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%||-||-|
|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|
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!