Tuesday, August 16, 2011

Our New Goal

I know I've been writing a lot lately about frugality and money, so are we surprised that I'm talking about it again today? No way! Hope along for the ride.

Recently, Ian and I made a decision to tackle his loans as early as possible. We have just begun the repayment process since they were deferred for two years while he was in school. It was a nice "break" - it gave us the wiggle room we needed to pay off mine! But now his have come in, and they are hefty. We have the typical 10 year repayment plan, but our new goal is to pay them off in 5 years!

I mapped it out and figured how much extra we would have to pay per month to make this happen. The amount is just beyond our budget, so with selling on ebay, etsy, and blogging, I'm able to contribute to the extra $140 every month we'll need to make this happen.

The number one reason we are determined to do this in 5 years is because the interest on the regular 10 year plan is over $10,000. Yes, that's right - 10 grand.

We know paying them earlier will not eliminate all interest, but I know it will be far less than the original number. I have heard that repaying loans sooner than necessary can affect your credit score This is something I need to look into. We have very good credit right now, and I don't want to mess with it.

So wish us luck! Maybe I'll give you updates every 6 months to tell you if we're "on track" with our goal! Do you think we can do it? I do!


i.ikeda said...

Just so you know, when I bought my first car on a loan, I paid it off ahead of time, but unfortunately that hasn't affected my credit score. It's still a good thing though, as you can save sooo much in terms of interest (holy cow, $10,000!). I don't even want to look at my school loans yet, because they are going to be astronomical - what with the PhD and having a kid to support and a husband who was also a grad student. *sigh*

Good for you guys to tackling this head on and making the extra payments.

Amanda said...

Good for you! We recently paid off a hefty student loan of mine and it feels so good to have that weight off...and snowball that money into another loan! Since I've taken over the bill for the past 2 1/2 years Dan finally has credit, not that we take advantage of it but he wasn't able to get anything before! It's nice to know there are young, responsible adults out there trying to get out of debt instead of digging deeper and deeper into debt.

Life After Piggie Smalls said...

Ugggh, school loans are going to be the death of me. We're about to pay off our credit card debt in a few months (this has taken us 4 years!), and I guess my reward for that is to start paying on my student loans, yay!