Payment Day – 6

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Guys! Can you believe Christmas is this week?!? I’m still having a hard time wrapping my head around 2016 coming to an end.  This year has been one of the stressful and best years of my life.  I’ve pushed myself in ways I never knew was possible, and now I can’t stop wanting to push myself.  I have been spending a lot of time reflect about 2016 and I have realized that there have been two mottos or “life lessons” that I keep going back to:

  1. If you want something bad enough you will find a way to make it happen; and
  2. Everything always works out in the end, no matter what you going through. Although I have found this applies to almost all my life events and not just regarding paying off debt or money, through this whole process I have learned that paying off debt is more about your mindset, then about money itself. “Those who move forward with a happy spirit will find that things always work out.”

So far in 26 years, both of these things, have without a doubt been true.

I’m trying my hardest to finish the year off strong with my debt payments and so far so good.  This last payment day was my highest student loan payment I’ve ever made totaling $1,500.00!* I always get a little nervous before I hit the “submit payment” because my payment amounts are always a large amount of money.  Sometimes it is hard to watch it disappear into the black hole known as Navient.  But, this last payment though I had no apprehension.  I just clicked the button and went on with my day – I am so ready to end this “chapter” of life.

My new student loan balance is $6,269.24.  In a little less than 2 weeks I will make my final payment for 2016 and, cross your fingers, and toes, and knock on some wood, or whatever you do to bring yourself luck, my new balance amount should be anywhere between the $4K and $3K range. I have a feeling it will be around the $4K range.  I ALSO will pay off my 12th student loan and have one left to go!

Loans Left Amount Owed January 2016

Current Amount Owed

12th Loan

$4,340.54

$1,398.64

13th Loan $5,040.04

$4,870.60

Besides my normal paycheck on the last day of the month, I also will get a bonus check that same day.  The bonus checks are only given on the last day of the year and the amount is never the same or set in stone.  Last year that same bonus allowed me to pay off my car one month earlier than the goal I set for myself.  I don’t think my bonus will be anywhere near that amount this year, because I recently had my three year review and my firm finally added me into their profit sharing program (I also got a slight raise and sweet talked my way into one more week of vacation, and by “sweet” talked I mean I said to my boss “so right now I have one week of vacation…” and before I could finish he said “two weeks it is”).  I am pretty sure my bonus check amount will be less because they allocate some of that money into the profit sharing program.

Whether my new balance is $5K range (if I only get a paycheck and no bonus check), $4K range or $3K range, I will be happy with any of those amounts.  All of them are substantially better than the $30,964.24 I started with in January of this year.

My payoff date still is going to be March 15 (unless those bonus gods bless me and I can move it to February. Who knows, I was shocked at the amount last year.)

Well, that’s all for now.  I hope everyone has an wonderful Christmas!!

Until next time…

Current Progress:  11 loans paid off, debt balance $6,269.24

Count Down Until Debt Freedom: 2 Months, 24 Days

*Yes, that is a LOT of money.  $500.00 more than I normally pay on my SLs.  I worked a few extra days at my side job, got a slight raise at work, back pay for that raise because my review should have been in October, instead of December, and got a little Christmas money.  I’m still kind of amazed that payment amount was so high, because in this time period I also did some Christmas shopping and paid around $250 for my personal property taxes on my car.

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Payment Day – 7

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I hope everyone had a wonderful Thanksgiving and long weekend!  I certainly did.  I worked 10 days in a row prior to Thanksgiving so I welcomed the 4 day weekend (even though I worked at my side hustle that Saturday) with open arms.

With only a little over three months left, I am nearing the end on my student loan journey.  I recently made another payment of $1,050.07 and my new SL balance is $7,757.49.  Lucky number 7. In less than one month I should be in the $4K range and will hopefully pay off my 12th SL in that time.  More than ever I am committed and anxious (in a good way this time) to pay off my SLs because … jmr proposed to me the day after Thanksgiving and the day we put up our first Christmas tree! (This is our third Christmas together, second living together, but it is our first tree.)

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My engagement ring (the band is rose gold)

I am SO so happy and still in shock.  His proposal was so perfect and it was a complete surprise.  I still can’t believe anyone would want to voluntarily and legally be bound to me. And now I REALLY cannot wait to make my final SL payment so we can start planning our wedding.  (We will be paying for it ourselves so it is so important to me to become debt free before we get married. I want to start our marriage debt free on my part, because jmr has no debt*. I don’t want him to have to worry about my debt baggage.)  In my future dreams I previously talked about how jmr and I wanted to get married one day and it is a surreal moment that my dreams are starting to become a reality.

