Our 2007 Goals Status, Part 2: Increase Student Loan Payments
Posted on December 07, 2007 by Him and tagged goals, student_loan
This is part 2 of our retrospection on our 2007 goals. See part 1 here.
The second goal that I'm going to discuss today is putting extra money towards student loans. Her's student loans come in two flavors: private and federal loans. The federal loans have interest rates that are <4% and have balances totaling ~$40,000. The minimum payment for these loans are automatically deducted from our account once a month.
The remaining ~$80,000 are private loans, with interest rates high enough to kill most vermin and maybe other small mammals.
Ouch, yo.
For 2007, we decided to attack this a little more aggressively. The minimum amount owed per month is ~$775 for this loan. Instead of paying this amount once per month, we paid $450 every two weeks. This ensures that we tack on an extra $900 on the student loans for the year since we'll be making the equivalent of an extra payment, plus another $150 per month we pay over the minimum. Our total extra student loan payment for this year is then ~$3,000. In our experience, paying every two weeks also limits the amount of interest that accrues so more of our payments go towards principal.
Looking back at this, the additional amount seems pretty measly, but then again a year ago we weren't anywhere near the financial place we are now. We're going to look to revise this goal for next year.
We also helped out this goal by transferring $11,000 of the private loan balance to a credit card with a lifetime interest rate of 1.9%. That alone saves us a ton in future interest costs.
Status: Completed
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Him | Dec 10, 2007 | Reply to Natham Crewott
The 1.9% interest rate came from an MCU Credit Union credit card. Try your local credit union for these deals. MCU has been great to us an even sends up coupons for free pie.
marie | Dec 7, 2007
Rah! Way to go! I know what you mean when you say that the extra seems paltry, but try to keep in mind that debt gets erased dollar by dollar, and every little bit counts. So, try to focus on the positive and give yourself credit for taking control of your finances and taking reasonable steps to eliminate the debt.
Reggie, another kid with good credit | Dec 7, 2007
I'd like to learn how to get a 1.9% interest rate.
karen | Dec 29, 2007
I too have massive student loan debt with several ideas and plans for repayment. I'm also considering a super low interest credit card for a small chunk. Where I hesitate is that I'm not sure what the min payment would be. Is there a set percent for all companies or do they tell you before you transfer?
NP | Jan 25, 2008
I had 50K in private student loans, and after paying off about 20K, I used 0% credit cards to pay off the rest. Now I am only dealing with those 0% careds (need to apply for new ones and roll the balance every 12-15 months) and it helped immensely. Discover used to have 0% for life promotion, and a few other cards offered 2.99% and 3.99% for life of the balance, so it worked out great. Now I just have to watch minimum payments made and pay some extra. While this is a somewhat risky strategy, it works if you watch it carefully and closely and go through all the offers in your mailbox for the best deals. I picked up a lot of tips on fatwallet, but overall, whoever decided anything could refinanced through 0% cards was a genius :)
Natham Crewott | Dec 7, 2007
1.9% forever with no balance transfer fees? That is an incredible deal and a great way to refinance student loans. I'd love to find a deal like that myself. Has anybody else ever come across something like this? Any idea on where to look for something similar?
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