance to take advantage of them. The low interest rates mean my minimum payments and the extra I put towards the loan I am targeting go a bit further each month.
I will do a more extensive update tomorrow for my 1-year blogging anniversary. So for now that’s it.
Nothing new or exciting to report. The continuing interest rate freeze on my federal student loans means my minimum payments went a bit further this month. Also, the continuing economic depression means that the interest rates on some of my private student loans are the lowest they have ever been.
It’s a difficult time right now and I want to be more excited about my finances than I am but…here it is.
Thank you to everyone who has ever taken the time to comment or write. You are appreciated.
Difference: $3,300.51 – 😲 Largest single month debt payoff to date! The first thing you probably noticed is that the payoff order of my loans changed a bit. You can find a far too drawn out explanation of that, as well as my revised financial goals for the year, here and here.
The second thing you probably noticed is the appreciable drop in my balance. 😲 Yea, I double checked the formula in Excel twice just to be sure. Ultimately, the drop came down to a couple of very expected and predictable things:
Federal interest rate freeze – The bulk of my student loans are Federal Student Loans and have a balance of almost $75,000.00. Under the current interest freeze, there is a temporary reprieve from the more than $300.00 in interest that usually collects on them each month.
COVID-19 Stimulus Payment – While it’s probably not what Congress wanted or expected me to do with the stimulus check I received, as I explained here, I put the entire $1,200.00 towards Private Student Loan 1.
Spring 2020 mileage reimbursement – University B reimbursed me $300.00 for miles driven on my vehicle. While I had wanted to put this in the beginnings of my car fund, applying it to Private Student Loan 1 gives me a bit more breathing room with it’s repayment by the balance transfer end dates, and is less necessary given that I will begin saving for my new car and the cost associated with turning in my lease (more on that later) once Private Student Loan 1 is paid off in August.
I stuck to my budget in March – I get paid on the 1st of each month and what I am able to pay in student loan payments is most significantly impacted by how well I stick to my previous month’s budget (if I stick to the budget, there is not miscellaneous spending that I need to pay off). For the most part, I stuck to my budget in March which allowed me to make a $900.00 payment towards Private Student Loan 1 on April 1st.
Of all the reasons that I was able to make more headway in April, I am perhaps most proud of sticking to my budget in March. While the ongoing COVID-19 pandemic certainly impacted my ability to spend money, the behavior changed started in February, which allowed me to make a $1000.00 payment on March 1st, and will probably have the biggest impact on my ability to pay my debt off in the long run.
Whooo. I know my debt is still massive but this is one of those moments where I feel like I will crawl out of it.
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.
So the numbers below are shockingly more positive…because I made a correction in March and didn’t account for how it affected the numbers. Okay, to the numbers…
March 2020 – Student Loan Balance(s): -$126,657.92
April 2020 – Student Loan Balance(s): -$125,192.33
Difference: $1,465.59
Right?!? So in my March 2020 – Student Loan Balance(s) Update post, I lamented how much interest sucks. And it does. It really sucks. But, that is pretty much a common theme with me but I lamented specifically that, I paid $2,231.17 this month in loan payments for a principal reduction of $605.68 which means I paid $1,625.49 in interest. *figuratively dies* So that statement is only kinda sorta accurate. Actually, not really at all…because I’m an idiot. So, when I was calculating my March student loan update, I realized that the student loan balance I had been using for all of my federal student loans was the “principal balance” and did not include “accrued interest.” So for the March updated I reported the “outstanding balance” which included the “principal balance” AND “accrued interest.” What this meant, is that the balance I reported on March 1st were significantly higher than the February 1st balances (I probably, would have realized this much sooner if it wasn’t early in the year and the outstanding interest wasn’t relatively low), which made my progress seem significantly less. That is, my significant payment was offset by the significant increase in the federal student loan balances.
However, I made similar payments in March as I did in February and the balance decreased much more meaningfully. That was because I was now comparing apples to apples (April 1st to March 1st), which both reflected the reporting of the federal student loan outstanding balance. I am an idiot and should have realized that a mistake had been made since in previous months, my less significant payments made more of a dent than a month in which I made significantly more payments but…Woosa!
Interest will also suck a little less in the future because the executive order freezing interest rates for 60 days beginning March 13th has yet to be applied/retroactively applied to my balance which means the numbers that the numbers that I am reporting today still include about ~$200.00 of interest that will later be removed. (Yes, I visited my federal student loan servicer’s website and my loans qualify for the temporary freeze.) Woot!
Ugh. Happy to be an idiot. I was really discouraged last month so recognizing the error and seeing the balance drop so significantly is motivation to keep make the short term sacrifices I need to make to get this paid off. I know not a ton of folks read this, but thank you to the kind folks who read and especially to the ones who take a moment to comment.
Observational Personal Finance essays, stories, case studies and how to articles with a distinctly Canadian Point of View, from the Chief Kibitzer of Personal Finance. Paying it forward as best I can.
