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Reflections on Student Debt Payoff

June 15th, 2021 at 04:14 pm

I paid off my student loan! I should receive an official letter within 20 days, but the payment has already been deducted from my account and the balance on the web portal is listed as zero. Somebody posted asking how I paid this off, so some reflections on the process:

 

First, I have been very lucky. My parents helped me with undergrad tuition and I have worked part time jobs for other spending money since high school, so I never had any other debt prior to entering professional school. I always knew I would be paying for that myself with student loans and spent years saving up. Growing up, my parents worked very hard and drilled into me that having debt is NOT a normal part of life and paying non-mortgage interest is a waste of money, so it never occurred to me to take a car loan for example. When I bought my used car I had X amount of money to spend on it and that was my budget, period. I was going to get the best used car I could with that amount of money, but ONLY as much car as I could with that money, no matter what a junker that might be. I know it’s a privilege to be able to operate that way since some people have to take a loan to be able to get any transportation at all to get to work, but I do think it helped me that my parents made it clear that as far as possible, if you can’t afford something you change your lifestyle BEFORE you change your budget. I did not have to help support my family financially, which is obviously also a huge advantage.

I am also lucky that I have not run into any major health emergencies, major car accidents, etc during this process. Everyone has car repairs, etc that pop up from time to time, but I have been able to direct most of my financial effort to loan paydown. My family members have also not needed any major financial assistance during this time. I don’t have any expensive chronic medical problems right now.

 

After 4 years of school I spent another 5 years in paid training, where I made between $48K-almost $60K by the end with yearly raises and some opportunity for limited moonlighting in the last few years. I was living in a medium cost of living city. That is not a bad salary, but definitely not enough to pay the full payment and interest on 200K+ in debt, so I was on income-based repayment during that time and my balance was actually increasing after my monthly payments due to the interest rates. All of my loans were federal. After building my emergency savings back up for a year or two, I moved to a place with cheaper rent to free up more of my budget for repayment, joined this website, and got more focused on paying down my smallest higher-interest grad plus loan by squeezing some extra money out of my budget categories every month.

 

A few years ago I fully finished training and received a huge salary jump with my new job (more than doubled), which is when I really started making progress. I moved to a new area but was able to keep my core living expenses, such as rent, essentially the same. I increased my personal budget a little, such as buying nicer gifts and pasture-raised eggs and springing for a WSJ subscription, and upped my charitable giving a little, but my monthly personal spending is overall pretty similar, under 50K a year before debt repayment.  I drive the same used car (the blue book value is around $1300 now). Most of my furniture is from craigslist. I buy a lot of my clothing and household items used not just to save money, but because it seems better for the environment when there are so many perfectly good items already available without manufacturing more.  I don’t eat meat and mostly cook at home, which keeps the food budget low. Possibly because I spend so much time working and spent so many years as a cheap student, I never really developed any expensive hobbies- I am happy just cooking at home for a date or going hiking, going to a museum, etc. Books mostly come from the library. I don't take expensive vacations. Basically, this allowed me to take my entire salary increase and direct it right to my loans every month. My increased salary also helped me qualify to refinance my student loans to get a lower interest rate. I had a very good experience going through CommonBond, but there are a lot of similar refinancing companies out there.

 

At my new job I have also had opportunities to pick up extra shifts for overtime, etc which went to my loans. This is the first job I have ever had that offered any retirement matching, so I did start contributing enough to get the full match.

 

I am very grateful to have paid this off. It will give me a lot more flexibility career-wise not to have to worry about how to make a huge loan payment every month, although I like my current job and don’t have any plans to leave right now. There’s still a big psychological benefit in knowing you don’t HAVE to stay if things change in the future. I am planning on using some of the money that is freed up to increase charitable giving and retirement savings. It is also a relief to know that if I do get married in the future, I won’t have to have the “guess how many hundreds of thousands of dollars of debt I have” talk!

 

Finally, I will say that although there are some things I would do differently ( refinancing earlier, etc), I would take out these loans again in a minute if I went back in time.  Money isn't everything, and the experiences I have had because of my education and the ability to do a job I love for my entire life was totally worth the financial discipline of repayment. Realistically I would not have been able to do this career without taking out these loans for school. I know that is not true for everyone and many people regret their educational debt, but for me it was totally worth it. 

