Month 9: -$115,448.73
This number may look higher than you expect, and that’s because it’s falsely inflated right now.
If you want more detailed information, check out November’s payoff report. Remember, calling this “Month 9” is a misnomer. This is year 5 & Month 9 of payoff. Last month I paid off my bar exam loan, leaving only the big federal loans to conquer! I was facing $10,000 of accrued interest that I would have to pay off before I started paying the principal balance (which accrued interest at 7.125% AFTER interest rate discounts), until this month when I refinanced my loans. Let’s get into the rest of the details before I get too far ahead of myself!
Extra Income This Month
Affiliate links are used in this post, and most posts here on WMSB. If you click on a link and make a purchase, WMSB receives a small commission. You don’t get charged a penny more for this, but it keeps WMSB running, and makes my debt repayment happy.
Amazon Affiliate: $0.00
SiteGround Affiliate: $50.00
Day Designer Affiliate: $0.00
Ebates Cash Back: $12.72 (If you sign up using this link, you’ll receive $10!)
Sponsored Posts: $300.00
Side Hustles: None. This project should start again next month.
Expected/Unexpected Reimbursements: None – I’m still waiting on my refund from Century Link which seems to be taking forever. I called them last night and they claimed there was a glitch that caused it not to send, and it’s been resubmitted to be sent. uh huh… Once I receive that, I plan to use it to pay my car insurance for the rest of the term, if they’ll let me use a visa gift card for that.
Where My Payments Went
I am still super excited about paying off my bar exam loan. It doesn’t feel real. It has freed up $940/month in snowball payments that now I am in the process of repurposing into savings or additional debt payments. The 0% interest rate on my discover card is coming to an end soon, so I will need to pay that off. I could have paid it off along the way without a problem, but didn’t think it made sense to pay that when I had a 7.75% loan accruing daily interest. Now I’m annoyed about the discover card, but it did work well to remodel my bathroom before refinancing my house, purchase our trip to Vegas last month, and Watershed over the summer. So at least it wasn’t like my old credit cards where it was unplanned spending on useless things/food/clothes/gas.
Bar Exam Loan: $0.00!!!!!
Unsubsidized Loan: $236.00 (minimum) = $236
Subsidized Loan: $604.58 (minimum) = $604.58
Extra Blogging Expenses: None, somehow.
Discover Card at 0% Interest: $150.00
Total Payments: $990.58
This was the smallest debt repayment month I’ve experienced since starting this process in November 2014. I suppose that makes sense now that I’m down to only one debt, and went on a vacation last month. But it’s still crazy. This doesn’t reflect any of the money I put into savings or toward my retirement accounts. Is that something you guys would like to see? I’m thinking about doing that, but also not sure how because I don’t want to share account balances for savings/401k accounts, etc. Feel free to leave any suggestions below!
I also went totally off course on my budget this month, unintentionally, because I forgot that I’d started contributing to my 401k. I’ve kept a solid budget for the last couple of years and by now I have a pretty good feeling about how much money I can spend on different things. By forgetting that several hundred dollars of my paycheck went to my 401k, I found myself in a really tight spot for about a week before it was pay day again. I’ve readjusted how much I put toward my 401k, and actually kind of appreciate the shock to get me back on track. Now, I am motivated to see WHERE my money has been going and reset a budget that hopefully finds some extra-money I’ve started wasting on going out for lunch or shopping on Amazon just because I’d gotten comfortable in my budget.
Current Law School Student Loans Balances
Paying off six figures of student loan debt feels like a bottomless pit. But seeing the progress in a graph and chart form helps to see that there really is progress.
The interest rates on these loans are what made my previous payments look almost meaningless on the subsidized (7.125% interest, accruing $5.71 Per Day) and unsubsidized (7.125% interest, accruing $14.63 Per Day) loans.
Before I could pay ANY of the $104,490 of capitalized principal (the principal at graduation, before any interest capitalization, was $82,000), I would have to pay off what is now $10,169 of interest. It made it feel impossible to overcome. So I was surprised last month to see that I made any progress at all on the big Federal loans. The “progress made” that you see there was only toward the accrued interest, and never toward the principal, which would continue to accrue at ~$20/day + the $10,169 I already owed.
After doing the math, I determined that it was time to refinance my student loans. I refinanced with Darien Rowayton Bank. I wrote all about it in the Complete Guide to What it was Like to Refinance My Student Loans.
The reason the balance is higher than last month is the payoff amount I received from my lender did not account for the monthly payment I would make, and the refinance happened a few days after my monthly payment of $841 was due. So it over paid by $901. The good thing is that I didn’t owe anything on the prior loan. The bad thing is that it apparently can take 45-60 days for that $901 to be sent to my new loans and taken off of that principal. For now, the balance is higher than I’d prefer, but it’s worth the 2% reduction in interest over the long term! The refinanced loan accrued about $16.19/day. This includes the first few days before the .25% autopay discount kicked in. I’m interested to watch the interest per day go down as I start to pay off principal.
To create this chart, I combined the total of my subsidized and unsubsidized loans, so that the progress can still be tracked over time and it doesn’t look like I’m starting over. Keeping momentum in debt repayment (and being kind to yourself if you get off track) is key to long term success. I will make my first official payment on the refinanced loan in late May. I may make a snowball payment before then if I choose to send it there instead of Discover, out of excitement. But I shouldn’t.
Financial Goals Now:
There are still things to accomplish, and goals to achieve that I’ll discuss below. But we definitely need to take the time to celebrate the wins we achieve throughout the payoff process. If we don’t, we will burn out or get discouraged. I’m speaking from experience here.
My Debt Repayment Goals
1) Pay off my car. 3) Pay off the Bar Exam Student Loan. I stuck with the snowball method, to pay off the bar exam loan, and it totally worked! 4) Re-evaluate my savings and retirement plan. I keep meaning to list out what I’ve done here, but as you read above I just haven’t figured out the sweet spot of what % works and what doesn’t, so I haven’t felt ready to write about it. 5) Tackle the accrued interest from my income based repayment plan. CHANGE OF PLANS! Refinance my Student Loans. Now that I don’t have two loans to track and send snowball payments to, I’m adjusting my goals to be in increments. It’s very strange to no longer have a snowball loan to attack!
6) Reduce Student Loan Balance by $10,000 to $104,500. I’m coming for you, law school student loans!
7) Reduce Student Loan Balance to less than $100,000. When I hit that $99,999 mark, I think we should celebrate!
There are some new links this month. Here are answers or insight into a few common questions that have come up during this process:
- 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
- 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.
- The Real Life Tracking Sheet I use to track my financial, health and self development goals.