Actually, I decided to payoff some of the CC’s with a student loan that was much lower in interest rate.
Note: husband also received his reimbursement for his Florida trip:
Costs of my husband’s work trip to florida: $1001.05
Reimbursement: $1001.05 PIF
Okay, student loan check senerio:
Recieved Student Loan check @ 6.8% interest: $4410.00
Do I use it to payoff some higher interest cards or send it back to the loan company?
Well, as you can see, I decided to use it, with my reasonings below:
I completed Ramsey’s step 1 and funded our Emergency Fund: $1000
Paid off balances w/ higher interest rates:
After Chart (Click to Enlarge Pic)
By using my student loan @ 6.8% interest,I managed to:
(4 cards = $567.96 annual interest rate divided by 12 months = $47.33 x 2.5 months left in the year = $118.33; $4410.00 x 6.8% = 299.88 divided by 12 = $24.99 x 2.5 months left in the year = $62.48; so,$118.33 – $62.48 = $55.83). Did you get all that???
Hey, it’s $56 saved. It’s worth it to me and my family. Because, if I was accounting for the 5 years of paying down my Snowball schedule, I would save $1076.85 in interest payments all together (4 cards = $514.75 interest per year; student loan = $299.38 interst per year; $514.75 – $299.38 = $215.37 x 5 = $1076.85).
But, that is not all. I have now created an extra $182.00 month payment to go towards paying down the 5th card. That is $37 + $182 = $219 per month to pay down a balance remaining of $767.38. Booyah!
Oh ya, and I get to put our 5% savings from the paycheck to the snowball schedule/bills (approx. $270 per month)! So now, I have freed up $489 per month to pay down the balance remaining on the 5th card (and so forth)!
So, now I need to prove that saying, “it takes money to make money”. Let’s see if this change will now speed the snowball process. Hmmmm????
Do you think accepting/using the student loan in this manner was for my benefit? Love to hear what you think! See comments for further clarification.
I’m starting to get the ball rolling faster. It’s exciting. ha! Happy Tuesday, y’all! Happy Tuesday.