I have been feeling incredibly thankful and even a little lucky** these last few weeks and I can’t thank everyone enough for all your continued support and for taking an interest in my story.  This space as truly been an outlet for me and I hope it has helped you find some motivation or support in your own journey.  My heart is full of gratitude.

*He also paid for my ring in full.  Maybe he should do a guest blog post on how to get engaged and not go into debt?

**I hope my luck continues because this afternoon is my 3 year review at the law firm.  Wish me luck.

Until next time…

Current Progress:  11 loans paid off, debt balance $7,757.49

Count Down Until Debt Freedom: 3 Months, 13 Days

Payment Day – 8

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St. Louis has some pretty extreme weather.  For instance, today the temp is going to be almost 80 degrees, but it’s supposed to snow the weekend.  Yes, you read that correctly. As random as the weather can be, we are lucky, to have 4 seasons very distinct seasons. Fall is finally here and I’m soaking it up.  Something about the crisp air, bright colors and upcoming Holidays puts me in an instant good mood.

Speaking of good moods, there are so many cool things to talk about this payment day post.

First, I now have a balance of $8,793.78 on my SLs, after making a payment of $1,038.31.  Let’s just take a moment of silence to remember the $30,226.80 I started with in January.  May that number RIP.

Okay so back to what I wanted to tell you – in July 2015 I started this journey with $39,263.95 in debt with a goal to pay my car off first. (This all happened pre-blog.) I owed $8,299.75 left on my Certified Pre-owned Ford Escape and paid it off in 6 months.  The amount left on my student loans, is roughly the amount I had on my car when I started this. I remember all that MA (mass anxiety) I had trying to pay my car off at that time and to know that same amount is all I have left is an incredible feeling. Oh, and it will be paid off in less than 4 months.

Second, I finally paid off my 11th student loan.  Hell to the ya! It was my biggest loan payoff to-date with a balance of $4,078.25 (amount it was at in January when I started).  I now have 2 loans to go:

Amount Owed in January 2016

Current Amount Owed

$4,340.54

$3,909.69

$5,057.72

$4,884.09

I still make the minimum payments on all my loans, while making large payments on one particular loan at a time.  That is why there is a difference in the amounts since the beginning of the year.

Third, according to Mint (which I use to help me budget), I now have a positive net worth. I never track my net worth, since it has been in the negative for most of my adult life, but it just so happens to be something Mint tells me when I am reviewing my account.  It just stares back at me on the overview page. Although I still have $8,793.78 in debt, Mint counts my paid off car as an asset.  (I also have a small investment account.) Some PF bloggers don’t include their car(s) in their net worth because it is a depreciating asset, but since I could sell it at any given time and get cold hard cash in my hand, I have to agree with Mint that it is an asset.  When the time comes to track my net worth on my own, if i decide to even do that, I will definitely include my car in those numbers.

Until next time…

Current Progress:  11 loans paid off, debt balance $8,793.78

Count Down Until Debt Freedom: 3 Months, 26 Days (I’m going to start adding this because I am THAT excited.)

Payment Day – 9

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S-I-N-G-L-E digits.  I am so happy I am finally able to write this.  Let’s look at those numbers:

Starting Balance (July 2015): $39,263.95

2015 Payoff Amount: $8,299.75

2016 Payoff Amount: $21,927.05

Total Payoff Amount:  $30,226.80

New Balance: $9,816.19

I was able to put $2,108.51 towards my debt in October which pushed me into single digit territory.  I still have 3 loans left, but the loan I am currently working has a balance of $645.54 – which means it will be paid off in 2 weeks with my next paycheck.  I will then only have 2 loans left with balances of $4,266.27 and $4,904.38. Ugh.

My hope is to have one of those paid off by the last day of the year.  We will see.  That might be pushing it, but I want to try to finish the year off strong. I do get some type of bonus on December 31 (that same bonus last year allowed me to pay off my car one month earlier than I planned).  I also am due for a review at my job since I hit my 3 years at the law firm last month. So far every review I’ve had to-date has ended in a raise, but like the bonus, it is never guaranteed – say a prayer, hail Mary or do a raise dance for me.

