I usually log into my student loan websites to check balances once per week. This is frequent enough for me to make sure payments are going through, but not quite enough to make me anxious from obsessing over the total.
My student loan balance now sits at $14,500. Looking at that number, I’m disappointed to admit I still feel daunted. How can I still owe so much after nearly a year of aggressive debt payments?
IT’S ABOUT HOW FAR YOU’VE COME, NOT HOW MUCH MORE YOU HAVE TO GO
Of the $6,700 I’ve paid toward my student debt so far, only about $1,000 was actually required minimum payments. This means I’ve paid $5,700 “extra” toward my loans.
This is no easy feat when you still have bills to pay and are intent on keeping international travel in your budget. I suddenly realized that even though I still have a long way to go, I’ve made a huge difference.
The fact that I budgeted enough to make such a huge dent in my debt and visit Europe for the second summer in a row shows some seriously solid financial planning. Maybe I haven’t shed my spendaholic identity entirely yet, but I’m obviously making progress.
THE BENEFITS OF PREPAYING YOUR DEBT ARE FELT EARLY
Putting extra money toward my student loans reduced the principal balance significantly, which both shortened my repayment plan and lowered the overall amount I’ll pay over the lifetime of the loans.
If I had stuck with the scheduled payment plan, chances are I would have made zero progress eliminating any debt. After all, over $800 of my payments went toward interest on the loans. If I hadn’t chosen to pay extra toward my debt, I would still owe over $20,000. Suddenly still being $14,500 in the hole doesn’t seem so bad!
Furthermore, I’m paying less than $50 a month in interest on the balances now—a huge decrease from the cost of over $70 a month to carry my debt at the beginning of my repayment term. Paying less interest has brought some relief to the feeling that my debt is growing at an alarming pace. I will still end up paying more than the figure I initially borrowed, but not too much more!
HOW I’M GOING TO ELIMINATE ANOTHER $4,000 IN 5 MONTHS
I’ve noticed the more I put toward my debt, the more I want to pay. It becomes easier to put extra money toward the balance because every time I do, my goal of becoming completely debt-free inches closer.
I’ve made some changes in my budget to allow for payments of $1,000 per month, which means I should have my federal student loan wiped out early in the New Year. If that number makes you cringe, you’re not the only one. When I think of all the nice-to-haves I would like buy with $1,000 a month, like an iPad or a shopping spree for a new Fall wardrobe, I’m tempted to deviate from my plan.
Instead, I just promise myself that I can have those things next year when I’m debt-free!