Let’s All Throw Some Money at Our Problems: July Check-In
It’s that time of the month again! (I was going to make a lady joke here, but changed my mind.) Last month, we decided that each of us would publicly keep track of one debt, and that we’d check in every month to see how much we’ve paid off. Let’s get to it.
Logan decided she would start with her J. Crew Credit Card, which currently has an APR of 24.99 percent, so her $29 min. payment didn’t go very far.
June 2012 Balance: $567.20
July 2012 Balance: $550.12
Mike is starting with one of his Sallie Mae Private Student Loans, with a current interest rate of 4.5 percent.
June 2012 Balance: $1,635
July 2012 Balance: 1,559.61
Your turn! Give us an update in the comments section. Also, if you’ve paid off something in full, feel free to send Mike your mailing address. He’ll totally make and send you a nice note to congratulate you.
This month I updated my automatic payment on my car loan from $233.46 (the minimum payment) to an even $250. According to some loan calculator I found online, I’ll pay off my loan a whole 3 months sooner!
Mike, will you still write me a note in 2017?
@Dancercise Yes! Just remind me!
My car loan June balance: $6716.58
July balance: $6544.58
(payment is $172)
apparently i can’t change the monthly payment to a different amount, i can only write cheques for lump sums if I want to. since the car is financed with 0% APR i’ve decided to just keep on keeping on.
it will be a very unexciting monthly check-in.
@redheaded&crazy @redheaded&crazy My car payment is about the same, and whenever I mention to my parents (who are good money-minded types) that I want to pay it off early they tell me that it’s at less than 2 percent APR and it’s probably better to just put the money in savings instead (so I have it handy, rather than having a higher net worth of imaginary money). Which I guess is true, but much less satisfying!
I don’t have the student loan balance handy, but I normally pay $250 a month on it, and this month I went for an extra $50. On track to finish this debt in 2012! Oh, and the possibility of a nice note from Mike is a lovely little extra incentive!
What’s Mike’s minimum payment?
I’m gunning to pay off one of my two student loans in 2012. The other is massive and overwhelming so I’m starting with the smaller, even though it has a much lower interest rate. I just need it out of my life.
Original loan amount: $11,000, started paying in December 2006, minimum $128/mo payment and 2.4% interest rate.
June 2012 balance: $3255
July 2012: $2955
I’d have to pay like, $600 a month to finish it this year, but I’ll probably end up just paying $300-400 per month and getting fed up in November/December and paying the rest of the thing off out of savings.
@down the rabbit hole Isn’t this a weird thing? I also have the tendency to just need bills to get out of my life, even if it doesn’t make sense. When my student loans kicked in, I threw in almost all the money I had in a desperate attempt to make the numbers less terrifying. I know it makes more sense to pay them off steadily, but ugh, debts, go away! I’m not worried about ever being in super serious debt, because I will live in a tent before I let that happen.
I’m trying to pay off the credit card that I used in college to buy textbooks. The current balance is 1,462. I could write out a check to pay off the balance right now but I am part of a friend’s wedding in September and I want to see how much money I will need to cover that before I go emptying out my savings to pay a credit card off. I will be paying it off entirely in October. Yay!
I live off my credit cards for rewards points (but pay them in full every month), so I’m never sure how much actual debt I’ve paid down. I did acquire a $1,200 balance this month that I will be paying down in future, though.
UGH. My spouse and I are hunkering down and aggressively paying down our last student loan. Balance at beginning of June- $21,670. Current balance- $20,020. Looking forward to a letter in 2014!
I just paid off a credit card! $237.32 towards a Citibank card. Add that to a $244.88 student loan (2.77% interest), a $355.14 consolidated student loan (4.75%), and one final credit card ($118 so far this month, 10% interest) and I’m not eating till next week. I’m trying very hard to pay off both credit cards by the time I turn 30 next year. I will be paying the student loans forever.
@Jack Daniels Congrats on the payoff!
@backstagebethy Thanks!
I did all of my debts… because I’m obsessive and now have big tracking amortization spreadsheets on all of them.
