August Debt Payoff Report
August was a great month because I paid off another Student Loan Group. Yes! Student Loan Group D bit the dust. When this loan was disbursed to me in college, it had a balance of $4,934.00 but due to interest that accrued while I was on the Income Based Repayment plan (that didn’t cover all the interest) an additional $1,151.24 was added or as the student loan people like to say, “capitalized”. So a balance of $4,934 became $6,085.24
Income Based Repayment Plan: This is where your monthly payments will be either 10 or 15 percent of your discretionary income (depending on when you received your first loans), but never more than you would have paid under the 10-year Standard Repayment Plan.
Capitalization: This occurs when the lender adds the interest to the principal balance of the loan. Then the capitalized interest becomes principal.
When I started targeting this loan in May of 2018, the balance was $5,901.05 ultimately it took about 3 months to pay if off.
Drum Roll Please
My payoff for the month of August wasn’t as large as other months but progress is still progress. I paid off an additional $425.00 this month which paid off Loan Group D and started the payoff process of Loan Group H which is starting with a balance of $5,889.34. The goal for paying off Loan Group D is December 31, 2018.
Just Say No
As with all months, there were somethings that I had to say no to but it was completely fine and life still went on. I don’t believe that you can yes to everything, everyone, every event and still achieve your financial goals. Therefore, the following things received a no from me:
- Recommended car repair of $700.00
- Taco Crawl event – $100 because of event cost and cost of babysitter
- On the Run Tour with Beyonce’ and Jay-Z – $100-$200
Currently I only have student loans and a mortgage – 5 student loans to be exact and at one point I had 10. The snowball method is the current strategy for paying off my student loans. I pay the minimum required payment on my student loans via monthly auto debit and then throw all remaining money on the student loan with the lowest balance. This plan will continue until I get down to the last two loan groups. When I get to the last two loans and will have one loan with a 2.125% percentage rate and one with a 6.3% percentage rate. I will pay off the 6.3% interest rate loan first and then the 2.125% interest rate loan, even though the balance will be lower on the 2.125% loan. Therefore, the last two loans will be paid off using the avalanche method. The avalanche method is where you pay off the debt with the highest interest rate first. This will save me some money on interest.
How do I pay on a specific loan group?
When making monthly payments on my student loans, I pay the extra money by group and my servicer is Nelnet. Nelnet provides an option to pay by group. Of course, any accrued interest would be paid first and the remainder will go toward the loan’s principal. Sometimes I make large payments, usually around payday and other times I make small random snowflake payments. August payments looked like a month of snowflakes:
9th 200.22 – This paid off Loan Group D
28th $242.58 (Standard monthly payment – not included in payoff total)
2018 Numbers and Progress YTD:
January – $2450.00 – Last Credit Card Payoff!
February – $900 .00– Paid off Student Loan Group G. YAY!
March -$126.00 – Cash flowed a beach house rental for April, purchased spring/summer items and cash flowed some other expenses that came up. Honestly, just did a lot of spending this month.
April -$899.00- I planned to pay $1000 but I didn’t fully submit the payment so it was added to May’s payoff amount.
May – $2000.00 – This payment put me under the $50,000 mark! It was great to see $49K….
June – $1175.12 – I set a goal to pay off $1350.00 and honestly, I am a little disappointed that I did not meet that goal. Even though, I was only off by $174.88, I was still off! But now I am super focused to meet my goal for July – which will include the payoff of a loan group so there will be strict budgeting for July and saying, “No” to more events and non-essential shopping. However, I am a real believer of making short-term sacrifices now for long term successes in the future.
July – $1200 – I set a goal to pay off $1447.83 – Which would have paid off Group D and it was a stretch but I wanted to try. Group D will definitely get paid off in August.
August – $425.00 – Group D paid off and started on Group H and my total balance is under $47,000.
The numbers reflected show payments made above the minimum payment required. The payoff amounts show actual debt reduction.
Sugar and Money for the Month of July
Sugar for the Month- Moments with my family and friends to include a family beach trip to Isle of Palms, brunch boat ride with friends and rewarding myself with the 2019 Erin Condren Deluxe Planner!
Money for the Month – Paid off $425
Now Let’s Imagine… What could I have done with $425 if it didn’t go toward debt…
Sugar – We would have went to see the On the Run Tour in Atlanta, GA and made a weekend trip out of it.
Money – Continue funding the imaginary Roth IRA that I would have opened in May. I could add $425 to it and I would only be $700 away from the 2018 contribution limit of $5500.00.
For the month of August, I paid off $425 from my student loans and I know the number could have been higher. However, every month won’t be a high payoff month in the sugar and money household because some months there will be more sweet living than paying off debt. I’m currently targeting Group H which now has a balance of $5,783.64. My current total balance on my student loans is now $46,771.17 – Under $47,000! I remember when my balance was $61,000.
A Question for you and Thanks…
Do you have any Student Loan Debt? If so, how much and do you have a plan in place to pay it off? Do you even plan to pay it off? Are you on a repayment plan?
Thank you so much for reading and all of your support!
Recommended books to get you started paying off debt and taking charge of your personal finances:
My blog on creating a budget and setting a monthly goal: