Why I’m Accelerating my Student Loan Payments

Oh Government you think you are so smart, with your low interest rate, meagre minimum payments and length of payback period. I’m on to you. I shall not play your little game. Ever.

Let me just state for the record: I absolutely hate my student loan and I want it gone. Like yesterday or the day before that. The thought of paying a loan for 12 years is the stuff nightmares are made of and being debt free is high on my list of priorities. I would rather tie a ball and chain to my leg and walk around with it or go to a butterfly house than sheepishly pay money for all those years.

While I think its thoughtful (or greedy) that the minimum payment is so low. I have to say thanks but no thanks and I have a few reasons for why I will pay more than the required amount per month.

Interest is no joke!

I borrowed $25,000 and if I pay my minimum payment for 12 years plus wait until after my grace period to start paying my interest will be something like $10083.53 That is an ugly number (and also bad at Math, so that may be wrong) and while I may not feel it over that length of time, I simply cannot ignore it and play along.

My interest rate is variable and while I admittedly don’t know much about the economy, I just feel like it can only go up from here. The quicker, I get out the better.

Added to my interest is some random insurance fee but thankfully it doesn’t affect my principal.

I have sureties

… and they would have to pay if for some reason I can’t make my payments any more. How shitty would it be that, I was living it up and probably doing more than them while paying the minimum amount, and then they have to pick up my slack. That wouldn’t be fair to them.

I don’t want to be 30 with student loan debt

I don’t even want to be 26 with student loan debt. While I probably won’t be one of those super ninjas who pay off their debt in 9 months, I will do my best to knock it off in less than 5 years.

I want to travel

This sounds so cliché but I want to see other places and paying that money over that length of time would mean potential money will always be tied up and spoken for. If that means not  travelling every year for the next couple of years because I am paying off this loan, I’m cool with that.

Some may argue that I could invest my money rather than pay off the loans fast, but mentally I can’t handle knowing I’m not doing my best to eliminate them. I love seeing my balance grow, but I love seeing my debt decrease more.

That’s essentially why I’m accelerating my payments and trying to get out of debt as fast as I can.

Do you feel that paying off debt early is important? If so, what are your reasons? If not, why do you feel that way?


Achilles Heel

Achilles Heel: Everyone has one or many and mine is junk food, but I’m getting way ahead of myself here, so let’s rewind.

I started budgeting on the 1st of February 2013, because I like to start things on a fresh page and January 1st had already gone, but like any normal person in this here 21st century, I decided to post my business on the internet, but  I digress.

One of the main reasons for starting a budget was to be able to pay way more than my minimum payment on my student loan and be able to track my money, so that I could save effectively. It’s no fun going to the bank and just randomly taking cash out and then one day realising your balance is not what you thought it should be. I started the process of working out how much I needed per week for my fixed expenses (transportation, loan payment, mobile payment [it shall remain] etc.), important variable expenses and savings. After jotting these down, came that all important category: Allowance. Now my allowance money previously went to, you guessed it, junk food. I could buy potato chips, gummy snacks and chocolates (the wafer kind) everyday with real hard earned money. If that wasn’t bad enough, I just went to the ATM at the beginning of the week and withdrew any amount of money I felt like using that week.

That crap would be no more!

I started off with a $30 weekly allowance ($6.00 per day), to cover junk food and other misc items and then after a few weeks chopped it down to $20 a week (4 frickin dollars a day!). I’m a master at trying to beat myself at my own game (slightly delusional but it works) so I would buy all my junk food at the beginning of the week for $6.00, ration it throughout the week and save the rest of the money. I’ve gotten to the point where I don’t even buy junk food everyday and I attribute that to three things:

– making sure I eat breakfast everyday

– not craving the snacks

– saving is more important than eating empty food, no matter how good it taste

Maybe I will walk into a store with $10 and walk out with a bag of junk food, later to be found hunkering down behind the sofa.

Here’s to seemingly overcoming my achilles heel and hopefully you can overcome yours too.

Small Victories

Delayed gratification is not something that most of us born in the last three decades are very fond of. We have become accustomed to this fast paced life and having things at our finger tips. No longer do we have stalk the radio to hear our favourite song or wait until we get home to tell our friends about something awesome that happened. So naturally, I don’t want to take 12 years to pay off my student loan. The thought of paying out money for 12 years is not a happy one, so I’ve created a goal to pay it off in 5 years or less. It is really daunting to look at my Student Loan balance and think I owe that much money to someone, so I’ve decided to create small victories for myself and my peace of mind. It is powerful, isn’t it, tricking yourself to make a situation more appealing.

The plan

The yearly payment required on my loan will be paid in a  four month period, therefore I will be paying off three years of my loan in one year. I will work with four month goals and subtract each payment from that goal amount and every time I knock it off, it will be small victory for me. My balance will still be high in the first year or two, but at least I will be meeting my goal, by cutting the large balance into smaller chunks. The amount for the payment will be one of the first things I budget for each month.

The Good News

My payments are not scheduled to start until June but I have started paying since February, so I’m ahead of their schedule. I have paid off all the interest that accumulates during the one year they give us to start paying back and have started the principal payments. Once I can keep this up, I should be able to pay off this debt by 2017 (gosh that seems so far away).