Earlier this year I finally decided to set a goal to pay off my mine and my wife’s student loans. Since we got married last year we have been paying extra toward our loans but we were just paying an amount that we were comfortable with. While there was no defined goal we did agree that paying off our student loans was a priority, we even put most of our wedding-gift money toward our loans! Sitting at home one night earlier this year I decided that it’s time to pay an amount which we AREN’T comfortable with so that we can get on with our lives.

Our Financial Situation
Our take home pay averages about $4400 a month. Right now it is my wife’s busy time of year so she is getting a lot of overtime, this should end by May. In January, I started a paper route to relive the nostalgia from when I was younger and that brings in about 200 additional per month. Hopefully by the end of March I will begin my summer side-gig doing landscaping. I find this work fulfilling and it’s a great way to make money on Saturdays and in the evening. Last summer I made about $4000 and I hope to increase that this year.
We have an emergency fund of $2500 and about $5000 in our checking account. At this time we are not looking to put more into our emergency fund but in the future we certainly plan to have 6+ months of expenses saved. We put everything on our credit card but never carry a balance/pay interest and are enjoying accumulating rewards.
I am contributing 14% of my salary to my 401k and my company contributes 4%. My wife contributes 6% with no company match guaranteed but it may happen depending on the year. Our contributions and match should total about $10k a year. Right now our retirement savings are at about $19k.

Expenses
I budget for our expenses (mortgage, utilities, food, transport, charitable contributions, and entertainment) to be around $2100 a month. For this experiment we will not be including our mortgage as part of the snowball. When our student loans are paid off we will reevaluate our financial situation and determine our priorities (retirement savings, college fund, kids?) You may notice that the debts are not being paid off in the order of highest to lowest interest rate. To be fair since we both contribute financially and to make it feel like we are both making progress we have decided to alternate between paying one of my loans and one of hers. The difference in interest paid was minimal and I was willing to make this compromise to get her onboard.

Debts:
Mortgage: 83,385@ 5%
Auto Loan: 452 @ 5% - will be paid off very shortly
1. Bill’s Loan 1: 961 @ 7.9%
2. Sarah’s Loan 1: 3,684 @ 6.8%
3. Bill’s Loan 2: 4,290 @6.8%
4. Sarah’s Loan 2: 4,562 @6%
5. Bill’s Loan 3: 4,318 @6.8%
6. Sarah’s Loan 3: 8,261 @ 5.75%
7. Bill’s Loan 4: 12,891 @ 5%
8. Sarah’s Loan 4: 751 @ 5%
9. Bill’s Loan 5: 4636 @ 5%
10. Sarah’s Loan 5: 5,127 @ 2.79%
11. Bill’s Loan 6: 2,587 @ 2.36%
12. Sarah’s Loan 6: 2,106 @ 2.36%

If I managed to rekey these from my spreadsheet correctly the total amount should be $54,626. Right now we are paying $1070 which includes my soon to be paid off auto loan and two other loans that have been snowballed in. The minimum payments for the student loans which we working on add up to $730. The goal is to begin paying a total of $2000 a month toward these loans. If we are able to pay that amount every month I estimate that we will be able to pay off all these loans in August 2014, 29 months from now. August of 2014 isn’t bad…but the goal is January of 2014. If we pay $2,000 for 29 months we will pay $3,216 in interest and a total of $57,842.

So we need to come up with quite a few more thousand dollars. Realistically I do not see myself continuing with the paper route past May, but I plan for $600 extra to come from that by the time I am done and I will add that in. If I only make $4000 landscaping this summer I plan to apply that to the loans in October. By adding in this $4600 the payoff date changes to June 2014, saving me two of the needed 8 months and $441 in interest! Of course I am not going to rely on the potential income and if for some reason it did not come through we would not be in financial hardship.

I feel the need to mention that we are not increasing our EF at this time because in the unlikely event that one of us loses our ability to earn income we would be able to survive on one income. If there were some sort of emergency car or home repair we could reduce to only paying the minimum amount on our loans, this combined with the $2500 EF we have should be enough to weather any unforeseen situations.

So...what do you think?

Looks good, looks like you have a solid plan.

Without a list of what's in your budget we can't suggest where trimming could be done.

However, one obvious one would be to continue with the paper route, or find another part time job, or a better paying full time job, to get the extra cash you want so you can get it done by Jan '14.

Looks like you're on the right track. Just make sure you don't overdo it. You're paying of your loans at a good rate with your current plan. Don't make you're life now miserably to pay of your loans a few months earlier. Anything you can do is great, but if you're making massive sacrifes that seems like the wrong approch.

Good luck!

That's the nice thing, at this point we are living comfortably. That's why I was skeptical of posting my expanded budget, as Geoff requested. I would say that to make it miserable that we could ditch or reduce the HSI, cell phone with data plan, satellite package.

