Author Topic: 16k Paid Down in 12 Months (Student Loan)  (Read 7885 times)

The Dutchman

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16k Paid Down in 12 Months (Student Loan)
« on: June 27, 2013, 08:42:20 AM »
Alright, here it goes I am throwing down my first gauntlet.  I am going to pay down all of my debt with interest at 5% and above off in the next year.  My numbers are below. 

$4,575 at 6.80%
$6,420 at 5.25%
$5,000 at 5.00%
TOTAL = $15,995

I will do this by putting all of my investment (except my amount to get my employer match) against my debt.  Also, I have various savings goals for larger car for my wife (used) (2 years) and a down payment (5 years).  I will throw both of these lump sums against my debt half way through.  Both of these can be paid back using my reduction in payment prior to the end of their goal.  I will also, at the end, throw my car repair fund at the debt.  I can use the increased cash on hand due to reduction in debt to cover car repairs as they come (no longer saving for them).   

My monthly payment to debt will be reduced by $220.  That is an additional $2,640 yearly which I didn't have previously.  This will leave a payment of 100 $/m for $5,860 at 3% interest. 

I will update via this thread as I go.  Can't wait to bitch slap Sallie Mae. 

See my original sanity check here:
http://www.mrmoneymustache.com/forum/ask-a-mustachian/sanity-check-student-loan-paydown/

George_PA

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Re: 16k Paid Down in 12 Months (Student Loan)
« Reply #1 on: June 27, 2013, 09:03:52 AM »
Sounds like a good plan; I paid off a similar amount myself about 4 years ago and it took about 12 months.  I don't miss that loan at all.

Mostly everything in your game plan is pretty solid; The only thing I would caution is that you mentioned saving for a car 2 years and a downpayment 5 years.  Put these other things on hold until you get rid of the student loan.  Deal with one thing at a time.  You can however draw savings you previously saved from those to apply to the student loan. 

The best strategy to get rid of a student loan is the way you are doing it.  Go at it hardcore aggressive and throw every dollar you have at it and make it die quickly.  I sold all my investments off, you should probably keep a small emergency fund amount however (how much is a personal preference).  Make sure all the extra money you throw at it is going to pay off principal and makes those extra payments earlier because they will reduce the amount of interest you pay each month with your regular monthly payments. 

Also for my student-loan repayment, this may piss off a lot of people on this blog but I suspended my retirement 401k savings entirely, including giving up the match.  This freed up some more extra cash to throw at the debt.  It was not a deal though because I had it paid off in about a year.  So, as soon as the student loan was gone, I re-activated by 401k contributions again.  So they are only stopping for a short amount of time. 
« Last Edit: June 27, 2013, 09:09:58 AM by George_PA »

cerberusss

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Re: 16k Paid Down in 12 Months (Student Loan)
« Reply #2 on: June 27, 2013, 09:17:11 AM »
Way to go, man! It took me two years, for an amount about half of that. Good that you start off aggressively.

The Dutchman

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Re: 16k Paid Down in 12 Months (Student Loan)
« Reply #3 on: June 27, 2013, 09:50:39 AM »
Mostly everything in your game plan is pretty solid; The only thing I would caution is that you mentioned saving for a car 2 years and a downpayment 5 years.  Put these other things on hold until you get rid of the student loan.  Deal with one thing at a time.  You can however draw savings you previously saved from those to apply to the student loan. 

Also for my student-loan repayment, this may piss off a lot of people on this blog but I suspended my retirement 401k savings entirely, including giving up the match.  This freed up some more extra cash to throw at the debt.  It was not a deal though because I had it paid off in about a year.  So, as soon as the student loan was gone, I re-activated by 401k contributions again.  So they are only stopping for a short amount of time.

Yeah that is basically what I am saying.  I will put on hold my savings goals and actually empty those saving that I have so far and resume after. 

Also, you will probably get a little grief for not contributing to your 401k.  I get matched 50% for the first 3%.  So If I did that to pay off my highest loan (6.8%) I would be losing the difference or 43.2%.  Granted this is only a year but that is only 1.2k for me.  However, that 1.2k at 5% annually over 10 years is 1.8k by the time I actually am able to touch it it will be worth upwards of 10k. 

KatieSSS

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Re: 16k Paid Down in 12 Months (Student Loan)
« Reply #4 on: June 28, 2013, 12:11:07 PM »
You can do it! This is basically where I started when I vowed to pay off my remaining student loan in one year. I'm down to around $10k right now and my goal is to be debt free by December 31st of this year. I've paid off $4600 so far since April. See here: http://www.mrmoneymustache.com/forum/throw-down-the-gauntlet/annihilate-student-loan-debt-by-december-31-2013/

Welcome to the gauntlet club!

