Month 5: -$120,819.
You guys!!! We are down to $120,000! We skipped $121k entirely! Wahoo! I think part of this is because I wrote last month’s report late, so there are 8 days of interest that aren’t reflected here, but I’m still stoked.
Last month I told you I was looking into ways to simplify this report. I hope that this new format will be easier for you to follow along with and will save people who have read prior reports from scrolling through repetitive information. Thankfully, some awesome friends helped give me feedback on how to make it easier from a reader’s perspective, and another friend is creating a new excel spreadsheet for me that will make the charts even better. Yay! If you want more detailed information, check out last month’s payoff report.
Remember, calling this “Month 5” is a misnomer. This is year 5 & Month 5 of payoff. And guess what? For the first 5 years of my student loan payoff I paid NONE of the principal balance on the Subsidized and Unsubsidized student loans, which makes up almost all of that balance. The remainder is my private bar exam loan.
The great news is that now that I’m credit card and car debt free, I can take this debt by the horns and show it who’s boss!
Extra Income This Month
Amazon Affiliate: $14.24
SiteGround Affiliate: $100.00
Sponsored Posts: $00.00 – I was too busy at my lawyer job to write any sponsored posts last month, but there are some coming up next month.
Side Hustles: None. The season for my normal work in this area is over, and I actually took the Winter off from Bar Exam grading. I’m hoping that I can come back up for air, catch up personally and at work, and go back to grading this summer.
Expected/Unexpected Reimbursements: Christmas Bonus
Where My Payments Went
In previous posts I put in parentheses when something was a snowball payment. One of my friends who is also a lawyer, pointed out that people may not know what “snowball” means. That did not even occur to me because I have been using the snowball method for two years now. I am changing the designations from snowball payments to where they came from in my budget so that it’s more clear.
Bar Exam Loan: $800 (Christmas Bonus) + $400 (Paycheck #2) + $430 (Paycheck #1) = $1,630
Unsubsidized Loan: $236.00 (minimum) = $236
Subsidized Loan: $604.58 (minimum) = $604.58
Extra Blogging Expenses: $0
Discover Card at 0% Interest from Bathroom Remodel: $100
Christmas Presents: WAYYYY too much money. This was my first Christmas without credit cards and I went kind of crazy, but it was totally worth it.
Car Registration: $151.00 – I love living in Washington. It’s so much cheaper than Nevada to register my car!
Total Payments: $2,721.58
Current Law School Student Loans Balances
I’ve created some new charts to track the progress here. My friend Brandon is creating a new one for me, but for now, I’m excited about these bar graphs
The interest rates on these loans are what make my payments look almost meaningless on the subsidized and unsubsidized loans.
Bar Exam Student Loan: 7.75% Interest +.25%
Subsidized Student Loan: 7.125% Interest, Accruing $5.71 Per Day
Unsubsidized Student Loan: 7.125% Interest, Accruing $14.63 Per Day
I received an e-mail from Wells Fargo last month claiming that my Bar Exam Loan is a variable interest rate loan. One thing I’ve heard from my family my entire life is to never get a variable interest rate loan. I do not believe I would have intentionally done that, so I’m furious. I asked to see a copy of my original loan documents that show I agreed to a variable interest rate. There’s a 10 day wait to get those. I’m also looking into whether it would save me money to transfer the balance to my Discover Card with 0% interest, refinancing it, or just throwing every single extra penny to it. Just when I think I’m getting less angry about my student loans, something like that happens.
What is a Bar Exam Loan?
The bar exam loan was to pay for the cost of BarBri, the only bar exam preparation course in Nevada in 2010 (roughly $4,000), the video iPod I had to buy to take my classes remotely because I took a clerkship in the middle of nowhere and back then there wasn’t reliable online streaming (roughly $200 I think?), the cost of applying for the bar exam (roughly $1,000), the cost of moving to a different state in the middle of nowhere (roughly $1,000), my apartment deposit and first month’s rent (roughly $1,200), oh and my two best law school friends got married during bar prep/the week after the bar exam and I flew to both their weddings/stayed in hotels/etc (roughly $800 – totally worth it), and then the cost of living for 2.5 months while I studied for the exam.
I worked part time while I took the bar exam. I don’t recommend this, but remember, the economy sucked and I had to take the job I was offered. That job required me to start three days after graduation. At the end of the exam period, I had a little bit of money left over, and I used it to pay a super high interest rate credit card I’d gotten to buy furniture in my 1L year. Thankfully, I have made some progress on this loan and it’s at a decent balance now to feel like I can conquer it!
I took most of my Christmas bonus and put it toward the bar exam loan almost immediately. I knew if I didn’t do that, I would spend it on something else. I can’t believe what a difference it made! Seeing that huge drop is super inspiring to me. Taking extra income and throwing it toward debt has become a super exciting habit for me now. I don’t miss the money because I didn’t budget for it anyway, and now for the first time the stacked column looks like it’s actually moving! yay!
My Debt Repayment Goals
1) Pay off my car.
3) Pay off the Bar Exam Student Loan.
I’m sticking with the snowball method, to pay off my loans.
4) Re-evaluate my savings and retirement plan.
I already had a phone call with my financial planner about my plans and will have a more in depth conversation with her once I send over some information she needs from me.
5) Tackle the accrued interest from my income based repayment plan.
Because I have been on an income based repayment plan, without making a ton of income, my monthly payments did not cover all of the interest on my student loans. I cannot make principal payments on the loans until I pay the accrued interest. The balance of the accrued interest is incorporated in the balances you see above.
6) Attack those Federal Student Loans!!
I’m coming for you, law school student loans!
I’ve written a few posts about finances and being a lawyer already. Here are the links if you’re interested:
- September 2016: Progress Report #1
- What is the Snowball Method?
- How I Paid Off $11,000 in Credit Card Debt
- 4 Changes I Made to No Longer Hate Being a Lawyer
- The Hosting Service I Use for Blogging – which allows me to earn extra money by blogging
- Why I Bought A House When my Boyfriend Already Owns One
- Why I Have a Roommate at 30 Years Old – published on The Huffington Post
- How to Start a Prayer Binder in 3 Easy Steps – if faith is impacting your financial journey
- In October, I also found a great website that answers a lot of good questions at Clear Point. I would highly recommend reading the post and the comments if you’re dealing with student loans.