Last year my husband graduated with his law degree. We took out a lot of loans so we could live. We both worked so we could have extra income, but it would never cover the cost of law school.
I know money can make some people uncomfortable. Luckily, the hubby and I enjoy planning for the future and making financial decisions. We are also very lucky to have a financial planner in the family to help us make sound decisions.
Since I am using this blog to keep track of how much I am saving at the grocery store, I would also like to keep track of how much we pay off towards our loans.
I want to show people how easy it is to save money and put that money towards something else. I hope to encourage people to make good financial decisions by showing them how we have paid off our loans. So, here it goes…
GOAL: Have ALL loans paid off in 7 years.
Edited to add: we actually did meet our goal and paid back the law school loans in 7 years. Read more about it here.
Background: We started paying back my husbands loans in January 2011. I started with $28,760 in loans from undergrad and part of grad school. Hubby started with $152,087.23 for a total of $180,847.23.
We have chosen NOT to consolidate any loans. Mine are not consolidated, nor are hubby’s. And ours are definitely not consolidated together. We both were lucky enough to get some really low-interest rates, but we also have some high ones so consolidation would only hurt us and make us owe more in capitalized interest.
Update: we did end up consolidated mine once we paid the higher interest loans off.
I make standard payments on a 10 year plan, and pay around $400 every month. My loans so far have only gone down to $22,820. This is mostly because I am finishing graduate school and have sometimes not made payments on my subsidized loans if they are not accruing interest. So I have only paid $5,940 to date on my loans.
Update: I took another $10k out for graduate school and 9 years later I’m still paying off my loans. Mine are low interest so we’ve decided to keep paying them slowly.
The hubby is super smart and has decided to focus on paying down his highest interest loan faster than the others. This way the interest won’t capitalize and make it more than we owe. His biggest loan started at $29,144.76 and is at a 8.25% interest rate. He has gotten it down to $16,961.63 in less than a year! I am so proud.
I could bore you with the specifics of each loan (9 total, each with a slightly different interest rate), but I don’t think anyone is that interested.
We pay $1770.64 each monthly that is automatically drafted from our account each month. But we do more. Anytime we have extra money, we pay it towards the loan. And it has paid off, literally!
We got it down from $152,087.23 to $130,169.99 in less than a year. This means we have lowered our principle by $21,917.24. We have paid more than that, but some of the money we paid went to interest.
Total at end of year, mine + hubby: $152,989.99
At this rate we can possibly get our loans paid off in 6 years, by the end of 2017!
And we did! Check it out here.