Main card:
6/20 balance: $3,586.17
7/18 balance: $2,602.22 (I paid down $983.95 – I actually paid down a bit more but also charged some, and I hope to pay it off before the end of the year)
Home Projects Visa:
6/20 balance: $6,236.44
7/18 balance: $5,936.44 (I paid down $300, and am on track to pay it off in November 2013)
Car loan:
6/20 balance: $4,691.79
7/18 balance: $4,327.22 (I paid down $364.57, plus interest, and am on track to pay it off July 2013)
Mortgage:
6/20 balance: $109,748.16
7/18 balance: $109,495.72 (I paid down $252.44, and am on track to pay it off in April 2037, heh)
I said this in the comments of the last Let’s All Throw Some Money At Our Problems, but I’m going to say it here too because I’m still really excited about it: inspired by that post, I paid off my entire credit card (several thousand dollars). This has left my savings account looking a bit sad, but at least I’m not paying interest any more! And I can put the money that I was using to pay my CC bill towards my savings instead, so hopefully it won’t take too long to recover.
@KiwiTheBirdNotTheFruit If you send ME your mailing address I’ll write a comment on the billfold about how I meant to send you a letter congratulating you!
seriously though, that is amazing. must feel good! :D
@redheaded&crazy It feels SO good! It was such a random and spontaneous decision, and initially I was like AAAAH NOOOO WHAT HAVE I DONE, MY SAVINGS ARE ALL GONE, but looking at that CC balance now and knowing I can pay it all off–easily–at the end of the month is so exciting.
@KiwiTheBirdNotTheFruit That’s so great! I also paid off my credit card, but it was WAY less than that ($588, I think?)…Anyway, CONGRATULATIONS!!!
I am seriously, aggressively paying down the last of my student loans (two down, two [consolidated] to go). Mine is (are) also a Sallie Mae private loan(s), at 4.75% (each).
June balance: $11,900.81
July balance: $8,900.81
Because I’m not spending money on rent for my very own NYC apartment, I’m taking most of what I make each month (while living with a ton of roommates) and paying this off. I’m hoping to have it completely gone by the end of the year, and hopefully sooner.
I owe the IRS over a thousand dollars. I haven’t paid any of it! I had a lot of expenses related to a wedding (previously discussed in that one Weddings Are Super Expensive post) and I’ve gotten a little spendy lately what with having money to spend for the first time in ever. And now I’m trying to curb my spending so I can move. But I guess it would be nice to at least START paying my IRS debt. I hereby vow to send at least $50 a month to the IRS. It seems like somehow a lot and yet so little it will make no difference! But that’s not true. So here we go.
Why do people aggressively pay down super-low-interest student loans? I’ll never understand it. The CPI increase last year was like 3.2%, so assuming you have some positive personal discount rate — i.e. you value money now more than money 10 years from now — those loans are basically interest-free.
@stuffisthings I don’t know about anyone else, but my money makes way less in interest than my loans accrue, so I’d rather not spend more money on my loans than I have to. If I wait ten more years to pay off this chunk, I will have paid a substantial amount more in interest on them than I’ve earned on my savings, including my 401(k). Plus, it’s only these last two (for me) that are at a 4.75% interest rate. The others (in the amount of about 20K) were 7.4%, which sucked. Anyway, after six or so years, not making that monthly payment anymore will be a giant weight off my shoulders.
@stuffisthings You’ll be totally mystified by my paying down my interest-free-for-three-years credit card I used to finance my home improvements in February, then. For me it’s sort of a hoarding/emergency preparedness-related impulse: there’s a chance that lean times may be coming, and the lower my monthly bills are when that happens, the more flexible I can be. If I can eliminate this payment in the next year instead of in three years, then if an awesome opportunity comes along that will lower my income in the intervening time, I can take it without worrying about that bill.
@kellyography If you have any loans that are eligible for income-based repayment, paying even at the standard rate is basically giving away money to Sallie Mae (or whomever). Even if you think you’ll eventually make a lot more money, as I understand it the highest IBR can go is just the standard repayment plan, which is designed to pay off the loan in 10-12 years. So as long as you stay on IBR, you will still get some loan forgiveness at the end of 12 years.
Anyway, I’m not really talking about opportunity cost — discounting preferences for individuals are different than how you might calculate them for a business. For example, if your paycheck was $1,500, imagine your boss said on payday “OK kellyography, you can either have this $1,500 now, or I can pay you $1,650 in a year.” I imagine you probably wouldn’t take that deal, even though it’s a 10% nominal – 3% inflation = 7% real rate of return.
Or another way to look at it: imagine your lender said you could pay either in euros or in dollars, so, say, 120 euros or 120 dollars a month. Obviously you would choose dollars, because you can buy more stuff with a euro than with a dollar. Likewise, you can buy a lot more stuff with a 2012 dollar than with a 2015 or a 2020 dollar. So if your lender gives you the option to pay them with 2015 or 20202 dollars instead of 2012 dollars, why not take it?