Loan update

May 30th, 2021 at 02:30 am

Current student loan balance:

Current balance: $12,867.40

Current interest: $32.77

Total: $12,900.17

 

I am looking seriously at potentially paying this off in the coming month. My usual payment is about $2300 and I already planned to pay another $5,000. Which would bring me down to under 5K. I am tempted to pay this off from savings. The market is really high now anyway to invest and it would be a big psychological milestone to finish paying off this debt!

 

Otherwise work has been pretty busy, which means less time for spendy projects/hobbies at least! Today I spent about $45 total for groceries at the farmer’s market and grocery store and saved 10 cents/gallon on gas with a grocery points reward card.

Getting closer!

April 10th, 2021 at 07:09 pm

After April payments were applied, my student loan balance is down to just under $20,300! (A previous post with exact numbers got eaten by the website and now the lender site is down for maintenence, but close enough!)

 

I am tempted to throw more money at it to get below the $20K mark, but have a big tax payment coming out of my account April 15, so may just be patient. I am not sure why my employer withholdings are so wrong when I request zero exemptions every year. 

 

I had been toying with the idea of buying a small place locally this summer or fall, since things seem to be going okay with the job and in this area rents are no cheaper than a mortgage. However, I have decided to just rent for another year when my lease comes up in July- the housing market has gone crazy and I am not willing to overpay. I'm not in a hurry. I suspect in another year when the world is fully reopened, a lot of people who freaked out and panic-bought houses with outdoor space during quarantine will realize they don't want to spend the time/money maintaining them when there are other entertainment options,  and I may be able to get a reasonable deal.

Pantry Challenge, Loan Update, Interest

March 4th, 2021 at 07:37 pm

The pantry challenge did make me use up some stuff that has been hanging around the cabinets a while! It wasn’t all successful- I ended up throwing out ¼ bag of dal that was contaminated and one of the old muffin mixes I made had gone bad somehow and was inedible, but better to find that out and clear out the space.  I did stock up pretty well the other day when it ended- I realized I like having plenty of staples so it is never urgent to grocery shop if work runs late, weather is bad, etc.

 

March payments posted to my debt.

Student loan update: 

Principal: 27,533.85

Interest: 0

Total due: 27,533.85

Interest rate: 3.21 %

Daily interest: 2.42

 

I am waiting to hear how much I might owe for taxes, but if my withholdings are closer to the mark this year and I don’t get a big tax bill I will probably throw some cash I am holding for that at this loan.

 

Some of you may remember I refinanced my federal loans last January to lower the interest rate from 6.8% to 3.21%. According to my tax documents this year I paid $2,532 in loan interest in 2020. This is a savings of $2832 compared to continuing to pay the old rate.

Debt update, taxes, and a surprise bargain

February 4th, 2021 at 08:33 am

My regular payment and extra payment posted to the student loan for February, and the current balance is $34,849.90.

Daily interest is down to $3.06/day. According to my tax documents, I paid $2,532.49 in interest for 2020. Ouch, but this would have been WAY more if I hadn't refinanced last January from federal loans at 6.8% to a private loan at 3.2%. At this time last year I was paying $11.59/day in interest. It is starting to feel like an end is actually in sight.

I have been doing some extra work that should be $500 before tax, but will be paid out quarterly (in a few months). 

Speaking of taxes, I suspect I will have to pay something, but am hoping it will be less than the $8K tax bill last year! I have been saving some extra cash for this year just in case, so if I don't owe a lot I may be able to move that over to debt. 

 

In other news, my laptop suddenly died, as in wouldn't turn on at all. I took it in and something in the charging mechanism broke, which they said would cost so much to fix it wouldn't be worth it. Being computerless was definitely not an option with multiple pressing work deadlines, so I went to Best Buy to look at laptops. I found a reasonable model that had what I am looking for there for $620, but they didn't have it in stock. Since I couldn't afford to lose a day of work time waiting for something to be shipped, I decided it was worth at least checking at another local store that carries a very small number of laptops and found the same model there on clearance for $420! It's not damaged, it was on clearance because they are making room for this year's newer model that is coming out. 