As of this date, my last payment is still going to be in March – March 15th to be exact. (I get paid on the 15th and the last day of every month which is why I know the exact date.)  4 ½ months will fly by especially with the holidays coming up.

Speaking of holidays, I am still trying to figure out what I want to do to keep my expenses low, while still being able to give people gifts.  It’s so hard to find balance when you have a huge goal, low budget but also LOVE Christmas and giving people presents.  Last year while I was in the process of paying off my car I decided since I was on an even smaller budget I was going to make everyone a variety of Christmas cookies as their Christmas present.  And since I felt like I was being a cheapskate for not giving actual gifts, I over compensated by making like 10+ different types of cookies for each person.  I was baking for a week straight from the moment I got home after work to midnight.  Even though I was able to give 15 people cookies and only spend about $40 for ingredients, baking that intensively was exhausting.  I don’t think I am going to go down that route again this year.

Oh, I also should mention in Missouri we have to pay personal property taxes that are due December 31. Last year my personal property tax on my car was a little less than $300. I guess it could be worse and luckily I don’t own a house or any other items that are taxable, but it still stings.

I know I have time to figure it all out considering it’s only the first week of November, but I’m a planner by nature and not having any idea how to pay for everything, stay in budget and on my self-imposed payment schedule kinda gives me MA (aka mass anxiety).

So the question of the day is, does anyone have any ideas for staying in budget during the holidays?

Until next time…

Current Progress:  10 loans paid off, debt balance $9,816.19

The Silent Killer: The Problem with Waiting to Pay Your Student Loans

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There is one big problem with only making the minimum payment on your debt and that problem can be summed up in one word:  interest.  Interest is a killer – let me explain.

My student loan story started in September 2009 when I enrolled in a specialized associates program.  The program was fast-paced and I graduated in October 2010 – the entire time not paying a penny on my student loans because they were in deferment.  Once I graduated, I had a 6 month grace period before I was required to start repayment.  At the same time, I decided to take 6 months off of school before starting a bachelors program in May 2011.  (The timing between the grace period ending and the start of my bachelor program was a coincidence.  I did not plan it that way and honestly I probably didn’t think of my student loans once when making that decision.)  Once I was back in school, my student loans went – you guessed it – right back into deferment. My bachelors program lasted from May 2011 to April 2013.  I graduated the following month in May 2013. That month was the first SL payment I ever made 3 years and 8 months after starting school.

My minimum payments started out small.  At first, I was only required to make a payment of $147.66.  I thought, “eh that’s not too bad, I can make that payment for 10 years” – and I did for 6 whole months until my payments increased to $350.32.  What, why the increase you ask?  Because the loans from my bachelor degree also got a 6 month grace period before I was required to pay on them.  I did not realize the $147.66 was the payment only for my associates degree.  I paid the $350.32 for roughly 5 months, until I decided to move into an apartment by myself.  I couldn’t afford to live by myself AND make that high payment every month, so I did what I thought was the best decision at the time and signed up for an income based repayment plan through Navient.

Confession: I did absolutely no research into this program.  That was mistake number one.  I heard about the program from a coworker, called up Navient, sent them a copy of my tax returns and waited for the new payment amount to come in the mail.  My payments were then lowered to $112.04.  I happily made those payments for 10 months without a care in the world until the following year (early spring 2015) when I was required to again submit my tax returns and my payment went up to $189.24.  I was so confused.

I started doing some research into the program and learned what an income based program really entailed.  My payments went up because I was actually enrolled in a “pay as you earn repayment plan” where your payments were determined based off how much money you make each year. Every year you are required to submit your tax returns and the payment amount is adjusted accordingly. (I should have read all that fine print.  You would think I would know better working at a law firm.)

I begrudgingly paid the increased amount for a few more months until one day in July 2015 I started to feel icky about how much money I was paying towards debt each month.  I started to think about all the things I wanted to do in my future and had no idea how I would accomplish those goals with almost $40,000K in debt.  So I decided to make a change and try something new. I started my debt journey by paying off my car, but I wanted to get a clear idea what I owed on my SLs and where all those payments were going.

