The student loan repayment grind

Ever feel like you’re just slogging it out in a cesspool of crap with no end in sight? It’s how I feel right now. With the allure of the ‘new year new me’ new-year resolution goals completely in my rear view window, i’m left with a sobering reminder of my poor financial decision: $160,000 of student loan debt.

For the educated and broke fans following the journey, i’ve managed to knock ~$10,000 off of the original loan balance of $170,000 since I started my debt pay off plan in July 2018. The crazy part is that in order to drive my principal balance down by $10,000, i’ve had to make approximately $18,000 worth of payments, check out the table below for my payment history.

The reason for this insanity is interest. The interest on my student loan balance is approximately $27 a day or $800 a month. When I make a $2,000 student loan payment, approximately $800 of that will go to interest before any principal reduction takes place. Do you know how much interest your student loans accrue per day, per week or month? Do you know how to calculate your student loan interest? Read my article “Your student loan interest is keeping you broke and here’s why” to learn how to run the numbers for yourself , because you will be shocked. Interest is the single largest reason why your student loan payments do not see any principal reduction.

What’s my goal?

So i’ve made 9 payments towards my massive $170,000 student loan debt. But what’s the end goal? When am I going to see the light at the end of the tunnel? Based on my projected earning potential in 2019 and 2010 i’ve estimated that i’ll be able to pay off $170,000 of student loan debt by March or April 2010. Check out my table below. Columns 1 through 7 represent my projected payment amounts and corresponding balance, while columns 8 through 10 represent the actual payment amount and balance. My projected loan balance as of March 2019 is $159,619.28 and my actual balance is $160,722.20. This means I’m tracking within 1 percent of my goal. So far so good!

I work in a sales role which has quarterly bonus payouts. This explains the projected April/June/September/December/February additional payments. On bonus months I’ll make a projected $19,750 payment towards my debt and on non-bonus months I’ll make a minimum monthly payment of $9,000. In order to make this work in my budget, I’m actually going to live on beans and rice. I’ve outlined a detailed explanation of my monthly zero-based budget in the article below, where I take home around $16,000-$17,000 per month.

When I say out loud “I am going to make a $20,000 student loan payment”, it honestly makes me cringe at my total lack of financial responsibility I had for myself. For example, this month (March 2019) I made two payments for a total of $2,002. When I peel back the onion and look at the principal to interest allocation, I see a disappointing reality. Over 40% of the payment, or $825.76, was applied to interest and only $1,110.84 was actually applied to principal reduction.

As I write this I honestly feel a little bummed out. On one hand i’m super happy that I have the opportunity and income potential to pay off $170,000 in under 2 years but on the other hand, I completely regret the decision to take on this much debt in the pursuit of education. I do think the pursuit of education is valuable, and generally speaking, an educated society is better for mankind. But the lack of guard rails around student loans and ease of access are a complete disaster and not beneficial to Americans or the world at large.

Unfortunately, there’s no turning back the hands of time. In addition to throwing all of my money at my student loan debt. I’m picking up a second sales-job which I can work after hours to accelerate my pay off plan. If I can net approximately an additional $40,000 over the next 8 months, I’ll be able to pay off $170,000 by the end of this year. Stay tuned!

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