Debt update, 2021 goals

January 4th, 2021 at 03:32 pm

Student loan update 

Principal: 43,128.76

Interest: 0

Total due: 43,128.76

 

Interest rate: 3.21 %

Daily interest: 3.79

I have been thinking about my goals for this year, but it's hard to plan without knowing how things will go in the world. Keeping my current 2021 financial goals simple:

-Pay off student loans

- Start investing in non-retirement accounts (have been investing in 401K concurrently with debt paydown)

Debt update

November 6th, 2020 at 01:26 am

Student Loan update:

Principle: $58,638.33

Interest rate: 3.2%

Current interest balance: 0 (just cleared a payment)

Daily interest cost: $5.15

Loan update and some spending

September 25th, 2020 at 02:24 pm

It has been a while since my last debt update. Student loan balance is listed below- the next regular payment is $2,388 which is scheduled to automatically deduct on Oct 3. I will also be making an extra payment after getting paid at the end of the month, barring any emergencies, so hoping to see the total drop below $70K.

Current principal: 73,087.15
Current interest balance: 102.74
Current total balance: 73,189.89
Daily interest: 6.42
Interest rate: 3.2 %

I worked some mandatory overtime this week due to a coworker calling out sick. Was not thrilled at the time because I had plans, but at least the extra money will help with my goals!

Spending was way up this month up due to a relative with a (nonmedical) emergency, but that should be a one-time expense and I am lucky to be in a position to help. On the personal spending side, I am looking to make my apartment a little more winter-ready before the weather gets bad, especially because I don’t know what flu season is going to look like and we might all end up spending a lot of time at home if there is a surge. So far I impulse bought a basket to keep my remotes and phone charger in ($7 at Aldi) and ordered about $10 of supplies to do some minor repairs. I’d like to replace my bedding at some point- bought it in a rush after my prior comforter was ruined during my last move and have never found it very cozy, but I’m picky about this and willing to wait for something I love. I also bought a book that was highly recommended and not available through the library- $3 for a used copy + $3.99 shipping. At least one other person I know has already asked to read it after me, so feels worth it.

I was already planning to order the next kindle book in a series I’ve been reading when it comes out Oct 1. It is listed at $3.99 and I have $2 in digital credits from Amazon for choosing no-rush shipping. (I try to shop locally, but sometimes specialized items are only available online.)

Five Digits!

June 3rd, 2020 at 10:35 pm

My student loan dipped under $100K this month! Currently at $97,805.21. Daily accrued interest is at $8.59. I remember how far away that seemed when I started this blog. Will keep chipping away at it- especially with all the economic uncertainty looming, can't wait to get this paid down!

Still here, time flies!

May 13th, 2020 at 06:36 pm

Long time no update! Have been chipping away at debt, working, and mostly socializing by phone/zoom as we are still under a lockdown where I live. Looking back at my last entry, I can’t believe how quickly time has flown since this whole crazy thing started.

After various delays due to staff being out at home, finally received reimbursement for $1500 of work-related expenses from earlier in the year (mostly airfare for business travel, all pre-Covid). I applied this to my student loan, along with a check for some accrued overtime from the last quarter.

Current Loan snapshot:
Student loan balance (3.21%):
Principle: $104,993.91
Interest: 0
Total: $104,993.91
Daily interest: $9.23

The regular monthly payment of $2,388.76 that will autodebit on the 26th. Getting close to five digits! Will continue to throw any extra money in the budget at it, but I somehow owed quite a bit on federal taxes this year, so waiting for that check to clear my account this month. Still trying to figure out why the withholdings were too low, even though I didn’t claim any exceptions/dependents and money was withheld for taxes on every check, even for overtime.

Stay at home finances

April 1st, 2020 at 09:15 pm

The state is under a stay-at-home order, so apart from going to work (considered an essential industry) and infrequently to the grocery store, I’m at home. Have worked a couple extra shifts and there will probably be more overtime as people get sick/quarantined and need to be replaced.

