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
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.
February was a really good month for a lot of reasons…
(I promise the budget post is coming after this one TODAY. I am working from home today and will actually have the time and space to crank it out. I could do it during my lunch break at work but I often eat at my desk and I worry about prying eyes…)
1) Stuck to my very tight budget – My food/personal/other budget is a bit tight. Like maybe ~$250.00 for the month. When I first did it, it seemed like a lot because I was working in a role at the university that had a dining plan which meant I just used the money for incidentals. But now that food also has to come out of that it’s extremely tight. In February, there were few surprises and the ones I did have I handled pretty well which allowed meant that in addition to my tax refund, I was able to make a $1000.00 on my student loans on March 1st because I didn’t have any extra spending in February I needed to cover.
2) Side Hustle (Work?) – I don’t know if this technically counts as a side hustle but I competed in an competitive activity in college that has allowed me to pick up work as a referee of sorts occasionally in the past and get paid for it. One such opportunity happened during the last week of February which allowed me to make an additional $100.00 payment on my private student loan this month.
3) Guest – I had a friend visit from out-of-state who stayed even longer than was originally planned. While in the past I would have just thrown the budget out because of my “guest” and lived it up (that’s what happened in December when the other guest visited. While she did stay for a lot longer, I went through lots of money on stuff I had no business spending money on like a trip to a Korean bath), I stuck to it. I explained that towards the end of the month I try to make meals using what is left in my pantry. We didn’t eat out once! It also helped that she didn’t make it in until after dinner time twice during her stay and I had to work during the day on most days. Overall, her visit only resulted in ~$15.00 extra dollars in unplanned food spending or otherwise.
4) Heavily Curtailed Binge Eating – This is really for another post but in the past, whenever I have a strong emotional response to something, it has resulted in me “eating” my feelings. This has been terrible for my budget and waistline. During February, I came up with new coping strategies which helped a lot with my food budget.
This change in mentality, where my priority was really sticking to my tiny budget and not creating excuses for my spending, allowed me to make a $1100.00 extra payment on my Private Student Loan 1 (PSL1) debt on March 1st. This was in addition to the $1000.00 tax refund which went straight to PSL1 as well.
So my current PSL1 balance, including the March 1st payment (which would be reflected in my regular April 1st debt update) is:
– Citi balance transfer (BT): $3,500.00 – Balance transfer expires 6/1
– Discover balance transfer (BT): $2,600.00 – Balance transfer expires 8/1
So because I didn’t make as much early progress on paying the balance transfer off, there will definitely be a savings financially even if it’s not much of a little more than $200.00. (You can see how I calculated this in my earlier post here.)
The big question is: Will I be able to pay off the balance transfers by their expiration dates? The answers is, I’m pretty sure. However, this does assume a few things break my way…more about a big thing that might break my way in a future post. The hustle will be making sure the Citi BT is paid off by June 1st. Early in my journey I started targeting the Discover BT because it was smaller, this was a mistake. I should have targeted the Citi BT because it ends sooner.
There was some success this month…woot! I think I am going to get even more intimate and start sharing my budget…that post will happen later today. For now…
Here are the numbers:
February 2020 – Student Loan Balance(s): -$127,263.60
March 2020 – Student Loan Balance(s):-$126,657.92
Yes…interest STILL sucks. My minimum payment is $1031.17. But I paid an additional $1100.00 on Private Student Loan 1 courtesy of my federal tax refund…so really, 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*
Actually, it was probably a bit more since some of that reduction comes from my car lease payments for which the interest is not accruing resulting in mostly principal payments.
I know that almost all of that results from the fact that I have $75,000.00 in federal student loans that are just sitting there collecting interest. Ugh. But right now, those loans being in deferment is allowing me to make the bigger payments on Private Loan 1 which I need to chuck before the balance transfer ends.
Ugh. I really need to get this interest under control.
Despite the awful math, February was the first month where I actually stayed on my strict budget which allowed me to make another $1000.00 payment today (March 1st) that will be reflected on my April 1st update. More on that later today.
January 2020 – Student Loan Balance(s): -$127,688.14
February 2020 – Student Loan Balance(s): -$127,263.60
Interest still sucks and the difference the January balance and the February balance is probably the second smallest it has ever been. That was not wholly unexpected because:
1) I get paid on the first of each month and only paid the minimums this month so that I could payoff December balances from holiday uncontrolled unbudgeted spending.
