Welcome to my July 2018 student loan debt progress! If you are new here, every month, I post the progress I’ve made on paying off my student loans. I do this to hold myself accountable and to share my debt progress with others who are also facing debt payments of their own.
Debt paid this month: $13,000
Debt remaining: $98,004
Check out my debt progress so far from the very beginning here.
FYI: I am on the REPAYE program which allows me to make $0 minimum payments each month until 2019 hence why I am able to only make payments to one loan without having to put in minimum payments to all my other loans.
Updates for This Month
I am so excited to finally announce that one year since I started repaying my student loans and made my first debt progressin July of 2017, I have now officially shed my title as a six-figure debtor! This month I was able to get out of six-figure debt!
Yes, that’s right, I now owe less than $100,000 in student loans! I never thought the day would come. One year ago, I set a crazy goal for myself to pay off my $212,000 loan in 3 years. I honestly didn’t know how I was going to do it. Mathematically, it was impossible to contribute ~$70,000 per year to accomplish this dream when my salary after taxes was going to be less than that.
But I thought, why not set a crazy goal, document my journey, and see where it leads me.
A little back-story on my loan (which you can read the details here), I started my debt repayment journey in July of 2017 with $171,324 in federal student loans.
I also owed my parents ~$41,000 which made my total debt ~$212,000.
In my efforts to avoid overwhelm, I’ve only been documenting my journey to paying off my student loans, not the personal loan from my parents. As of my one-year debt repayment anniversary, I’ve paid down my student loan from $171,324 to $98,004.
Just as a disclaimer, this number may be a bit misleading though as I’ve received an additional $10,000 loan from my parents this month. I also received additional loans from them inJuly 2017and October 2017to help pay down my student loans.
This means that while I’m able to pay down my federal student loans by $13,000, my overall loan amount has not been reduced by $13,000 this month.
What Worked
While I continued to implement all the strategies I wrote about on my May debt progress, the biggest contribution this month came in a form of $10,000 help I received from my parents (which I will pay back).
I want to be completely honest in my debt progress review and not underscore the help I’ve been lucky enough to receive over the years.
I know not everyone is fortunate enough to be able to get monetary assistance from family members so I do not take it for granted that my parents are willing and able to help me out.
I mentioned in my How I Got Into $200,000 Debtpost that I owe ~$41,000 to my parents. Since my focus has been on paying off my federal student loans, I don’t really write about the money I owe my parents (interest-free! yay!).
I have, however, been paying $500/month since October 2017 to my parents so in total I’ve paid $5,000 back. I will, of course, be paying it back at a faster rate once I pay off my student loans but for now, they are supporting my mission to pay off my student loans hence why I received an extra $10,000 loan from them this month.
Overall the things that worked this month for me were pretty much the same as what worked last month so check out my June debt progressfor the detailed description of the four things I did last month and this month to contribute $3,000 of my own salary to my student loans.
The four things were:
1. I had a concrete short-term goal in mind.
2. I made payments to my student loans as soon as I receive my paycheck.
3. I worked a lot. I made sure to pick up any available shifts even on weekends to get extra cash.
4. I charged my expenses to my 0% interest credit card to allocate the majority of my income to the loan payment.
Goals for August
I really like the idea of having goals for each month to keep myself on track and motivated so I create goals for the following month on each debt progress report.
The goal for August is to finally finish off my last 6.2% interest rate loan (my highest interest rate loan) since I am using the debt avalanche method. It will be my last loan with an interest rate > 6%!
This loan has a balance of $4,417 which I’m optimistic I’ll be able to finish off in August.
Unfortunately, I was unsuccessful in meeting my stretch goal of contributing $5,000/month that I had successfully met for the last 2 months.I was only able to contribute $3,000 of my own money this month.
This is because I saved up the majority of my second paycheck to rebuild my emergency fund. For the last two months, I started dipping into my emergency fund to meet my stretch goal as I knew I was getting close to my major goal of getting under $100,000 debt.
Although the past 2 months I’ve been contributing $6,000/month to my loan, I have really been working hard to cover every shift I can get my hands on.
I mentioned last month that I’m not going to be able to get as many hours in the coming months at work so I will be less aggressive in my debt repayment.This is probably a good thing to give my body and mind a break.
I have a lot of reassessing to do now after aggressively paying off my debt for a year. I am looking to find a place of my own so I may start putting more money into savings or investing my money the rest of 2018 as all of my loans are on the REPAYE program and have very low-interest rate this year. I wrote about how the REPAYE program allowed me to cut my interest rate by more than half on this post.
My big goal for 2019 is to have enough money saved up to purchase my first home. I live in a HCOLarea and homes are outrageously expensive so I expect it will take me at least one year to save up for a down payment.
Last but not least, I have already started planning a change to my debt repayment strategy and as soon as I finalize it, I will document it in a new post. Until then, I will be chipping away at my 6.21% interest rate loan and hopefully, by the end of August, I will no longer have any debt with >6% interest rate.
