Today I have an unexpected and wonderful loan update: I just paid off the remainder of my Stafford 2 loan! I officially only have two loans left and $8,633 left in debt!
This month my goal was to pay off my Stafford 2 loan. That loan had a balance of $1,515 at the beginning of March. It also had an interest rate of 5.35%. As I am following the debt avalanche method, that was the next one on the chopping block. I am proud to say that as of today, it has a balance of ZERO!
To really explain how I was able to do this, let me explain a little more about my finances.
I have five part time jobs. That means I have five separate paychecks. Three of my jobs pay me every other week (but operate on different schedules, so I don’t receive them all on the same day), one job pays me once a month and one job pays me whenever I invoice them- roughly twice a month. So, that means my paychecks arrive all over the place throughout the month. That is awesome for debt payoff.
One of the things I have found to be most effective in debt payoff is making frequent payments. Not necessarily huge ones, but just paying something once a week or once every two weeks has been the number one thing to help my debt crumble. Since my paychecks come more than the normal twice per month, I am able to do this really easily. And since debt payoff is my priority right now, my frequent payments are large.
There are the payments I made this month:
3/3/15- $600 (entire first (of two) paycheck from my non profit job)
3/5/15- $100 (part of a catering paycheck)
3/10/15- $116 (monthly minimum payment, deducted automatically. $57 goes to another loan.)
3/10/15- $200 (random check from my Grandma! Thanks Gma!)
3/12/15- $557.91 ($255 from catering paycheck that came in on 3/12, $302.91 from checking account)
Total amount: $1,573.91
Here are the dates I’ve gotten paid this month:
Notice a trend? As soon as I get paid I make a loan payment. I don’t let the money sit in my account for no reason and I don’t let interest accrue on my loans for one second longer than I have to. This means more of my payment goes towards the principle, not to interest. Making more payments each month has been a game changer for me!
I still have two paychecks to come this month, which means I may be able to make another $200 payment. Of course, I still need to pay rent and fill my gas tank, so that also may not happen. But here’s hoping!
Alas, I will not be able to keep up this kind of payment level past April. I have been working as much as possible since the beginning of the year to take as much action as I can on my loans. I’ve been going 110% and while that has added up to great loan benefits, it’s not feasible for the long term. It gets to 110 degrees in Austin during the summer, making catering a sweaty and even more laborious job. Not my cup of tea. My coaching job also ends in mid-May, which is roughly $900 a month gone from my monthly income. Plus, I’m planning on using my last coaching paycheck that’s coming in early May to pay for my San Diego trip. I didn’t forget about planning for that trip!
So what’s next for my loan game plan? I’ve got two loans left: MyCampus Loan, with a balance of $4,586 and an interest rate of 5%, and my final Navient loan, with a balance of $4,047 and an interest rate of 4.35%. Since I’m following the debt avalanche method, I’ll be knocking the MyCampus Loan off next. I hope to do it by the end of July!
Kara Perez is the original founder of From Frugal To Free. She is a money expert, speaker and founder of Bravely Go, a feminist financial education company. Her work has been featured on NPR, Business Insider, Forbes, and Elite Daily.