My last post stirred the pot a bit! That was not my intention, but I am so grateful to the BAD community for your support and comments alllll throughout my many years of being in debt.
Today, I want to talk about my current debt status and I’d love to crowd-source comments/input about what my plans should look like moving forward. But let’s start with my current debts.
Sept 2023 Debt Update
|Debt||Amount||Original Balance||APR||Minimum Payment||Sept Payment|
|Carmax||$4521||$20,539 (10/2021)||3.45%||$374||$374 (+ Extra $871 planned)|
|Mohela||$26561||$96,020 (2014)||0%||$0||$0 ($250 saved)|
I’ve got a fire under my butt to get this paid off ASAP! October is my target deadline and I’m still fully planning to do that. I’ve made this month’s normal payment and plan to put another $871 toward the car this month. That will bring the amount owed to about $3651 (give or take a few bucks in interest). Next month I already have a car payment planned of $925. That brings the total owed to approximately $2726. And I have $3,000 in a CapitalOne360 savings account that is earmarked for “car repairs.” I plan to raid that fund to pay off the remaining balance in full.
After raiding my “car repair” savings account, I can slowly start to rebuild it a little bit each month. I like to have some money stashed away strictly for repairs so I don’t have to shoulder it out of my normal budget if something big comes up. Knock on wood – I haven’t had any major repairs since I bought this vehicle in October 2021. But with my previous vehicle, I was very grateful to have the repair fund since I had a series of unexpected repairs in the $2,000ish range during the last couple of years I owned the vehicle.
That brings us to my student loan debt. Here’s where I’ve got to be honest. I have very little motivation to pay this thing off. Like, almost none. I was accepted into the Publish Service Loan Forgiveness program earlier this year. I will be eligible for loan forgiveness in 2026. Three years. I’m leaning toward just riding it out until then, making minimum payments (which resume next month), and calling it a day.
Including all the interest I’ve paid, I’ve more than paid back my original student loan debt. I’ve also written before about how I used to be laser-focused on paying back my student loans and why that has since changed. I know I could pay the loans off before they are forgiven. It took 2 years to pay off $20,000 for my car. I can totally pay $26,000 in 3 years to eliminate my student loans. But why? For what?
Instead, I’m more inclined to save some money in a high-yield account that I can use to pay the tax burden when my loans are forgiven (forgiven loans are considered taxable income, so if $26,000 is forgiven, I will need to pay what we would owe in taxes on $26,000).
But what do you think? What’s the “right” move? I say “right” in quotations since there is no single right or wrong answer. I used to feel it was my moral, ethical obligation to pay back my student loans in full. At this point…..I just don’t (read here why). In my opinion, I’ve more than paid back my debt. And then some. But what would you do, if you were in my situation?
I’d certainly like to be debt-free sooner than 2026. But I think it would likely take right about 3 years to pay off that amount of money anyway. Why scrimp and save and everything just to pay off the loans by the exact time they’d be forgiven anyway? Wouldn’t that money be better spent in a high-yield savings account? Then I could take the savings and pay our taxes (when the loans are forgiven) and maybe put any remaining balance toward our mortgage? Or heck, take a vacation? Maybe do that debt-free scream in Nashville like I’ve always wanted? 😉
I realize this is likely a taboo topic for a “get out of debt” blog. At this point, I’m okay with that. If I need to step away from blogging because my focus shifts (after paying off my car), then I’m okay with that too. I’d love your honest input here.
I welcome your thoughts, opinions, personal stories, etc.
Thanks, again, for always being so supportive! The BAD community is the best!
Hi, I’m Ashley! Arizonan on paper, Texan at heart. Lover of running, blogging, and all things cheeeeese. Late 30’s, married mother of two, working as a professor at a major university in the southwest. Trying to finally (finally!) pay off that ridiculous 6-digit student loan debt!