Whew, that’s a big number and NO that’s not how much money I have sitting in my savings account (I wish)…that’s actually how much money I owe in student loans! Let me be the first to tell you that I’ve had student loan debt since the early 90’s and it has gradually grown out of control. Dave Ramsey says that most people treat student loans like it’s a pet….we hang on to it forever and that is, without a doubt, what I’ve been doing.
To be honest, I didn’t borrow that much money to begin. What I mean is that I didn’t go to a private college or rack up unnecessary school debt while in college. I don’t think I owed anymore than $25k. My big mistake was not making debt reduction a priority in my life until now and it has, unfortunately grown into a monster….the interest ate me alive. Who thinks about paying down debt or better yet, bills when they are young and in their 20’s? You’re just happy to be out on your own. That’s the problem with America…I think that getting an education is important, but it should be free to all. Education is free in other parts of the world. You shouldn’t have to sell a heart or lung to get an education in this country. I cringe when I hear how much college cost these days and it’s steadily rising. People are coming out of college these days with over $100k of student loan debt….and that’s not even a private school. Who wants to start a life out being in so much debt? It’s like you’re down for the count before you’ve even started. You haven’t really had a chance to experience life and all the benefits life has to offer because you are now forced to become a part of the rat race, which means that you are more than likely forced to go to a job you hate. Most people hate their jobs, and what makes it even worse is if you racked up all this debt and you don’t even work in your field. You are now like over 75% of other Americans in this country. You’re normal….you’re in debt up to your ears….congratulations.
Well if being in debt up to my ears is considered normal…I don’t want to be normal anymore. I’ve had it with these student loans. I’m going to pay them off with gazelle intensity…..in 3.5 years (or earlier). ). My current monthly payment is $248.97 and my interest rate is fixed at 6.37% so basically my entire payment goes to interest at this point so if I’m ever going to get this loan paid off, I’ve got to throw a boat load of extra money at it, however, I want to be realistic. I wish that I could pay $2k/month extra on top of my normal payment of $250/month, but that’s just not going to happen. So after doing some doodling on the back of an envelope (just kidding, I used an excel spreadsheet) I came up with the following realistic plan to reach my goal:
Year (2013): I plan to get the balance down to $40k by the end of 2013, therefore I will have to make extra payments of at least $1k/month from August to December.
Year (2014): I plan to knock the principle down at least another $12k (approx $1k/month), so the balance should be around $28k at the end of 2014
Year (2015): There will be approximately $28k left. I plan to pay another $12k toward the balance, leaving a balance of $16k.
Year (2016): The last $16k will be paid by the end of 2016. I’ll throw every penny I have at it.
I know that I didn’t take into account the monthly payments of $250 because it mostly goes toward interest. So the little bit of principle that is paid from these payments will just be gravy on top of my extra payments toward the principle. I honestly hope to pay this off before 2016 by selling some things on Ebay, Craigslist, etc., or finding other ideal ways to earn some extra income. If you have some great ideas for how to make some extra cash, I’m open to suggestions. I want to get rid of this debt as soon as possible. You guys will be my accountability partners, so I’ll keep you abreast of my progress from time to time. After this debt is paid off, all that I will have left is the mortgage. By that time, I’ll really be on a roll toward being debt free!