Success is a marathon, not a sprint. Sound familiar? This is the wisdom that I echo to myself
Under my standard repayment plan to pay off $170,000 of student loan debt (I still cringe every time I say this out loud), I’d make a minimum payment of $2,000 for 120 months (10 years). 120 payments of $2,000!!! Shoot me now! That’s a total payoff balance of $240,000 on a principal balance of $158,000. You can check out the original loan history in the post below.
Following the principals of the ‘debt snowball method’ – make minimum payments on all your debts and apply extra to the smallest balance, I made the obligatory minimum payments on loan groups B, D, F, G, H, I as outlined below. This represents the minimum payment of $2002. I then took the excess income I allocated for this payment and applied it as a principal only payment to loan group B. That principal only payment represented a balance reduction to loan group B of approximately $1131.04.
What’s interesting is when we look at the principal to interest allocation across all loan groups for this payment. This is where the brutal reality of my poor financial decisions really start to sink in. I can see that despite loan group B’s payment being ~96% principal, on average the interest payment on all loan groups was 26% and for Group I, it was as high as 50%! This means that for every dollar I pay towards that loan group, 50 cents goes to interest and not
The reason behind this madness is because, across all my loan groups, I pay approximately $27 per day in interest, That’s over $800 a month in interest payments alone. Want to know why your student loan balance never goes down? Want to know why you’re
Before I project into the next set of payments, I like to take a moment and appreciate the payments which I’ve made
If we look at how this $3,133 payment actually impacted my student loan pay off balance, we can see that loan group B (the group with the smallest principal balance) has been reduced by over $1,200 as a result of my additional principal only payment, with a total payoff balance of $14,274.21! On the opposite end of the spectrum, I can see loan group G hovering at a consistent balance of around $38,000. I am truly losing sleep over this loan group, and honestly, I’m filled with massive regret and incredible motivation to pay off my entire loan balance of $158,000 by the end of March 2020!
With over $158,000 still ahead of me, is there a silver lining with this payment? I’m a glass half full kind of