@ThatJenn You’re right to view paying off low/no-interest loans as functionally equivalent to saving. However, if you have the discipline, a better approach is to put any “extra” money you might have used to pay down those loans into a separate savings account. Most likely the interest you earn will be pitiful and far lower than even a low-interest student loan, but if you decide that bill is going to be a hassle at any point in the future, you can just make a lump-sum payment (or dramatically increase your monthly payments), while still keeping the money available for emergencies. Once you pay it to the lender, though, you can’t un-pay.
@stuffisthings I split the difference – half my “extra” money goes into savings, half goes into paying off debts. Then I have some for emergencies, but even if I have an emergency that wipes out the savings, at least the amount left on my debt is lower.
I’m aware that in a perfect, self-disciplined world I would never have to dip into my savings for either emergencies or greedy desires, but it is not a perfect world, and I would like to plan for multiple possibilities, including the one where I somehow blow the contents of my savings account – which hasn’t happened yet but was a real danger when I was in the process of divorcing someone with access to my accounts.
Ultimately, I’d probably make/save a few bucks by saving instead of paying off low/no-interest debt (and it’s what my mother always suggests, too), but it lowers my anxiety to have lower debt, so I consider it like paying for happiness.
@stuffisthings Like so many things related to money, my anxiety around student loans is not entirely rational. I will feel FREER when they are gone, and that feeling is worth something to me, even if I can’t put a dollar amount on it. I also like getting ahead so I feel more in control of the payments in case there are months when I have an emergency or situation where I can’t.
@stuffisthings For us, it’s our highest interest debt. Also, it’s our only existing debt that we can’t run away from if shit hits the fan.
@stuffisthings I think IBR loan forgiveness comes after 25 years, not 12? Def correct me if I’m wrong because 12 would be amazing.
@sockhopbop Oh my bad, I may have been thinking of the Public Service Loan Forgiveness program (which thankfully I qualify for). I think there is legislation in the works to offer similar terms to everyone, though.
In any case, the advice still holds. Better to get some money forgiven than none (though you have to do the math yourself to see how it works out).
ETA: This site seems to have really good info on the subject: http://www.ibrinfo.org/
@stuffisthings Aah that makes sense! And actually as I started investigating after your comment, I learned that I qualify for Public Service too (heck yeah 501(c)(3)non-profits). I just ran down the hall to tell my office buddy, who also has student loans. We are both pumped.
@sockhopbop I’m a little confused about what “full” payments means though — it says graduated or extended repayment plans don’t count, but I’m not sure about IBR. I recall reading somewhere else that IBR payments do qualify, though, which makes sense as the standard repayment plan is 10 years, so if you made 120 full, standard payments the debt would be paid off anyway.
@stuffisthings Yeah, I’m actually on standard but am glad Public Service provides an extra safety net in case something goes haywire. But IBR does qualify according to this website:
http://www.ibrinfo.org/faq.vp.html#_How_does_Public
Debt Management Plan:
April 2009 balance $28,921.20
Negotiated interest rate on remaining balance 5.99%:
June 2012 balance $2,248.25
July 2012 balance $1,610.25
Mike, I should be getting a note in the next few months. I might shed tears of happiness while reading it.
Logan- Credit counseling – Debt management plan… it feels sooo goooood.
Right, I didn’t put anything in last month because I pay my student loans two months in advance every other month. This is what happens when you live abroad and Sallie Mae does NOTHING to help you pay from anywhere outside the US.
(I’m working on writing something about this because I want to know how other people deal with the insanity too. Mike Dang, I will email you about it!)
ANYWAY! My loans are split in three different groups. I pay at least a tiny bit over the minimum on all of them, and as much extra as I can at the one with the highest interest rate, which is 7.25%, arghhhhh (the others are at 6.8% with a balance of about $20,000 and 3.75% with a balance of about $16,000).
Before I paid a few days ago, the balance was $16,759.27. That’s a little less than one third of my total loan debt. I just threw $410 at it, which covers two months minimum payment of $140.77 plus a whopping extra $128.46! Gotta knock that principal back somehow. Balance is now $16,349.27.
Progress. Very slow progress.
I’m working on a CC with 6% interest–it’s my lowest balance AND my lowest interest rate, but it has to be paid off by October so I don’t accrue the 24 months of interest or whatever.
