As I’ve mentioned in my first article I amassed around $35,000 of student debt to pay for my college education. Fortunately, I was able to start an engineering job with a $71,000 salary two months after I left the university in the same city, which has a lower-than-average cost of living. And within the first month of being employed Kubo Queen and I received a windfall of $10,000 (before taxes), which we put all to use towards my student debt. From there, I elected to pay my student loans, whenever possible, $3,000 per month.
I have some great news. After five months of making payments I now only owe $16,743.65 of student debt — less than half of what I had originally owed! I’ve made good progress towards my goal of paying it off in a year. It truly feels amazing. My plan is to stay the course until I’m debt free.
However, you might be wondering why I’ve set a pretty aggressive goal. Why do I want to pay it off in a year, which requires me to put the majority of the money I make (around 78% of my paychecks) towards my student debt every single month? Why don’t I choose to only pay the monthly minimum of $250 so that I can have more of my money to enjoy each month? Well, there are many great reasons.
The most obvious reason is that the longer it takes me to pay off my debt, the more money I will have to pay in the long run. This is due to the interest that is accruing — daily. For example, if I chose to follow the standard repayment plan (which would mean only paying the monthly minimum of $250 a month) then it would take me 10 years to pay off my debt, and I would be paying an extra $10,000 (approximately) in interest on top of the amount I originally borrowed (the $35,000). However, by being aggressive with my payments, it will only take me about a year to pay off my debt, and I will only be paying an extra $1,000 (again, approximately) in interest. That is a difference of $9,000… Personally, I would rather keep the $9,000 for myself. It’s a significant amount of money that could be used for something more meaningful and fulfilling than student loan interest payments.
The other reasons will be discussed in another article. But, I hope you find the one above a strong enough reason to pay off your debts (if you have any) as quickly as possible. Why would you want to give away more of your hard-earned money than you have to? You give up a lot of your free time and energy to earn money. So do not give it up so easily.
Anyway, as I’m typing these words on my couch, Kubo Queen is right beside me lighting some candles on the coffee table. It’s time for me to spend some good quality time with her. I hope you have a wonderful Christmas!
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