Monday, April 2, 2012

March Financial Update

Things here are continuing to steadily move along.  Even though the balance doesn't reflect a major victory, this month's payment marks one more milestone.  I put extra payments on loans #2, #3, and #6, to take care of the outstanding unpaid interest on each of those accounts.  Doing this will make each payment more effective.  My future payments will allow me to begin paying off the principal with what's remaining after the month's newly accrued interest is paid off.
Here are the numbers.

   $1394.12 total I paid towards my student loans.

                   $944.12 Minimum Loan Payments (67.7%)
                   $450.00 Snowball Payment (32.3%)

                    $776.61 Amount to Interest (55.7%)
                    $617.51 Amount to Principal (44.3%)

                    Percentage of Principal Paid (0.51%)




Like I said, things are moving.  Not as quickly as I would like them too, but now that the outstanding interest is gone my snowball payments will completely go towards my principal balance.  Yeah!

I do have a question for you readers.  Initially I planned on tackling loan #2 next because it has the highest interest rate and it would save the most money in the long run, but part of me is leaning towards paying off the next smallest balance first.  When it comes to buying a home they look at the amount of monthly payments you have and it might be better if I can eliminate another payment before buying a home.  Thoughts?

p.s.  I know a lot of pf bloggers and readers have committed to debt free living, and view a mortgage as an absolutely unnecessary burden.  While a mortgage is another debt, my goal is to use a home as another vehicle for paying off my student loans.  In my opinion a mortgage done right can be a huge financial investment.

2 comments:

  1. Mathematically, pay off the higher interest rate first- we both know that. But I think there is a HUGE mental boost to being able to knock another loan off the list and that shouldn't be discounted.
    SOooooo, I don't know? What is the difference in interest rates between the two?

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  2. Hey Amy, thanks for getting me to look at some different aspects. The difference in interest rates is about 2.6%, but the highest interest loan gains about $100 a month in interest *gasp* and the smallest balance loan gains about $35. Each snowball payment to my high interest loan will reduce the interest by about $2.75 a month. While a snowball payment to my smallest balance will reduce the interest by about $1.75 a month. Hmmm $12 a year... As much as I would love to see another loan knocked off, I just can't stand seeing a loan gain over $100 of interest a month. It's not the only one doing that either. #8 is gaining over $100 a month in interest as well. OOF!

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