I was hanging out the other night, scrolling through my Mint app and having a grand old time congratulating myself on the progress I’ve made so far this month on my loans. I was feeling pretty optimistic about what I’d been able to do thus far in 2015 and scheming about my payoff abilities in coming months. “If I work this many weekends, I can pay off this amount of debt!” “If I continue to have a $0 food budget, I can increase monthly payments by $100!” The totally normal kind of stuff that one does on a Wednesday night.
It occurred to me that I had no idea how much interest I’d paid last year. I know that interest accrues daily on my loans and that following the debt avalanche method of paying off highest interest rates first is saving me money on interest, but I didn’t actually have a number down anywhere. So I did some quick calculations and figured it out!
How much did I pay in student loan interest in 2014? TOO MUCH. Well, any interest is too much for me, but I did pay a sum that was heartbreaking to me.
Total: $569.45
Private loan-$257.47
Navient loans- $311.98
For some people, especially those in debt, $569.45 is laughable. There are people who pay that much in two months in interest. For a whole calendar year, it doesn’t really seem that bad. However. To me, someone who was basically unemployed for four months last year, who had to take a 6 month deferment last year and who currently works five jobs, that is a BIG chunk of change.
Paying that money to interest is just salt in the wounds of my student loan debt. That’s money I earned catering until 1am. That’s money I saved by not buying food. That is money that I worked damn hard for and poof! It’s just gone. I paid thousands of dollars just on the principle last year AND I paid $569.45 in interest on top of it! It stings. It sucks. It makes me angry and it doubles my motivation to get out of debt ASAP.
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.
I know how you feel.It really eats you up. On the plus side, you are all over it and you are working a plan with incredible dedication.
Thanks Tim. That’s what everyone tells me but I am so ready to be 100% DONE. I wonder what I’ll be paying in interest this year…but I’m pledging to never be in debt again (except maybe a mortgage), so this is the last year with interest!
Hahaha that totally sounds like a normal thing I would do on a Wednesday night!
Also, have you tried calculating how much you’ve saved on interest by making extra payments? A little harder to figure out – but might be cool to see that extra money!
I love crunching numbers like that! I never have done exact calculations on saved interest but I’ve estimated I’ll save about $5,000 by finishing these loans off this year instead of in 2021. Finishing off my highest interest loans (6.8% and 6%) last year means I’ve already saved a boatload. More inspiration!
I try not to look at the interest I’ve paid, but I know the number and I cringe looking at it. The good thing is you can claim the interest on your taxes and get up to $2500 and get it back at least in Virginia). It is cool to add up how much you saved in the long run by paying it off early or by making extra payments!
I do appreciate the tax deductible aspect. I never get much back but if not for the interest I might not get anything back!