Continuing from my recent post, our next big item was student loans. Some may say that student loans don’t need to be paid off rapidly and it is considered as a “good debt”. I don’t consider any debt to be good. Combined, we accumulated over $25,000 worth of school loans.
We tried calling the loan company, (I won’t mention the name, but you know who I’m talking about) to see if the loan can be forgiven or reduced, but the response we received was to either defer the loan for a year while accumulating interest or join the military. Those options didn’t work for us so we chose a different route. Divide and conquer. The framework of the loan was categorized by year/line item and the amount borrowed that year. So one line item may have $800 because of the year it was borrowed and the other will have another amount according to its year. Now we still had to pay the monthly payments but we would put extra on the lowest line item.
During this time in our life, we were pregnant with our first child, so we wanted to get our monthly costs as low as possible because we were not in a position where I can stay home full time and I knew I would have the added cost of daycare. I was also working a part-time job as an Adjunct Professor to bring in extra money. We looked at our budget to see what we can cut out or cut back. We were able to reduce our cable/internet bill by 40% when we switched to another provider. My husband also traded in his car for a less expensive one which reduced our monthly payments.
By working part-time and reducing our bills, we were able to put even more money towards our student loans. In six months, we went from having a monthly student loan bill of $258 to $168. Yippee. Then another six months after that it went to $138. You may be saying, $30 is not much of a difference, well let me tell you, that’s a $30 raise each month! After I gave birth, we slowed things down on being so intense on paying the school loans because there was a lot to learn as new parents. All in all, it took us about 4 years to pay all of our student loans by reducing costs and using some of our tax refunds.
Are you having a tough time tackling your school loans? What steps are you taking to eliminate them?