Continued from yesterday…
I had planned on being very conservative and only taking out loans to cover the costs of tuition/fees. But that didn’t quite work since I needed a new computer after a couple years in school, plus I got married about a year before finishing up the degree, so living on my own instead of with the parents was tougher in my tiny part-time job paychecks.
So instead of only taking out around $25K for my graduate school studies, I wound up taking more than $10K more than that. Try those numbers in the calculator I mentioned yesterday. Yeah, ouch. The happy 6.7% interest rate and the $25K means less than $300/month in payments. Not too shabby, even when you consider an expected income of less than $40K/year. But then bump that number to $35K and you’ll see the payment shift to $400/month, which is kind of like paying rent twice, at least in my area. Yikes!
This was causing me some anxiety (see my first post) so I decided I needed to do something about it. Steps I took:
Step 1: Get a much better paying job than expected.
Step 2: Become a Dave Ramsey disciple.
But seriously, I did get a starting salary which was higher than I had anticipated, and even with my husband’s student loan debt, we are able to pay a good chunk more toward our debts each month using Dave Ramsey’s Debt Snowball. A helpful calculator like this one can show you how quickly you can get out of debt by adding extra payments or even a little extra each month.
I’m very much looking forward to paying off the smallest loan by the end of this year, and putting that payment toward the next loan on the list. My husband and I share a set of Google Documents with our financial plans each on a separate spreadsheet, which makes for ease in communication on financial matters and also allows both of us to see the plans laid out simply. Nerdy but exciting stuff!