Financially, I don’t spend a lot on going out anyway, but of course that is down to zero. I have been avoiding the cafeteria at work as part of social distancing (that’s one way to cut out unnecessary coffee spending!) Also cancelled a trip to see friends and would have otherwise spent money on date activities, but being in a long-distance relationship means no travel = no dates.

Areas I’m spending more:
Groceries! Picking up extra things to leave on the porch for my parents when I do shop to minimize how often they have to go out. Also bought a few extra things that I usually wouldn’t due to shortages of my usual products or to avoid making a second trip to another store to get something more cheaply.
Gifts: Sent some gifts or gift cards (ordered online) to friends and relatives who are furloughed right now or on fixed incomes
Donations: Pretty worried about the food banks and animal shelters, both due to not having their regular fundraising activities and the increased demand they will probably see in this tough economic situation.

Working on using up things in the pantry, to minimize food waste AND shopping trips. Today I focused on a big bag of dal that’s been languishing in the cupboard for a couple years. Made something similar to this recipe, but added half a cup of rice as well: https://myheartbeets.com/instant-pot-green-moong-dal/ The bag is still about 1/3 full, but it’s a start! It wasn’t amazing, but it was certainly edible and filling! May freeze part of it for later.

Anyone up for a use-up-the-pantry challenge?

Loan snapshot:
Student loan balance (3.21%):
Principle: $114, 229.67
Interest: $60.24
Total: $114,289.91
Daily interest: $10.04

Financial housekeeping

February 15th, 2020 at 08:27 pm

It’s about time to do review recurring monthly expenses. I try to do this at least once a year, to see if better deals are available and try to keep fixed monthly bills in check. Auto insurance is a great deal around here and should stay the same (I was mildly injured by another driver this year, which weirdly goes through your own auto insurance per our state laws, and Geico was very helpful. Great customer service. Can’t say the same for the medical billing people at the ortho clinic, but that’s another story). Renters insurance is bundled. Medical, dental, and vision insurance premiums are determined through work. I locked in a promotional $40/month rate for home internet for two years a few months ago. Disability insurance will go up a little because I’m adjusting my policy, but that’s worth it. Need to look into getting a better deal on my cellphone plan, but I’m nervous something will get messed up with my keeping my current number, which is essential. Honestly the headache of that has been putting me off. My regular monthly student loan payment went up by around $400/month when I refinanced, but when you factor in the lower interest rate and the fact the term switched from 10 to 5 years, this was a savings overall.

Other financial housekeeping goals for this year: Need to sit down and figure out/change how my 401K is allocated. They automatically put me in an age-based fund when I was hired, but the mix is probably too conservative (too many bonds) for me. I should also probably move some of my savings into the market to earn better interest, but I’m pretty conservative about having a liquid cash cushion for emergencies.

Recently sent some extra money that had gradually built up in other budget categories toward my student loan.

Consolidated student loans:
Total: 121,233.34
Daily interest cost: $10.65

$9.90/month

February 5th, 2020 at 12:17 am

Really loving this new "daily interest" display on the student loan website. I sent in the $550 cash back bonus as mentioned before, and also $3354 from extra shifts/side work in the last several months. The daily interest cost is now $11.26, for a saving of 33 cents per day/$9.90 a month. That's more than my Hulu subscription!

New consolidated loan

February 3rd, 2020 at 07:19 pm

As I mentioned in my last post, I refinanced my federal student loans with CommonBond. They disbursed the check to Great Lakes at the end of January, but I am still waiting for the payoff to go through on the website. The estimated payoff period for that is Feb 4-mid February because they physically mail a paper check and it can take some time to receive and process it. Meanwhile, my new private loan is officially active, so I’m updating my loan chart:

Consolidated Student Loan:
Principle: $131,916.00 Interest: $46.36 Total balance: $131,962.36

As part of the refinancing deal I got a $550 signup bonus, which I’m submitting as my first extra payment. This company clearly focuses on a certain type of borrower, because my daily interest cost for the loan is listed right there next to the balance on my account statement. ($11.59/day, ouch). Looking forward to watching this go down!

