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:
Before Chart (Click to Enlarge Pic)
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.
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Well Done You!
sounds great ~ but how do you now pay for school? (or did you already pay for it with a cc?)
congrats on saving a bit of money!!
That is awesome you hit your goal of the 1K!!!Fantastic!
frugal trenches: thank U. I just hope that my decision to use the student loan will work the way I think it will. Only time will tell!
jpkittie: the amount was the ‘refund’ from my balance that was already paid.
So yes, I did incur new student loan debt to pay my school balance and accept the refund. My plan is that freeing up almost $500 a month using a loan that is still deffered will jumpstart this snowball process. Let’s see if it will work.
To all bloggers: I’d love to hear arguments against my decision – because I took out new debt, used a low interest loan to reduce higher interest rates, you think it…name it. Do you think I made a mistake?
budget mama: thank you. I believe that if I stick with “the plan” using this student loan was definitely to my benefit. 🙂
The question I have is: was this a private student loan or a subsidized fed’l loan?
If it’s a subsidized fed’l loan that has a fixed 6.8% APR, I think the fact that you moved your high interest rate debt to a low interest rate debt was good. If it’s a private loan, you have to be vigilant since the rates are variable.
The only other drawback I see with this plan is that you won’t be able to get rid of it via bankruptcy. On the other hand, if you ever come across hardship, you’re more likely to have forbearance options.
All in all, I think you did well!
Good – I wasn’t sure if that was a payment that would have been used for schooling — it will be great to save a bit on interest for sure
shtinkykat: yes, it is a 6.8% Fixed Sub. loan. So, there is no variable. Thank you for your input. I think the move will prove beneficial, as long as I continue course. 🙂
And your right, if I come into hardships I will not be able to file bankruptcy, but I will have a much better chance w/ options like forbearance.
jpkittie: Definitely paid school! 🙂
Now, I just need to make sure, as my plan proceeds, that I Snowball as quickly as can be before I have to start paying that student loan back! But, it is deferred until I finish my degree.
Hi there-after reading the whole post and your before and after situation all I can say is ‘WooHoo, Fantastic!!!’ From what I can gather, you’ve done the exactly right thing-4 debts PIF is excellent news, I say!