George_PA

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Re: 16k Paid Down in 12 Months (Student Loan)
« Reply #5 on: June 28, 2013, 01:38:42 PM »
However, that 1.2k at 5% annually over 10 years is 1.8k by the time I actually am able to touch it it will be worth upwards of 10k.

Yeah I am well aware of that math that a little money in a 401k now compounds to a lot over a large amount of time (i.e. 30 or 40 years); I just wanted to get the thing paid off as soon as possible

The Dutchman

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Re: 16k Paid Down in 12 Months (Student Loan)
« Reply #6 on: July 01, 2013, 07:10:16 AM »
You can do it! This is basically where I started when I vowed to pay off my remaining student loan in one year. I'm down to around $10k right now and my goal is to be debt free by December 31st of this year. I've paid off $4600 so far since April. See here: http://www.mrmoneymustache.com/forum/throw-down-the-gauntlet/annihilate-student-loan-debt-by-december-31-2013/

Welcome to the gauntlet club!

Thanks for the encouragement.  It looks like our goals are very similar.  It looks like you are already almost under 10k which is sweet.  I can't wait to be there myself. 

Yeah I am well aware of that math that a little money in a 401k now compounds to a lot over a large amount of time (i.e. 30 or 40 years); I just wanted to get the thing paid off as soon as possible


I agree to some degree.  If it helps your peace of mind to be debt free quicker... you should do so. 

charles_roberts

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Re: 16k Paid Down in 12 Months (Student Loan)
« Reply #7 on: July 16, 2013, 05:57:54 AM »
You have an awesome plan. Good on ya!

burly

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Re: 16k Paid Down in 12 Months (Student Loan)
« Reply #8 on: July 16, 2013, 07:15:14 AM »
...Can't wait to bitch slap Sallie Mae. 


+ 1

The Dutchman

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Re: 16k Paid Down in 12 Months (Student Loan)
« Reply #9 on: October 01, 2013, 06:55:50 AM »
Here are my numbers from June
$4,575 at 6.80%
$6,420 at 5.25%
$5,000 at 5.00%
TOTAL = $15,995

I will do this by putting all of my investment (except my amount to get my employer match) against my debt.  Also, I have various savings goals for larger car for my wife (used) (2 years) and a down payment (5 years).  I will throw both of these lump sums against my debt half way through.  Both of these can be paid back using my reduction in payment prior to the end of their goal.  I will also, at the end, throw my car repair fund at the debt.  I can use the increased cash on hand due to reduction in debt to cover car repairs as they come (no longer saving for them).   

Here is my progress:
$2,577 at 6.55%
$6,314 at 5.25%
$5,000 at 5.00%
TOTAL = $13,891

That is a change of $2,104 in 3 months.

Not huge for three months but it is something.  At this rate it will take me 2 years; however, this hasn't factored in my Savings goals which I will throw against this debt at the very end the end.  I will include the current status of my savings goals below for information.  Remember these savings goals are still growing so I am getting closer and closer. 

Car Repair - 3,000 (funded at a rate of 200 $/m)
Car Replacement - 1,900 (funded at a rate of 175 $/m)
Down-payment - 1,000 (funded at a rate of 135 $/m)

So my actual status including savings goals (which will eventual be thrown against debt) is closer to 8k remaining.  The only reason I haven't pumped these into my debt yet is that I am hedging my bets.  If anything goes wrong with my cars I have it covered.  The down-payment is being held on to because I may use it to insulate my house which I bought in May.  I should have a 100% handle on the Down Payment by end of year (next planned update).

Lastly, I am throwing about 800 $/m at my debt which I was previously investing (this is where the initial 2k indicated above came from).  If you take the current status of 8k remaining and assume 800 $/m (previously investment) + car repair + car replacement + down payment; I could be done in 6th months.  Which would be 3 months ahead of my schedule (which was conservative to start with).  If no unexpected costs come up in the coming months then I could pay this all down in 9 months total.  We will see.  Wish me luck.   

PS - The 5k is in my wife's name so I need to get that updated from her.  The highest debt was previously listed at 6.80%; however, there were two loan groups in that one at 6.80% and one at 6.55%.  The 6.80% is paid off. 
« Last Edit: October 01, 2013, 06:57:35 AM by The Dutchman »

szymanski

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Re: 16k Paid Down in 12 Months (Student Loan)
« Reply #10 on: October 01, 2013, 03:59:00 PM »
Progress is progress.

Does your income fluctuate at all in the way of bonuses?

I'm still carrying my 4.1% student loan @ a tad under $12k.  I really hate it but I've had better gains in the market.

Auto loans, last checked, still have good rates in case you finance. 

The Dutchman

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Re: 16k Paid Down in 12 Months (Student Loan)
« Reply #11 on: October 02, 2013, 08:13:35 AM »
Does your income fluctuate at all in the way of bonuses?