2) I still haven’t gotten a side hustle to step up debt repayment. I know I have been full of excuses but January was brutal…yesterday was my first day off in two weeks and the weekend I worked was a 6:00AM-11:00PM deal. While I didn’t get paid for it, I am hoping that labor is reflected in my bonus…
For the record, I WILL get a second job this month, even if it isn’t at the pay rate I would like, think I deserve, think I am worth. I really just need to be bringing in a lot more.
3) I had been reporting the wrong totals on two loans. The totals that I had previously been reporting for Private Student Loan 3 and 4 were the principal balances (with years of capitalization of course) but did not including the currently outstanding interest. While searching for my tax documents I found the page with the interest included and those are the totals I am now reporting which is why you saw an increase from last month’s balance to this month despite a $350+ payment.
4) With my loan to my friend paid off (YAY!), it decreases the amount of my payment each month that directly decreases the principal (shucks).
Happy New Year! I know, I still owe you an explanation as to where I have been and what I have been doing in terms of my debt repayment. One of my new strategies for combating procrastination is to break up a task into smaller chunks. So here is this small chunk.
January 2020 Student Loan Balance(s): -$127,688.14
December 2019 Student Loan Balance(s): -$128,724.12
This is a difference of$1035.98which is still less than the minimum payments as of December because interest still sucks but eh. It could be worse. It has been worse. Usually in these post I include my financial plans for the upcoming month but since I’m going to do that in my year end/upcoming year post, this will be it for now.
I know, I know. Where the hell have I been? Ugh…that’s another post. While I haven’t been posting, I have been making debt payments, albeit, not as aggressively as I had hoped, and somewhat more diligently keeping track of my debt. Find my student loan balances as of the first of each month, below:
September Student Loan Balance(s):-$131,848.28 October Student Loan Balances(s): -$130,927.01 November Student Loan Balance (s): -$129,739.26 December Student Loan Balance (s): -$128,724.12
I am going to post a proper balance update for January but wanted to do a brief recap of what repayment has looked like over the past few months.
Okay…I know this post is late but this Monday was a holiday in the U.S. and blah, blah, none of that really matters, I was just procrastinating putting this up because I am ashamed of my progress. 😔 But I decided to be a grown a** woman about it and post it it anyways. Ugh.
September Student Loan Balance(s):-$131,848.28
August Student Loan Balance(s):-$132,084.30
This is a difference of $236.02, which is significantly less than the minimum payments of $1,342.73 because interest still sucks AND…
1) More accrued interest – When I transition from University A to University B, I went from being paid biweekly to monthly. This meant, if I had a student loan payment due on August 1st, it would have been paid on July 15th under the old pay schedule. Under the old pay schedule, the next time I would have paid it would have been August 15th and approximately only 30 days would have passed. However, because I now get paid on the 1st of each month, I made the payment on July 15th which meant the payment due on August 1st was satisfied. However, I did not make a payment on August 15th as I no longer get paid biweekly but instead made a payment September 1st. This meant, 45 days have lapsed between the payment I made on July 15th and the payment I made on September 1st. While it doesn’t seem like this would be that significant, the 15 additional days of accrued interest over the amount of debt I have really adds up. Next months debt update will be more “normal.”
2) Balance transfer fee – If you read the post about my self-refinance, you’ll know that I incurred a $295.00 balance transfer fee when I transferred Private Student Loan 1 balance from the originating lender to two credit cards offering 0% from the next 12 months with a balance transfer fee of 3%. While I had lofty goals of paying off the fee by September 1st so that my balance on the loan didn’t rise, it was obviously a fail.
3) No side hustle – This was also a goal for August and I didn’t really make any progress. I would like to say that that I was still “transitioning” into my new role and trying to “understand” my new schedule a bit better but these would be lame excuses. I really just wasn’t as aggressive as I needed to be. I have also become hesitant to take low paying side gigs like I used to (ala $7.50/hour) because I feel like my time is worth more than that. And it is, I guess. But given the amount of debt I have, $7.50/hour is better than nothing so I need to get with it and either find something at a better hourly rate or suck it up because doing nothing is no longer an option.
Okay. That’s it. I’ve used up all my pride to make this post.