I logged into my account and was horrified at what I saw.  Not only was my balance not decrease all this time I was paying on my SL, but my “total current balance” actually was increasing.  I quickly clicked the account history tab and realized all those payments I made for 2 years almost solely went towards interest. (See a snapshot of the horror in Exhibit A)

 Exhibit A

Date Description Principal Interest Total
7/16/2015 Payment $40.72 $148.52 $189.24
6/16/2015 Payment $20.32 $168.92 $189.24
5/18/2015 Payment $6.57 $182.67 $189.24
4/16/2015 Payment $0.00 $189.24 $189.24
3/16/2015 Payment $0.00 $112.04 $112.04
2/17/2015 Payment $0.00 $112.04 $112.04
1/16/2015 Payment $0.00 $112.04 $112.04
12/16/2014 Payment $0.00 $112.04 $112.04
11/17/2014 Payment $0.00 $112.04 $112.04
10/16/2014 Payment $0.00 $112.04 $112.04
9/17/2014 Payment $0.00 $112.04 $112.04
8/18/2014 Payment $0.00 $112.04 $112.04
7/16/2014 Payment $0.00 $112.04 $112.04
6/16/2014 Payment $0.00 $112.04 $112.04

My goal really became clear after I saw this.  It was hard to make excuses now that I was looking at the numbers.  Paying only the minimum balance wasn’t going to get me out of debt, I had to start accelerating my payments.

(I paid off my car first in 2015, and then started accelerating my SL payments in January, 2016.)

Truth about Interest

To date, I have paid $6,351.40 in interest since I started paying my SLs in 2013 and it is still accruing daily.  I make a loan payment every two weeks and just last payment $34.27 went solely to interest.

I have only paid $21,718.45 in principal payments since I graduated in 2013, with $20,914.54 being paid off THIS year.  That means from 2013 to 2016 before I started to accelerate my student loan payments, I only paid off around $800 in principal.

I learned if you want to make more of a dent on your principal balance, you will need to make more than the minimum payments.  My advice to everyone is start paying your loans back early.  Do not wait just because you can.  Pay what you can while you are in your grace period or even when you are still in school.  I could have afforded to start paying back my SL while I was in school, but I choose to buy shoes instead.  So, so many shoes.  Start early or make more than the minimum payment today and your future self will thank you.

I recently read a quote that said “the best time to plant a tree is 10 years ago, the second best time is today.”  Don’t spend time thinking about the shoulda, coulda, woulda.  By starting TODAY, you will save yourself thousands of dollars in the future.  There is no better time than the present.  Interest really is a killer.

Now is now friends.

Shoulda, Woulda, Coulda

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All the Woulda-Coulda-Shouldas
Layin’ in the sun,
Talkin’ bout the things
They woulda-coulda-shoulda done…
But those Woulda-Coulda-Shouldas
All ran away and hid
From one little did.

–  Shel Silverstein

The year was 2009, I had spent a lovely day bumming around with my Aunt going to lunch, shopping at a bookstore and visiting my Papa.  Our time together unfortunately was coming to a swift end and I needed to head home soon to get ready for my job working evenings at a tanning salon.  We said our goodbyes to my Papa and hopped in the car so she could take me home.  My Aunt was driving and I was sitting in the passenger seat.  We made it to the first stop light of the neighborhood where we sat eagerly waiting for the light to turn green when BAM, we were rear-ended by the sweetest old lady who thought her brakes were the gas pedal while going down the hill.  She slowly got out of the car and said “oh no, do you have groceries in your car too?” Bless her heart.  At the time of impact my head hit the window and instead of heading to work I had the pleasure of spending the night in the hospital with a concussion.  Besides a bad headache, some memory loss and a few days off work, I really was fine – which was why I was surprised to find a $10,000 check in the mail from the insurance company of the driver that hit us.  (Still to this day I am not sure why I received that money.  All of my hospitals bills were covered by my insurance and I didn’t file any claims.) That was the largest amount of money I had, and still to this day, ever received at one time.

Like the very smart and responsible 19 year old that I was, I immediately took that check and opened a second bank account with it so that I could pay off most of the $12,000 in student loans I had taken out for my associates degree.  Once the check cleared my bank account, I quickly paid off $10,000 of my student loan balance.  That left me with a balance of $2,000, which ended up totaling $20,000 once I took out $18,000 more in student loans for my bachelor degree.  Since I just paid off $20,914.54 in student loans, I am now debt free.

Ha!! I have jokes. If you read my story, you know that’s not really how it went down.

With the very best of intentions, I did open that second bank account with the idea I would use that money to pay off $10,000 worth of my student loans.  That part of the story is true.  But, instead, I squandered it all away on “loans” to a family member and an ex-boyfriend, a week vacation to Destin with my best girlfriends, shopping, food and countless other extremely useless things that I have sense long forgotten about.