I do have a bonus coming up just prior to Christmas.  After taxes I am thinking that will be around 1.2k.  This will all get thrown against debt which will likely remove another month and a half from my total time paying down.  So best case would be 7.5 total time paying down debt. 

I'm still carrying my 4.1% student loan @ a tad under $12k.  I really hate it but I've had better gains in the market.

Yeah, I am putting my cut off at 5% and higher.  I will have a small amount of loans sitting at 2% which I will pay off per the plan.  My Roth has been getting 6% returns for the last 2 years.  So it is hard to lose that 1%; however, that is not guaranteed. 

The Dutchman

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Re: 16k Paid Down in 12 Months (Student Loan)
« Reply #12 on: December 13, 2013, 01:07:24 PM »
Here are my numbers from June
$4,575 at 6.80%
$6,420 at 5.25%
$5,000 at 5.00%
TOTAL = $15,995

I will do this by putting all of my investment (except my amount to get my employer match) against my debt.  Also, I have various savings goals for larger car for my wife (used) (2 years) and a down payment (5 years).  I will throw both of these lump sums against my debt half way through.  Both of these can be paid back using my reduction in payment prior to the end of their goal.  I will also, at the end, throw my car repair fund at the debt.  I can use the increased cash on hand due to reduction in debt to cover car repairs as they come (no longer saving for them).   

Here is my progress:
$2,577 at 6.55%
$6,314 at 5.25%
$5,000 at 5.00%
TOTAL = $13,891

That is a change of $2,104 in 3 months.

As of today here is my progress:
$0        at 6.55%
$6,179 at 5.25%
$4,632 at 5.00%
TOTAL = $10,811

That is a change of $3,080 in 3 months.
It is also a change of $5,184 since my start (6 months).

As stated previously I have a couple of of savings goals which have been growing.  Some have had to be drawn upon for repairs and such.  However, below you will see an additional 7,500 which I have in the bank for different savings goals. 

Car Repair - 3,200 (funded at a rate of 200 $/m)
Car Replacement - 2,300 (funded at a rate of 175 $/m)
Down-payment - 1,500 (funded at a rate of 135 $/m)

The last item remaining is the bonus which I should be getting any day.  The bonus should be around 1.5k.  If you add the bonus and the savings goals I have about 8k.  I should be able to pay off my debt in 2 or 3 months. 

tomq04

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Re: 16k Paid Down in 12 Months (Student Loan)
« Reply #13 on: January 17, 2014, 11:08:44 AM »
Get that bonus?  Did you bitch slap Sally?

The Dutchman

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Re: 16k Paid Down in 12 Months (Student Loan)
« Reply #14 on: February 06, 2014, 06:07:23 AM »
Here are my numbers from June
$4,575 at 6.80%
$6,420 at 5.25%
$5,000 at 5.00%
TOTAL = $15,995

I will do this by putting all of my investment (except my amount to get my employer match) against my debt.  Also, I have various savings goals for larger car for my wife (used) (2 years) and a down payment (5 years).  I will throw both of these lump sums against my debt half way through.  Both of these can be paid back using my reduction in payment prior to the end of their goal.  I will also, at the end, throw my car repair fund at the debt.  I can use the increased cash on hand due to reduction in debt to cover car repairs as they come (no longer saving for them).   

Here is my progress:
$2,577 at 6.55%
$6,314 at 5.25%
$5,000 at 5.00%
TOTAL = $13,891

That is a change of $2,104 in 3 months.

As of today here is my progress:
$0        at 6.55%
$6,179 at 5.25%
$4,632 at 5.00%
TOTAL = $10,811

That is a change of $3,080 in 3 months.
It is also a change of $5,184 since my start (6 months).

As stated previously I have a couple of of savings goals which have been growing.  Some have had to be drawn upon for repairs and such.  However, below you will see an additional 7,500 which I have in the bank for different savings goals. 

Car Repair - 3,200 (funded at a rate of 200 $/m)
Car Replacement - 2,300 (funded at a rate of 175 $/m)
Down-payment - 1,500 (funded at a rate of 135 $/m)

The last item remaining is the bonus which I should be getting any day.  The bonus should be around 1.5k.  If you add the bonus and the savings goals I have about 8k.  I should be able to pay off my debt in 2 or 3 months. 


As of today here is my progress:
$0 at 6.80%
$0 at 5.25%
$4,600 at 5.00%
TOTAL = $4,600

That is a change of $11,395 since my start (8 months).

To get to this point I emptied some savings goals (which was the plan).  I now have 4k in my accounts for a rainy day fund.  I think the plan is to in the coming months get that to 6 k and then pay off the remainder. 

Get that bonus?  Did you bitch slap Sally?

