Revisit: Paying Off Debt

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I have been reworking our budget…..Big Daddy has not been working overtime and we’ve had some unexpected things come up.  This is all part of life and we allot for that, as best as we can.

Our goal, for the next year, is to get rid of my student loan.  We owe almost $20k at 6.8% and we pay $183/mth for the next almost 15 years.

Let’s just stop and soak that in………….

$20k

6.8%

$183/mth

FOR almost 15 YEARS.

We will pay more in interest then what I took out, initially.

Uhm, I don’t think so.

So, we take our $183 (mthly pymt).  We add in our $240 (paid off van amount). $300 (Raise and what the kids pay us for their phones/car insurance). What we will add in to that amount is Bart’s travel money (he gets that mthly), his OT and travel for that (he will work, at least, 1 weekend a month), any money we have leftover from our envelopes, and then our “xtra” money left at the end of the month.  That will put us paying in almost $1500 a month.

How crazy is that?

All that is just being SUPER strict and tight with what money we have and Bart working overtime.  I hate that he has to do that because he works so hard all the time and that is more time away from us, as a family, but we are so dedicated to being debt free, so we can do more things together as a family.

We were able to cut our landline out (thanks to him, accidentally, cutting the phone cord), so we are adding that to the above amount.  We have also cut out some “extra” stuff that we didn’t need anyway and an extra cellphone that is no longer in use.  All this “little bit” ends up being a big chunk to pay on this loan.

Here is a break down of keeping our payments the same versus making sacrifices, selling stuff, cutting down on things, and working overtime.

The remaining term of the loan is 14 years and 2 months. By paying extra $1,500.00 per month, the loan will be paid off in 1 year and 1 month. It is 13 years and 1 month earlier. This results in savings of $10,321.91 in interest payments.

If Pay Extra $1,500.00 per month
Remaining Term 1 year and 1 month
Total Payments $20,632.54
Total Interest $755.54
The Original Payoff Schedule
Remaining Term 14 years and 2 months
Total Payments $30,954.45
Total Interest $11,077.45

Keep on working towards your goal and you will see success.  God willing, once this is paid off, we will add this chunk (adjusted, of course and not taking into account emergencies), and add it to the next loan, which is our home equity loan.

 

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