It has been many years since I made that huge mistake and spent the last penny of that money. I have learned so much in that time. Just recently, I did indeed pay off $20,914.54 in student loans – which leaves me with a balance of $10,810.50.  Seeing that new balance is a milestone I have been looking forward to for months, but it also comes with a lot of “shoulda, woulda, coulda” thoughts.  If, and if is the key word here, I used that $10,000 to pay off my student loans, I would be debt free right now.  But, that is not the story I am able to write today.

I think we all have “shoulda, woulda, coulda” or “might-have-been” moments in our life we regret and sometimes wish we could do-over an event in our past.  These moments seem to add up with every year we get older – in reading this I am sure at least one thing you wish you could change about your past comes to your mind. Those regrets can rob you of your sleep and cloud the really good moments of your present life. We can agonize over the past and fill ourselves with anxiety, stress, sadness and regret, but no matter where those thoughts take you, it is always pointed back to a time you can’t go back to.  You can’t live there.

That is the problem with living in the past. No matter how much time we spend on wishing the past can be changed, you are helpless to alter it – but you can always alter the present and your future.

One of the things I do to get myself out of the “shoulda, woulda, coulda” mind frame is to embrace what I am doing now. I not only embrace it, but I take time to focus on things I am accomplishing or have accomplished.  Instead of spending my time wishing I used that $10,000 for school, wishing I hadn’t bought all those clothes I never wore and wishing I had started saving earlier, I am mindful of my accomplishments today and how far I have come from I was my 19 year old self.  If you spend time reflecting on your past, only use it to reflect the good, or take the bad moment and use it as a motivator to do better today.

I look at 26 year old Jessica and think about how freaking cool it is that I paid off my car in 6 months or that I paid off 10 loans and $20,914.54 in student loans in 10 months.  When I find my mind going down a spiral of what ifs, this is the type of thoughts I try to focus on.

I am going to make a promise to myself to abandon the “shoulda, woulda, coulda” mind frame. I encourage you to as well. I want to spend my time focusing in the here and right now so I can pay attention things that really matter today, my goals in the future, not my mistakes in the past.  Because in all honesty, we are always going to make mistakes now and then – be like my girl Taylor Swift and #shakeitoff.

You have the ability to shape and reshape your life as you choose to, but only in the now, in the present.  “From one little did,” of starting to aggressively pay off my debt, I have changed today and my future, and that is worth more than any mistake I made in my past.

Has anyone else found themselves in the “shoulda, woulda, coulda” mind frame?  Any helpful tips on getting out of that thinking?

Payment Day – 10

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There once was a girl with a large amount of debt.  She budgeted and dreamed with spreadsheets galore that one day she’d be free and in debt no more.  With less than six months to go she can see the end, especially when her new payment begins in a ten.

You read that right, my new student loan balance is $10,810.50.  In ten months I have paid off $20,914.54.  That is an insane number and I am having a hard time wrapping my head around it.  It almost doesn’t feel real.  I keep trying to think back to January when I had $30,964.24 in student loan debt, or even back to July 2015 when I had $39,263.95 worth of debt, and it just doesn’t feel like that was ever my life.  Has anyone else every experienced a feeling like that – when you know you accomplished something but have a hard time remembering what it’s like to be in that particular moment or stage in your life?  What you were thinking, feeling, doing at that time? One reason I love having a blog is I can go back and re-read my posts and imagine what it was like typing out those words during that time period.

Lately I have been really trying to savor each and every moment and accomplishment along this journey. When I hit paying off $10K I told jmr that it was a big milestone for me.  He laughed and said “every payment day is a milestone.”  But, you know what, it is!  Reaching $10K is a big deal.  Next payday day I’ll be in single digits and that is a big deal – and so on.  I think that looking at each payment day as a milestone and by taking the time to celebrate (and by celebrate, I don’t mean going out and spending any money), it will help me to remember what it was like going through this whole process.  I don’t want to forget where I started.

Until next time…

Current Progress:  10 loans paid off, debt balance $10,810.50

Payment Day – 11

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Like woah, where oh where did September go? – the month flew by.