Yes and yes.  I did get my bonus.  However, I had a couple of large car repair bills (perks of old cars) and a large home repair which eat most of this up.  All in all it was not a fun way to spend a bonus; would have been more fun to spend it on my debt.  Also, my 5.25% loan was Sallie Mae.  I did get to bitch slap the hell out of her with a payment of 6.2k a couple of days ago.  I was excited about that. 

PS - What do you guys think; should I pay off my 5% loan?  That is the highest I have now.  It is basically at the cut off point of when it makes sense to pay it off.  I think I am going to pay it just so I can be done with it.  Thoughts?

tomq04

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Re: 16k Paid Down in 12 Months (Student Loan)
« Reply #15 on: February 07, 2014, 02:43:27 PM »
No one I know finishes paying off a debt and regrets doing it.  In theory investing could do better in some sets of dates.  Having that debt gone is for good!

Knock it out the box!

payitoff

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Re: 16k Paid Down in 12 Months (Student Loan)
« Reply #16 on: March 05, 2014, 03:53:34 PM »
wooohoo im doing this too!! paying over $1000 a month to something never feels this exciting! i am actually counting down, 1 down, 11 to go!!

The Dutchman

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Re: 16k Paid Down in 12 Months (Student Loan)
« Reply #17 on: March 12, 2014, 11:37:05 AM »
Here are my numbers from June
$4,575 at 6.80%
$6,420 at 5.25%
$5,000 at 5.00%
TOTAL = $15,995

I will do this by putting all of my investment (except my amount to get my employer match) against my debt.  Also, I have various savings goals for larger car for my wife (used) (2 years) and a down payment (5 years).  I will throw both of these lump sums against my debt half way through.  Both of these can be paid back using my reduction in payment prior to the end of their goal.  I will also, at the end, throw my car repair fund at the debt.  I can use the increased cash on hand due to reduction in debt to cover car repairs as they come (no longer saving for them).   

Here is my progress:
$2,577 at 6.55%
$6,314 at 5.25%
$5,000 at 5.00%
TOTAL = $13,891

That is a change of $2,104 in 3 months.

As of today here is my progress:
$0        at 6.55%
$6,179 at 5.25%
$4,632 at 5.00%
TOTAL = $10,811

That is a change of $3,080 in 3 months.
It is also a change of $5,184 since my start (6 months).

As stated previously I have a couple of of savings goals which have been growing.  Some have had to be drawn upon for repairs and such.  However, below you will see an additional 7,500 which I have in the bank for different savings goals. 

Car Repair - 3,200 (funded at a rate of 200 $/m)
Car Replacement - 2,300 (funded at a rate of 175 $/m)
Down-payment - 1,500 (funded at a rate of 135 $/m)

The last item remaining is the bonus which I should be getting any day.  The bonus should be around 1.5k.  If you add the bonus and the savings goals I have about 8k.  I should be able to pay off my debt in 2 or 3 months. 


As of today here is my progress:
$0 at 6.80%
$0 at 5.25%
$4,600 at 5.00%
TOTAL = $4,600

That is a change of $11,395 since my start (8 months).

To get to this point I emptied some savings goals (which was the plan).  I now have 4k in my accounts for a rainy day fund.  I think the plan is to in the coming months get that to 6 k and then pay off the remainder. 

As of today here is my progress:
$0 at 6.80%
$0 at 5.25%
$0 at 5.00%
TOTAL = $0

That is a change of $15,995 since my start (10 months).

Bitch Slapped the hell out of Sallie Mae today!

This was due partially to a favorable tax return and aggressive savings over the last 2 months.  I still have like 2k in my emergency fund.
 
It is such a great feeling to know that you are out of any and all high interest debt.  Also, remember that frees up 260 $/m which was previously going to pay off those loans (3k of post tax money a year).  On to bigger and better things!
« Last Edit: March 12, 2014, 11:39:18 AM by The Dutchman »

The Dutchman

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Re: 16k Paid Down in 12 Months (Student Loan)
« Reply #18 on: March 12, 2014, 11:41:44 AM »
No one I know finishes paying off a debt and regrets doing it.  In theory investing could do better in some sets of dates.  Having that debt gone is for good!

Knock it out the box!

Thanks for the encouragement!

wooohoo im doing this too!! paying over $1000 a month to something never feels this exciting! i am actually counting down, 1 down, 11 to go!!

Good luck my friend.  Just don't get discouraged.  Remind yourself how much a year you will have and what your return on investment is.  I had 16k of debt.  It took me a year to pay it down.  The reduction in payment to those loans will pay back my investment in 5 years!

DunkCityFan

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Re: 16k Paid Down in 12 Months (Student Loan)
« Reply #19 on: April 09, 2014, 06:30:49 PM »
You did it! Way to go! I just finished the same and can say that it feels, well, weird not having those loans. Amazing how they condition us to feel like killing debt is part of our being. Oh well let's get ready to kicka** investing with all that money that Sallee Mae used to eat!!!!!

Congrats again. Amazing!