Refinancing

January 20th, 2020 at 04:09 pm

I finally pulled the trigger on refinancing my government student loans. My application was approved and the scheduled date for everything to go through is in late January. My current servicer, Great Lakes, takes forever to process payments, so I don’t expect the process to be finished until early Feb. I have one final payment to Great Lakes in process right now for $1,944 (usual monthly amount), then in February I will start paying the new company. This will lower my interest rate from 6.55% to 3.2% fixed, which will obviously be a big help. The new loan is on a 5 year repayment term. There are no penalties for making extra payments to the new servicer, so I plan to continue to pay it down aggressively. I should really have done this sooner, but I was hesitant to lose the option of going to IBR if something happened like a job loss, etc when my total balance was more like $250,000.

I got soft quotes from several of the major companies before ultimately choosing CommonBond. The fixed interest rate quotes I received were all the same, but CommonBond’s customer support really impressed me, they had the best “what if you run into unexpected life emergencies” policies, and they had the best referral bonus, which is sent out 3 weeks after your loan is disbursed and you make your first payment to them. That said, friends have used Laurel Road and Sofi and also been happy with them. Amazing how customer service improves when you are the actual customer, rather than the Dept of Education being the customer and you being the annoyance they have to deal with to keep that sweet government contract money...

Loan snapshot

January 11th, 2020 at 07:19 am

Loan snapshot:
Private loan: $19,612.46 principal and $454.07 interest – PAID OFF
Grad plus loan: $9,546 principal – PAID OFF
Stafford loan #1: $8,500 principal – PAID OFF
Stafford loan #2: $8,500 principal- PAID OFF
Stafford loan #3: $8,500 principal and $1,399.20 interest: Balance: PAID OFF
Stafford loan #4: $43, 595.23 principal and $10,794.81 interest: -PAID OFF
Stafford loan #5: $23,547.17 principal and $37.91 interest: Balance $23,585.08
Stafford loan #6: $46,004.29 principal and $5,620.83 interest: Balance $51,625.12
Stafford loan #7: $50,244.56 principal and $6,139.08 interest: Balance $57,309.54
Total remaining balance: $131,593.78 Remaining principal $119,796.02 Interest: $11,797.76

Loan snapshot

December 2nd, 2019 at 05:08 am

It's been a little while since I posted a student loan update. Still here working on them.

Loan snapshot:
Private loan: $19,612.46 principal and $454.07 interest – PAID OFF
Grad plus loan: $9,546 principal – PAID OFF
Stafford loan #1: $8,500 principal – PAID OFF
Stafford loan #2: $8,500 principal- PAID OFF
Stafford loan #3: $8,500 principal and $1,399.20 interest: Balance: PAID OFF
Stafford loan #4: $43, 595.23 principal and $10,794.81 interest: -PAID OFF
Stafford loan #5: $32,231.64 principal and $75.19 interest: Balance $32,306.83
Stafford loan #6: $44,013.66 principal and $8,459.32 interest: Balance $52,472.98
Stafford loan #7: $48,070.76 principal and $9,238.78 interest: Balance $57,309.54
Total remaining balance: $142,089.35 Remaining principal $124,316.06 Interest: $17,773.29

Debt Progress Update

October 6th, 2019 at 02:30 pm

Several interval progress posts were lost, so this will seem like a big jump, but I wanted to post an update. Over those months I’ve thrown overtime and a bonus at my loans in addition to my usual budgeted payments. For some of the paid off federal loans only principle is listed because it's hard to tell the total interest paid from the website.

Loan snapshot:
Private loan: $19,612.46 principal and $454.07 interest – PAID OFF
Grad plus loan: $9,546 principal – PAID OFF
Stafford loan #1: $8,500 principal – PAID OFF
Stafford loan #2: $8,500 principal- PAID OFF
Stafford loan #3: $8,500 principal and $1,399.20 interest: Balance: PAID OFF
Stafford loan #4: $43, 595.23 principal and $10,794.81 interest: -PAID OFF
Stafford loan #5: $43,952.80 principal and $8929.01 interest: Balance $52,881.81
Stafford loan #6: $44,013.66 principal and $8941.62 interest: Balance $52,955.28
Stafford loan #7: $48,070.76 principal and $9,765.45 interest: Balance $57,836.21
Total remaining balance: $163,673.30 Remaining principal $136,037.22 Interest: $27,636.08