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.