Wednesday, April 29, 2020

student loan payoff update: vol 1

At the start of the year, I shared our financial goals for 2020 with our biggest priority being to pay down student loan debt. We planned to put $75k towards debt, which is a challenging goal, but we had a solid plan to tackle it.
Then, the Coronavirus Pandemic hit and no one could have predicted the financial ramifications that it would have. 
Personally, I have taken a MAJOR hit with my job as I went from working 5-6days/week down to just 1 day a week. This is the safest option so I'm ok with it, but it doesn't mean that the loss of income doesn't hurt. We are fortunate that Husband is able to work from home, but we have definitely decided to put more focus on saving during this crazy time. With our new savings goals and the significant drop in income, our goal to payoff $75k this year is officially out of reach. But that's ok, life is fluid and we are trying to roll with it. In the meantime, we will pay off as much as we can this year and I will share updates of our progress each quarter. On that note, let's look at what we paid off during the first quarter of the year...

January 2020 // $3,827
Minimum Payments: $1,006
Extra Payments: $2,821

I'm really pleased with our January payoff. With taking time off for the holidays in December, it meant less money coming in January. After meeting our minimum payments for the month, we paid off the remainder of our highest interest rate (7.6%) loan and started chipping away at our second highest interest rate (7.0%) loan. Baby steps.

February 2020 // $6,024
Minimum Payments: $1,000
Extra Payments: $5,024

February was a good income month for us, but we had a few bigger costs that expanded our normal budget. It was Husband's birthday this month = all the presents. We also paid into an upcoming international trip. And we found ourselves unexpectedly taking time off from work and covering the cost of travel for my grandmother's funeral. Still, we managed to put a big chunk ($5k) into extra 
payments, targeting our 7.0% loan. 

March 2020 // $3,036
Minimum Payments: $1,000
Extra Payments: $2,036

March wound up being a crazy month with big expenses and rapidly changing finances. Realizing that we owed taxes this year, we paid into a big tax bill before heading off to travel though the Middle East. Thankfully, most of this trip was paid in advance. When we returned, the Coronavirus was revving up, which led to a sudden reduction in my job and a big shift in our financial goals. We switched gears into emergency save mode, which meant we only put $2k to extra payments this month. 

Debt Payoff Vol 1: $12,887
Interest: $5,347
Principal: $7,540

We didn't pay off as much as we had hoped this quarter due to Coronavirus. But what we did pay down is nothing to scoff at with an average of $4,295 per month being sent to debt. We paid off our largest interest rate loan during this time, which is huge because the payoff date was scheduled for 2031.  I'm literally doing the biggest happy dance knowing that we won't be making payments with added interest on this loan for the next 10+ years! We also managed to pay down about half of our next highest interest rate loan. All of this led to a big daily reduction in interest for us. 

Future Goals
I can't even begin to guess how the next quarter will go. We don't know if things will get better or worse with the Covid-19 outbreak and I have no idea how it will ultimately affect job security in my industry. Regardless of it all, we are focusing on saving more. And since the government has cancelled federal loan minimum payments and interest through the end of September to help lessen the financial burden of the virus, we will be taking advantage of this interest-free time to hit our savings goals. 

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