As the school year drew to a close, I realized something: I have begun to kick the shit outta my loans the very best that I can without making more money, or spending less of it. And what I’m doing is good: on my largest loan, I am spending about $200 extra a month to cut it down quickly. The projections I have received using the CNN student loan repayment calculator are telling me that this means, instead of paying this loan over 25 years, I’ll be paying it over about 7 to 8 years instead, and saving $45000 in interest over the life of my loan. Think about that: a relatively small increase in how much I’m paying month to month (that loan costs me $500 a month typically, so adding $200 is adding only 40%*) is saving me more money than I make in one year, and getting me out of indentured servitude on this loan more than 15 years early. Often it takes much less money to make a huge difference than you think it will. If you want to check this out for yourself, and see what a few hundred dollars’ difference can make for you, try it out here: http://cgi.money.cnn.com/tools/studentloan/studentloan.html
I’m accomplishing what is an impossible goal for some, and a goal that many others would say even I shouldn’t be trying. But the really good thing about having gotten this down? I’ve been able to focus on the smaller goals I have wanted to accomplish in this first year of being out of school. I now have my own insurance for life, health, and dental. I have started saving for my retirement. I’m donating to causes I believe in without suffering. I am saving money and getting exercise because I sold my car and no longer have insurance on it— so am walking or riding a bike everywhere. Cutting out the unnecessary, living small, doesn’t have to mean living less well off. Be strategic and find the cuts that will work for you.
Anyway, I’ve done what I can to make my situation work for me now. I’m going to start looking for ways to continue cutting my finances, and to increase my income. I’ll post a few things in the next week: what my mom said when I told her I sold my car, How I’ll be taking a plunge in the stock market, and maybe a post about how to cut out the unnecessary.
*Disclaimer: I have been one of those folks who only make an average of $1200 a month, and so I know spending $700 a month on a loan is extravagant for a lot of people. Luckily I’m not in that position trying to pay off my student loans, which are exorbitant. I hope yours aren’t so much. The important point of these numbers is the percentage: Small, voluntary increases (even just a few dollars sometimes), if you can make them, will benefit you immensely in the long run, and with debt this is true at any income level— though harder at the lower ones, I know. Keep the faith in your dreams!