Student Loans – Update and a Plan
As you may have seen my complain about from time to time here on NTBTWK, I wracked up a crazy amount of student debt while going through school. $71,504 to be exact. Now, when you consider that I was in post-secondary education for 11 years, it’s not actually that much – a mere $6,500 per year on average1 or $5,500 per letter I get to put after my name. And, as you’ve also seen me talk about here from time to time, I’m paying off my student loans as aggressively as I can, while still trying to have some sort of balance in my life2. I’m making sacrifices – not doing nearly as much travel as I would like, and renting a place in Surrey, where it’s much cheaper than Vancouver – as I’m putting the money I’m not spending on those things towards my student loans instead. The sooner I get them paid off, the sooner I don’t have to make giant student loan payments every month. Short-term pain for long-term gain, right?
Well, I did some number crunching on the weekend and I think I have a plan in place that means that I can have my student loans paid off by the end of next summer! When I first started paying off my loans, the loans were set up such that it would take me 9.5 years to pay off. That was April 2007, which means I was scheduled to have them paid off by October 2016! A combination of falling interest rates and me putting extra money that I have made towards the loans sure looks like it’s paying off!
At the moment, I have $24,000 left to pay. I currently pay $1,400 per month, meaning that I’ll pay $16,800 in a year. This, of course, leaves $7,200, plus all the interest on my balance3, unaccounted for, if I wanted to have my student loans paid off in a year. Fortunately, I have a some contract work that I’m doing and I figure that I can put all of the after-tax amount I make onto my students loans. But even that isn’t quite enough, so I’ve decided to do something drastic.
Ages ago, I started saving for a trip for my 40th birthday. Every two weeks, ~$25 is automatically transferred into a separate account that I’ve been using to save up for this trip. The idea, of course, is that you don’t really even notice $25 missing and then all this money piles up. Well, I can verify that such a system works, as I really have mostly forgotten that that money was sitting there. Until, that is, I realized how close I was to being within a year of my student loan freedom date, and then, all of the sudden, I noticed this $2,700 sitting in my birthday trip account that looked like something that I could really put to better use. I mean, I’m still a good 5.5 years away from my 40th birthday – that’s plenty of time to save! So I made the executive decision that I will take that $2,700 and I will give it to the student loan peeps and I will be that much closer to having this student loan monkey off my back. And then we will party.
- And that’s pretty much tuition fees and books most years. Jobs and scholarships were added into the mix so I could do things like eat food and not be homeless. [↩]
- Some money to student loans, some money for laser eye surgery. Some money to student loans, some money for braces. [↩]
- Interest on my student loans is currently 5.5%, except for a small chunk that is 4.5% [↩]