Monday, March 31, 2014

What's Your Motivation to Pay Off Your Debt?

In order to tackle a huge mountain of debt, you will need to be motivated by a bigger goal other than debt payoff.  Sure seeing those amounts owed go down to $0.00 is a huge thrill in itself, and may be enough to motivate you to aggressively pay down your debt.  Ultimately though, it's not about how much money we owe, but how much freedom we have.  The more we owe, the less options we have in terms of what kind of work to pursue, how much money we have left over at the end of the month, and what career options and hobbies we can pursue in the future.

What's your motivation for paying off your debt?
  • Quit a job you don't like
  • Getting engaged/ married
  • Milestone birthdays (e.g., turning 30)
  • Having kids
  • Your monthly expenses have gotten out of control
  • Getting inspired by reading about or meeting someone who has it together financially and/ or has paid off a large debt
  • An increase in your living expenses in the near future
  • Wanting to work less so you can travel more / pursue more hobbies / spend more time with loved ones 
  • Wanting to keep more of your take home pay/ reduce monthly living expenses
  • Retire early
For me, the wake up call was a combination of a few things.  
  • Feeling tied down to a job I don't enjoy and which offers me little to no opportunity for growth solely so I can make payments on my debt
  • Learning that my monthly payments on my federal loans were about to sharply increase, meaning less money leftover from my paychecks every month
  • Wanting to go into public interest work but not being sure if I could afford to, as my monthly debt payments were so high
  • Meeting my boyfriend and starting to talk about our future goals and plans together
Of course meeting my boyfriend had the biggest impact on me, because in thinking and talking about our future together, I realized I didn't want my student loan debt to weigh on our relationship or on our future plans.  Fortunately, the emotional support he has provided has been nothing short of exceptional.  
What's your motivation for paying off your debt?

Monday, March 24, 2014

Updated Breakdown of What I Owe as of March 2014: $173,525.38

Here's an updated breakdown of what I owe:

  • Federal Student Loans: $123,475.86 @ 5.75%
  • Private Loan 1: $11,523.96 @ 5% (paid off 3/7/14!!!!!)  
  • Private Loan 2: $10,024.27 @ 3.03%
  • Private Loan 3: $40,025.25 (made up of 6 4 separate loans) @ various, ranging from 3.22-3.72%. Here's the breakdown for this one:
    • $11,652.79 @ 3.22% 
    • $10,832.18 @ 3.72%
    • $8,936.85 @ 3.72%
    • $8,603.43 @ 3.72%
    • $2,128.50 @ 3.72% (paid off 2/28/14!!!!!)  
    • $2,114.48 @ 3.72% (paid off 2/28/14!!!!!)  
And the grand total is.................   $173,525.38.  

I've now taken my first major steps toward debt payoff, by paying off 3 separate loans.

My next goal is to pay off the loan I have in the amount of $8,603.43 by the end of April 2014.  Wish me luck!

Wednesday, March 19, 2014

Net Worth Update - March 2014

As I had previously mentioned, neglecting to include that pesky thing called accrued interest on my federal student loans means I miscalculated my net worth last month.

Here's another go at this.  My net worth is currently:


This consists of:
  • Cash: $10,253.18
  • Investments: $29,706.67
  • Apartment Deposit: $2,625.00
  • Credit Cards: $2,468.52
  • Student Loans: $173,432.62
While my net worth may seem like it's decreased since last month if you solely look at the numbers, I'm proud of the progress I've made so far.  I've paid off ***$15,605.71*** (!) of my private student loans, while continuing to invest in my 401(k) and saving cash to replenish my emergency fund.  I took a hit on my credit cards because I accidentally killed my laptop by spilling some green tea on it and replaced it with a new one.  (TIP: keep liquids AS FAR AWAY AS POSSIBLE from your laptop!)

Here's hoping that I can display a higher net worth next month!!

Happy Spring Equinox, my lovely readers!

Friday, March 14, 2014

I'm on a Roll!

I have an exciting update!  I paid off my highest interest private student loan, which incidentally also had the highest balance.  Private Loan 1 is now paid off, with a payoff amount of $11,344.15.  I paid for this out of money in my savings account that was just sitting there earning way less than the 5% interest I was paying on this loan.

We now have 3 loans paid off completely.  The total amount paid off thus far is $15,605.71.  It's scary to watch my savings account shrink, but I have reduced my recurring monthly expenses by $261/ month just by paying off these three loans.  I'm going to save that extra money to pay off my other private student loans.

I will be doing an update post on the total amounts owed on my loans and my net worth next week.  Check back soon for updates, my lovely readers!!

Wednesday, March 12, 2014

It's Actually Worse Than I Thought

I calculated my net worth wrong.  Ugh.  And it turns out I owe more on my federal loans than I originally thought!

I apparently neglected to include that tiny little detail called **accrued interest**.  So, instead of the $107,875.14 I originally thought I owed on the federal loans, I actually owe $123,325.13.  That's a $15,449.99 difference.  So that means my original total outstanding debt when I started this blog was approximately $190k, not $175k.  Le sigh.

So my March net worth update may turn out worse than February, just cause I've been calculating it incorrectly up until now, and my accrued interest wasn't showing up in my account until now.  Ah well.  I am working on getting better at this.  This blog is one attempt at improving how I manage my finances (including knowing what exactly I owe ;), so I will share my successes, failures, and mistakes along the way as well so that you, my lovely readers, can benefit from my mistakes!  See, there's a bright side to everything.  :)

Stay tuned!!  I'll be publishing a net worth update next week.

Monday, March 10, 2014

What I Really Need to Pay Off My Debt is a Political Career and a Book Deal

Apparently, what I really need to pay off my debt is a political career and a book deal for an autobiography.  That's how President Obama and Senator Marco Rubio did it.

What are your thoughts?  Should I run for public office?  (I kid, I kid.)