This past month I had some fun things happen.  I went to Nashville for a weekend to visit my best friend from high school, leaving after work on a Friday and coming home on a Sunday.  I’ve taken multiple road trips in my life, but this was the farthest I have ever driven by myself – Nashville is about a 4 ½ drive from St. Louis. I was so nervous about driving that far, but made it there and back with no problems.  I have really been trying to step outside of my comfort zone this year and push myself to try new things.  The whole trip cost only $100. I was able to stay at her house so that helped keep the cost down. (I housesat a couple weeks before my trip and used that side hustle money as my allotted budget for the trip.)  We went to cute coffee shops, restaurants and even went dancing on Broadway (the Strip).  The trip was a blast and it was so nice to allow myself to unwind and spend some money.

My trip to Nashville is going to be my last vacation for the year and it probably will be my last vacation until the fall of next year.  I had previously talked about how jmr and I were going to take a long weekend to Minnesota in October, but we have since canceled it.  We planned that vacation after coming home from vacation in Michigan in July (we might have even still been in Michigan when we planned it) – guess you could say we were on a vacation high.  The trip to Minnesota just didn’t feel right.  I could have afforded it, but that would have taken money away from paying off my student loans.  My debt repayment is my #1 priority right now.  Minnesota isn’t going anywhere.  Maybe next year we’ll make it up there.

Last month I also was a guest on a radio program to share my story, talk about paying off debt and millennials.  My heart was beating out of my chest for the entire thirty minute air time, but again, it was fun to step outside my comfort zone to try something new.  I will have to see if I can figure out a way to link the interview to my blog so we can all laugh at the amount of times I said “uh” before a sentence – which may be better than saying “like” or “literally.”  We’re always our biggest critics. I’m sure it sounded better than I thought it did.

So let’s talk numbers.  My favorite.

I was able to pay off $2,083.90 worth of debt in September.  It is a little less than what I have paid off in previous months, but I was still able to hit $2,000 so I am happy. I spent a good part of my summer selling unused things around my house on Buy, Sell, Trade on Facebook to bring in extra money, but I have since run out of things I am willing to part with to sell.  I also really needed a break from it.  That side hustle felt like it was becoming a full time job with all of the driving around to meet people.

With this bi-weekly payment my new balance is $11,887.62. I will now only be answering to the name “Eleven” for the next 2 weeks.  (Stranger Things reference, I know, hilarious. I spent a whole Sunday binge watching that show.)

In 15 months I have paid off $28,118.29 (car + SL), with $19,818.54 of that amount being paid off in 9 months.

Next paycheck (11 days to be exact – 11 seems to be the theme today) I will hit paying off $20,000 in student loans and be in the $10,000 “range.”  I am not ashamed to say I am counting down to this milestone.

 Until next time…

Current Progress:  10 loans paid off, debt balance $11,887.62

Snowball Method

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I love analogies.  I am also a very visual person – so bear with me…

I think it is safe to say that at least once in your life you have made a snowman.  The concept is easy enough for a child to understand.  You start with a tightly rolled ball of snow – small enough to still fit in your hand. Then, you place it on the ground and start rolling it in the yard until it becomes the size of a baseball, then a soccer ball, then a basketball and so on until you reach your desired snowball size.  Within no time you will have enough snowballs to make your snowman.

Now, what if I told you this concept could be related to paying off debt?  It can and just so happens to be the method I am using to pay off my student loans. The concept is called the Debt Snowball Method. This method was made popular by Dave Ramsey, author of the book The Total Money Makeover and finance guru.  I have had a lot of questions lately about how to get started paying off debt and what do I personally use – I usually begin by explaining the snowball method.

This debt payoff approach is similar to building a snowman – you start small.  Step number one is making a list of all your debts from smallest to largest based off the amount of each loan you owe.  Do not worry about the interest rates.

Next, continue to make your minimum payments on all your loans except the smallest loan.  All your extra income, whether leftover after your living expenses are paid, money received from a second job or side hustle, bonuses, tax refunds, birthday money, money found on the street or while doing laundry, etc. should be used to pay off the smallest loan. Once that loan is paid off, you throw all your extra money at the next smallest loan on your list.

Because I love a good visual, here is a detailed example of how the snowball method works from my friend Dave (I’ve read so much of his stuff I feel like we can be on a first name basis).

I first started the snowball method January 2016. I had recently paid off the $8,299.76 balance on my car and was looking for an effective way to pay off my student loans at the same as staying content and motivated through the process. I knew it was going to take me over a year to pay off my student loans and more than the money, I truly believe paying off debt is about your mindset.

