Hey everyone, I’ve been working hard to get my student loans under control and wanted to share my progress and get some feedback on my plan going forward.
Here’s where I’m at:
Federal loans
Current balance: $26,673
Originally about: $38,000
Minimum payment: $327.69
Private loans
Current balance: $136,881
Originally about: $75,000 six years ago
Situation: My cosigner filed bankruptcy which put the account into a stay, so it was my understanding that I couldn’t make payments and the interest ballooned. That’s what the customer service rep at Sallie Mae told me when I originally tried to start payments. Earlier this year when I tried to negotiate some of that interest they told me that I could in fact make payments, just not online and I didn’t know that, so it’s my fault the debt ballooned. If I knew that I could make payments, I would have.
Recently refinanced from 9.875% through Sallie Mae to 5.81% with Earnest in April
Old minimum: around $1,500
Current minimum: $965.54
Progress so far:
Since February, I started an aggressive payoff plan using the snowball method. After making all minimum payments, I threw everything extra at the smallest loans. In about 3 months, I paid off a little over $10,000 of my federal loans.
Cash flow:
I have about $5,200 per month available to put toward student loans, including minimum payments.
Current plan:
I decided I need to prioritize an emergency fund before continuing aggressive payoff.
Step 1: Build a 3 month emergency fund of about $15,000 while only making minimum payments on loans
Step 2: Once that is done, resume aggressive payoff while continuing to save $1,000 per month until I reach 6 months of expenses
Step 3: After I hit 6 months savings, put all extra money toward loans again
Step 4: When my final loan balance is about equal to 3 months of expenses, pay it off in one lump sum from savings
Based on my math, this is roughly a 4 year plan.
What do you think about my plan? I wish I would’ve been smarter with my Sallie Mae loan earlier on and saved myself the trouble of the interest ballooning to its current balance, but I wasn’t and now here I am.
Appreciate any feedback. This has been a grind but I’m trying to be more intentional instead of just throwing money at it blindly.