June 2012 balance: 1081.89
July 2012 balance: 588.86
I get paid tomorrow at my new rate (I got a 5% raise due to merit/a compensation study), and it looks like I’ll be getting an extra $50 or so each paycheck, which will definitely help pay this down faster. Ahhh I didn’t realize it was going to be that much. I’m super excited now.
@backstagebethy That’s awesome! Congrats on the raise and on paying down so much of your card balance.
I love this check in, feels great to know for sure that I am not alone in the spiral of debt and poverty. I have a credit card I’m paying off, it is my very last credit card to pay off after about 5 years of constant high interest debt:
June 2012 balance: 2977.35
July 2012 balance: 2000.00
It is 0% APR so I’ve saved it for last but it also has a good points system so I find myself using it more often than I should-trying to work on that. My goal is to have it paid off in two months paying about $1,000 a month. Can’t wait to start putting that $1,000 in savings.
I paid off a TON of student loans in June after a grant finally came through after two years of waiting, and I’m really texcited about it. I paid off one of my three remaining student loans in full; of the two remaining, one only has 2% interest, and the combined amount I’d need to pay it off is under 10k. HOLLA! This feeling is almost worth holding off on a vacation this year…
@charmcity Texcited? My excitement is the size of Texas?
Reading this blog forced me to take a long look at my credit card debt and get serious about paying it down. When I found out that the interest rates on 3 cards were all over 27%(!!!!), I started a rage fueled payoff plan. I went from a total of $8696 in March to $4589 as of yesterday. Almost cut in half!
@mm That’s awesome! Any tips?
@backstagebethy Thanks! I had been just ignoring my cc debt, making the minimum payments and not realizing what crazy interest rates I was paying. When I saw how high they were, the anger I felt (at the cc companies and at my own ignorance) gave me the self-control to do a lot less shopping and eating out.
i just graduated from graduate school with 32,000 in federal student loan debt. after never ever ever having any debt. i don’t even own a credit card (i know, i know, i’m going to get one sometime this year. it’s on my grownup adult checklist.) but! i got a job! and am consolidating all my money i’ve squirreled away in various banks! and when my second large-ish adult paycheck comes in 2 weeks, i will start paying down my debt. my goal is to have it gone in 4 years.
I’m flying high this week having finally gotten down to a $0.00 balance on both of my credit cards. I think the high point (low point) of that CC debt was about $15,000 a few years ago, and it was so stressful.
Oh, and I fixed my bike’s flat yesterday instead of taking it in to the bike shop which is clearly part of my feeling like a superhero.
Now my goal is to take the “extra” money each month that used to go to paying off my CCs and plug it into a Roth IRA and also accelerate my student loan repayments (getting a PhD was expensive).
@Rooster A way to go!
I owe $307.83 on my credit card. I want to get it down to zero, but when I do, I’m going to have to charge $500 for a new timing belt and some other car repairs. I’m not sure if I should wait until I pay the balance down or just charge the repairs and pay from that point??? I’d be paying less in interest if I do it that way right?
@Slutface As my mom once told me, if you pay off the CC you might charge it back up but you might not. But if you don’t pay it off you could fritter away that money elsewhere and still be in debt. Or something, but the point is I would pay it off because I am jealous because I had a card that was down to about $300 and now it’s back up to like $3000 less than a year later.
Guys, I’m not doing it this month because I went on an impromptu roadtrip to Milwaukee and Mistakes Were Made…
On the bright side, I found an apartment that is $350 cheaper than the place I was originally going to move into in August! Hopefully this will help reduce the amounts for next month…
Last month’s balance: $1,074.93
This month’s balance: $1,048.67
Interest rate: 19.99% (IT BURNS)
Sooo yeah, not a ton of progress there. I usually make a bit more than the minimum payment but I really need to start kicking that up a bit. When I get it to under $1,000 I will be really happy, for some reason.
Last month’s balance: $15,062.31
Current balance: $7,156.48
Interest rate of 19.99%. I cashed in some useless retirement savings through a scheme for people going back to school up here in Canada. My education will be paid for (I pay upfront, they will pay me back)… I have a low interest 3% loan I’m going to use as well for some funding… THEN I will be getting a second job in the Fall.
I want this debt gone. FAST.
I paid off my student loan! Worked my face off all year, negotiated being actually paid to do this, and sunk my cheques into that $33,000 debt. All gone! In typical Millenial fashion, I will likely celebrate by going back to school next time I am unemployed.