The primary purpose of the snowball method is the psychological benefit of seeing results sooner.  I wanted to see reductions in both the principal balance as well number of loans owed.  I think one of the best things about using the snowball method is it gives me small successes along the way.  It helps me reach my goals while continuing to keep me motivated. I personally need those smalls wins.

Within the first month of using the snowball method I was able to pay off my first three loans. Ta-da instant gratification. Being able to cross those three loans off my list the first month was such an amazing motivator and a great way to start this process.

Nine months later I have paid off ten loans.  I now have three loans left and am currently working on loan number eleven on my list, which should be paid off in early November.

My list of loans I made in January looks like this:

Amount

Status

1

$151.39 Paid off

2

$349.08

Paid off

3 $665.36

Paid off

4

$1,205.47 Paid off

5

$1,504.03 Paid off

6

$2,229.33 Paid off
7

$2,320.64

Paid off

8

$2,832.59

Paid off

9

$3,057.79

Paid off

10

$3,172.05

Paid off

11

$4,078.25

Currently working on

12 $4,340.54
13

$5,040.04

Admittedly, there are good days and bad days when paying off debt.  When I start to feel slightly discouraged or I do not feel like I am making the progress I should be (it happens, trust me), it is nice to look back at my list and see those ten loans paid off.  It lifts my spirit and helps keep me rolling along.

Another motivating factor of this method is being able to look at the loans individually rather than just looking at the principal balance due.  Every monster payment I make is directed towards a specific loan.  This is currently how my loans break down:

 Loans Left

Currently Owe

Loan 1

$3,545.15

Loan 2

$4,265.55

Loan 3

$4,910.50

Total 

$12,721.20

Instead of looking the $12,721.20 and having mass anxiety, I look at the loan I am currently working.  $3,545.15 is a much smaller number than the total debt owed and is much easier to pay off.  Keep in mind at the same time I am paying a crazy amount of money towards a particular loan, I am also paying the minimum due on my other loans, which is why those numbers have decreased since my original list was made.  Just like making the snowman, you have to start small.

There are many ways to pay off debt, and the best thing to do is find an option that works for you.  Everyone is different.  (If you are more patient than I am, try looking into the Avalanche Method, where you pay off the loans with the highest interest rate first.)  For me, the snowball method is the best approach and if you are looking for a place to start, I highly recommend looking into it.

Has anyone had success using the snowball method?  Has anyone tried another type of debt payoff method?

Payment Day – 12

photo-1438116356317-4a94d22e3f15

March 2017.

I think I can finally say this will be my new payoff date.

I have been thinking about this for a while now, but haven’t wanted to say it out loud (or write it in a blog post) for fear of jinxing myself.  I have consistently been paying $2,000+ a month towards my student loans, and if that continues I will be debt free in March 2017 – instead of April.  I know it’s only a one month difference, but one month in the debt freedom world can feel like a lifetime.

This is the second time I have moved my payoff date up.  When I moved my payoff date from July 2017 to April 2017 I was so confident and wanted to shout it from the roof tops, but this time I feel a little more apprehensive.  The numbers, however, do not lie though.  When I was crunching the numbers I only included what my monthly payments will be.  I did not factor in my yearly bonus at the end of December, as that amount is never guaranteed and changes every year.  But, if I was going to include it, based off what my last two years looked like, I could possibly be debt free in February.  Woah.

So with this last payment I have paid off $18,959.54 (interest paid included) in student loans.  That is roughly the amount I took out for the last two years of my degree, or the amount I purchased my car for (that has since been paid off).  Still after all this time it blows my mind what you can achieve when you set your mind to it.  I financed my car for 5 years.  If I put my mind to it I could have paid it off in only 9 months.

My new student loan balance is $12,721.20 and with this last payment I also paid off my 10th student loan.  I have three more to go.  I think I am starting to see the light at the end of this journey – more like a twinkle, but a light nonetheless.

This weekend I am headed to Nashville to visit my best friend.  It’s going to be a short little trip, leaving after work on Friday and coming home Sunday night, but I’m really looking forward to seeing her.  I have never really been to Nashville before (besides driving through it on the way to Florida – which I do not count) and this is also the longest I have ever driven by myself.  Nashville is about a 5 hour drive from St. Louis.  I think I may be more nervous about this drive than paying off my $30,964.24 in student loans.  I guess this really is the year of stepping outside of myself and pushing myself to my full potential.

Until next time…

Current Progress:  10 loans paid off, debt balance $12,721.20