by Ashley
Happy Monday! How about a little mid-month debt update, shall we?
I’ve listed things in order of our planned repayment schedule (according to my new plan of action):
| Place | Current Balance | APR | Minimum Due | June Payment Made | |
|---|---|---|---|---|---|
| Capital One CC | $0 | 17.9% | - | - | |
| Wells Fargo CC | $0 | 13.65% | - | - | |
| BoA CC | $0 | 7.24% | 35 | 1005 | |
| License Fees | $5543 | 2.7% | 55 | 85 | |
| Sallie Mae - Federal Student Loans | $4474 | 8.25% | 62 | 62 | |
| Sallie Mae - Dept of Ed | $5578 | 8.5% | 0 | 0 | |
| PenFed Car Loan | $22742 | 2.49% | 411 | 411 | |
| ACS Student Loans | $21388 | 7.24% | 25 | 25 | |
| Sallie Mae - Dept of Ed | $65236 | 7% | 0 | 0 | |
| Medical Bills | $8103 | 0% | 150 | 150 | |
| Totals | $133064 | 738 | 1738 |
I’ve been snowballing payments as I go and the snowball has reached a pretty good size!
$450 (from Capital One CC)
$350 (from WF CC)
$100 (from Mattress Firm account)
$60 (from refinancing the car, which now has a lower payment)
$35 (from Wells Fargo)
= Total “Snowball” payment of $995 (we’ll round up to $1,000/month)
The first debt I want to focus on is the license fees. We have been paying $55/month toward it, so our payments starting in July will be $1055. In addition to that, we’re still expecting to have “leftover” money at the end of June so hopefully we’ll be able to make additional snowflake payments in addition to putting some away for savings (an as-of-yet undetermined amount).
Per this conversation, we’re going to start stashing a little money aside, using leftover funds from the end of the month (as opposed to writing a line-item into the budget). At this point, I’m just going to store it in my Capital One 360 savings account. I want some time to do a little research into various options, but my intent is to open a Roth IRA at some point and begin planning for retirement. I want to gain a little better traction on our current debts right now, but I don’t want to put the Roth off too long either. So at some point retirement will, indeed, become a line item in our budget. Currently, we’ll just keep stashing a little here and there into our CapOne360 savings.
Also – and this is random – but on Sallie Mae’s website I decided to click on the “payment history” tab to see more info about my 8.25% APR student loan. I have always only looked at the overall number (total debt due), but when I clicked on payment history it tells you, broken down, how much of your monthly payments are going toward principle (principal?) versus interest. Can I say how disgusted I was to see that out of every $62 payment, approximately $32 went to principle….the other $30 toward interest?!? WTF? How is this even possible? I know they stack the interest up-front so I’m sure it all makes sense numbers-wise, but that feels like a 50% APR!? Disgusting. I cannot wait to target those two high interest student loan debts. Can you believe – when I’ve worked my way through them (and am down the list to the car in terms of the order of repayment), my monthly snowball payment for the car will be over $1500!?! The power of the snowball is real, my friends! Very, very real! Never did I ever think I’d be making regular monthly car payments of $1500!!! At that rate (along with an extra snowflake payment here and there), it really is reasonable to have it paid in full within a year from the time we start focusing on it for debt repayment (remember, that’s the goal….I plan to start focusing on the car debt in February 2015 and the goal is to have it paid in full by February 2016). Of course, my other loans come out of deferment in February so we’ll see what happens. If we can’t make all the minimum payments the funds for the minimum obligations will have to come from our snowball. : (
I don’t want to see that happen. I want these debts gone with a quickness! I know we still have an unfathomable amount of debt, overall, but it really feels like we’ve been making great progress. It’s very encouraging!
Hi, I’m Ashley! Arizonan on paper, Texan at heart. Lover of running, blogging, and all things cheeeeese. Freshly 40, married mother of two, working in academia. Trying to finally (finally!) pay off that ridiculous 6-digit student loan debt!
What a great job you are doing! Could you explain again why you want to pay off the car at its low interest rate before the higher interest rate student loans that are currently in deferment?
Mainly because the car is an actual asset and the student loans are not. If all went to hell, we could sell the car to make money; if we stopped making payments it would be repossessed (none of which is true with student loan debt). Additionally, it will take several years to have the student loans paid in full, whereas the car loan is a more manageable size that can be paid down sooner.
Wow, that’s some high interest on a student loan… never had that happen. I have seen that in other types of loan, where they charge the interest up front, and then the amount of interest drops off halfway (mortgage comes to mind), but never with student loan. That’s horrible, and I probably would work on getting that debt reduced first. But many congrats on getting such a large snowball! I remember when I first stacked my snowball… it was small ($150), and quickly grew to $400, then $620, all the way up to $810. Right now, it’s only $600 due to the added car loan, but it’s still a long way from what it was.
Excellent work Ashley!
No advice just wanted to suggest you add the Mattress Firm debt to your list of debts already paid! It sure is motivating seeing the progress since March!! Keep it up 🙂
PS Did you mean start the car payment by Feb 2015 and have it done by Feb 2016?
yes, thanks for pointing that out! I just changed it so it wouldn’t confuse others!
I feel the SAME WAY about student loan interest. It always seems absurdly high when you look at it on a monthly basis. I had to stop looking at it- it made me feel like I was fighting an ENDLESS battle.
Wow! So exciting to see the snowball at work 🙂 I’m really looking forward to October. I will have my furniture loan paid off in September and that will (mostly) all be going toward the next debt on the chopping block for October. Progress will feel much, much faster after the furniture loan is gone.
You may have already discussed this, but your payment on the ACS loan isn’t enough to cover the interest. Your approx. interest charge is $129/mo and your payment is $25. Is the interest suspended too, or is it just increasing your balance due?
Because then you are “borrowing” money from ACS at 7.24% to pay off loans higher up. You might want to add just enough to that payment sooner than later to stop that balance creeping up.
Similar thing could be said about the Sallie Mae – Dept of Ed. Are you accruing more debt while in deferment?
Good way to put it (“borrowing” from one to pay another). No, interest is not suspended while in deferment (which explains why, even though payments are being made, the balance keeps creeping up….bc the monthly payments aren’t enough to cover interest). So, you may be right that I should allocate a little more toward them – just so I’m at least covering the interest each month, in order to keep it from being compounded on top of the balance due. So many factors to consider! : /
i agree. You should bump up your minimums on your deferred loans to cover the monthly interest (and i’d even say add a $10 or $20 cushion so it so the balance goes down a little). you’d still have a nice snowball to work with
Great job Ashley! Love watching your numbers go down and your tenacity in tackling debt. So great to watch someone with a journey like mine who isn’t wallowing in misery!