It’s the beginning of a new month, and while, for most people this occasion might be fairly inauspicious, in our home it’s a HUGE DEAL! Why is it such a huge deal you may ask? It’s the start of a new budget!
At the beginning of each month Katie and I take some time to do a final review our budget from the previous month and see how we did in each category. We tally up how far under budget we were in each category, and ensure that, if we did go over in any of our categories we’ve covered those expenses from our surplus. Once we have reconciled each category we add up how much under our budget we were, zero out all the categories, and add all surplus money to the category titled “extra money to put towards student loans.”
As I mentioned in a previous post, we’re usually able to come in well below our budget. This is where it gets exciting: WE GET TO PUT ALL THAT EXTRA MONEY TOWARDS OUR STUDENT LOANS!!!
Earlier this week, through careful budgeting and spending, and some windfalls, we reached an important milestone. We finished paying off my bar study loan. When we began focusing our resources on this loan the balance was about $21,000 and the interest rate over 8%. Today, we are free. Free from the thousands of dollars we had accrued in interest, free from the hundreds of dollars that were accruing each month when we began paying off this loan, and free from the $35 we accrued in interest last month, and will never accrue or have to pay again.
A few other amazing things happen when you pay off a loan too. We budget a few months in advance so the money we had earmarked to pay the minimum on this loan in June and July went instantly towards the next loan we’ll be focusing our attention on. We were able to delete a line on our budget. We won’t ever have to think about that loan again. That expense is gone. We get all that money back forever. We get to “snowball” meaning, much like a snowball rolling and gathering more snow and getting bigger, we get to take our ever increasing surplus of money from obligations we’ve eliminated and instantly use that money to pay off the next loan we’ll be focusing on even faster.
All of these things are awesome, and make you feel good! When you pay off one loan it makes it that much more possible to pay off the next loan, and it gives you additional hope that your task of getting out of debt is possible.
I wish upon each of you suffering under the weight of student debt the same good fortune! Keep pushing, and those loans will be gone sooner than you think. Feel free to share your success stories in the comments below!