Watch $4,000 disappear into a waste land of debt

Since we’ve last met, i’ve had the opportunity of paying an additional $4,004 towards my student loan — currently with a total balance of $166,519.39 At an average interest rate of 6.06%, my average daily interest is $27/daily or $830/month, yikes! For new readers, the original loan amount for my undergrad (Computer Science) + Masters (MBA) is $167,543.73, with an outstanding principal of $155,953.26.

October 2018 total payoff balance

The 3 metrics I focus on are:

1. Original Loan Amount = $167,543.73;
2. Outstanding Principal = $155,953.26;
3. Current Payoff Balance = $166,519.30;

The difference between #2 and #3 is interest. The $27/daily is capitalized (added to principal) and becomes the total new payoff amount. And in turn, interest is computed on the new amount (principal + interest)!

Let’s jump into the payments:

Imagine what I could have bought with $4,000 in cash.

  • A 2008 Nissan Versa
  • A 2010 Yamaha FZ6r
  • How about a Dixie BevMax 4 DN-5800 vending machine!?
Talk about residual income!!

Sadly, the $4,004 actually represents 2 payments of $2,002 for the month of September 2018 and October 2018, seen below. With my student loans currently in a six month grace period, my payments do not actually start until January 2019. While I understand that interest accrues on all loans, my philosophy is: pay each individual student loan off, smallest to largest, using the debt snowball method.

You can see from my last post, i’ve ranked each loan group smallest to largest, allocating my September 2018 $2,002 payment to pay:

1. Group C (outstanding balance of $324.75) — Paid off!
2. Group E (outstanding balance $2,301.05) - Paid $1,677.25.

With Group C balance at $0, my October 2018 was allocated to pay Group E (my 2nd lowest student loan debt) and Group A (my third lowest student loan debt)

1. Complete pay off of Group E,$845.12 paid off in full!
2. Pay $1,156.88 to Group A, remaining amount $1,159.88.

With Group C and E paid off, this leaves 7 student loan groups with an aggregate total of $166,519.39 due.

What now?

I anticipate on being debt free by March 2020 — check out my payoff plan below and follow me on this crazy f*cking debt free journey!

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