A Penny Saved

I feel like I’m kicking debt’s ass right now. Since the beginning of the year, I have put $1,667.82 towards my student loans. Of that, $143.14 went to interest and $1,524.68 went to reducing my principal. My current principal balance on my Federal Direct loan is $13,957.33.

One thing that’s been very helpful to me has been to focus on one debt at time. All together I owe ~$48,400.00. That’s more than I make in a year! When faced with a number that large, it’s easy to feel like you’ll never make progress. By focusing on a smaller amount of debt, I feel like getting out of debt is more easily within reach. I can handle $13,957.33. And when that’s done, I’ll be able to handle the $11,450 of my Federal Perkins loans and the $23,000 of my mom’s PLUS loans (or however much their principals are after making minimum payments for as long as it takes to get through my Federal Direct loans). I’m breaking it down. Even the longest marathon is run one step at a time.

This month, between my normal debt snowball, a recent raise (going from $32,000 to $35,000 means $200 more a month I can use to blast my debt), and my tax refund, I should be able to get my principal down to below $12,500. Before I started aggressively paying down my debt in October 2007, my principal was $17,095.08. By the end of the month, I’ll have paid off over $4,500 since then!

I was able to knock out so much debt last month because I took $1000 from my savings account to do so. I still have an emergency fund of ~$2000, which seems sufficient for my low-maitenance lifestyle. The interest rate on my Capital One money market account has dropped to 3.44%, whereas my interest rate on my FD loan is almost 7%. Meh. It seemed somewhat mathematically-sound and it gave me a psychological boost. A local credit union is offering really good CD right now: $500, 8 months, 8% APY, limit one per member. I’m thinking of joining just so I can snag one.