I paid off my car loan It is a hassle to get the funds to that account so I made slightly over a double payment this time so it is one less thing to remember next month! Paid off probably 6 months early overall.

Woohoo!

Woot! My company made their annual contribution to my Employee Stock Ownership Plan and the value of that takes our retirement savings to just over $22k. I won't be fully vested for a few more months but it's free money toward retirement!

Today was a loan payoff day!

Auto Loan: 452 @ 5% - Paid Off
1. Bill’s Loan 1: 961 @ 7.9% - Paid Off
2. Sarah’s Loan 1: 3,684 @ 6.8%
3. Bill’s Loan 2: 4,290 @6.8%
4. Sarah’s Loan 2: 4,562 @6%
5. Bill’s Loan 3: 4,318 @6.8%
6. Sarah’s Loan 3: 8,261 @ 5.75%
7. Bill’s Loan 4: 12,891 @ 5%
8. Sarah’s Loan 4: 751 @ 5% Paid Off
9. Bill’s Loan 5: 4636 @ 5%
10. Sarah’s Loan 5: 5,127 @ 2.79%
11. Bill’s Loan 6: 2,587 @ 2.36%
12. Sarah’s Loan 6: 2,106 @ 2.36%

Total Debt: $52,123.45 ( I can't make up the 12345...)

I paid off my highest interest rate loan today and a small nagging one for $751..

I also turned in my notice on the paper route. It was not worth the sleep being lost and the hassle of having to be home EVERY night...

Estimated payoff date is still June 2014

Well I got myself into a situation by paying off a loan out of order. The loan was owned/serviced by ACS Education. The regular loan payment of $40 was scheduled to be taken on April 1. We also scheduled the payoff amount to come out that day. They have withdrawn both payments from our checking account and we are now not able to log in to the account. I was initially aware that there may be a problem because I was expecting the loan balance on Mint to go to zero but I gave it a few days before contacting them.

My wife called them today and told them what was going on. The first level support she talked to wasn't very helpful. He basically told her that he has no record of her loan but people above him may be able to look at more details. He also suggested that she contact someone at the National Student Loan Database to see if they have record of the loan. She is going to contact ACS again tomorrow to see if she can get any more details.

Personally I feel that it is ridiculous for them to tell her to contact the NSLDS so I hope that we are able to resolve this with ACS. A google search brought back plenty of people with awful experiences so I am not getting my hopes up...

It wasn't a very exciting month in the student loan repayment area. We did resolve the issue with ACS, they are sending a document that states the loan has been repaid, I plan to keep that document for a long time.

I paid more than I should have on the loans this month causing the balance in our checking account to get lower than my wife would like. This happened because I applied the snowball amount to the next loan on the list a payment sooner than I should have but all is well.

Auto Loan: 452 @ 5% - Paid Off
1. Bill’s Loan 1: 961 @ 7.9% - Paid Off
2. Sarah’s Loan 1: 1785 @ 6.8%
3. Bill’s Loan 2: 4,240 @6.8%
4. Sarah’s Loan 2: 4,484 @6%
5. Bill’s Loan 3: 4,211 @6.8%
6. Sarah’s Loan 3: 8,156 @ 5.75%
7. Bill’s Loan 4: 12,751 @ 5%
8. Sarah’s Loan 4: 751 @ 5% Paid Off
9. Bill’s Loan 5: 4422 @ 5%
10. Sarah’s Loan 5: 5,076 @ 2.79%
11. Bill’s Loan 6: 2,525 @ 2.36%
12. Sarah’s Loan 6: 2,065 @ 2.36%

Total Debt: $49720.18

Keep looking at that paper and keep going! More payoffs are in sight.

Which loans are you aiming for next?

Sucks when you get too excited and transfer more out of your daily spending account than you should, but sounds like this time you were able to make do and thus actually got ahead on your loans?

Next loan is Sarah’s Loan 1: 1785 @ 6.8%. It will be paid off in June. The loans should paid off by their order in there list from now on. Our checking account should be restored to a comfortable level by the end of the month assuming nothing unexpected pops up...Estimated payoff is April 2014

I'm curious why loan #s 6 and 7 are where they are. They're awfully large loans, so it'll take awhile to pay them off - why not put them at the end, so that you can pay off a bunch of smaller ones first?

Because they have higher interest rates than the ones after it. It saves interest.

It isn't Dave Ramsey's method, but it is mathematically superior.

I could see switching 9 & 7 but I was trying to keep the order of paying one of mine then hers... It's not perfect but it keeps her happy. Keeping that in mind I think the order I have them listed minimizes interest paid and maximizes the wife's happiness and therefore I win!

Also until we get to those loans the additional amount we pay each month is going to be so large that it won't make too much of a difference in payoff time.

Good plan and good effort you've got going. It definitely helps to have a plan to keep the motivation strong.