If Dave Ramsey’s proposed concept of paying off debt (any and all debt–no debt is ‘good,’ even student loans, even mortgages!) isn’t a familiar one, I’ll use some of my own real world examples to demonstrate why I am waging an all out war on debt (my student loan). These are **actual real life numbers,** so if you’re afraid of what this means, then you know my fear!

Now, I’ve already admitted I borrowed a bit more than I should have in order to get through graduate school, but I’ve also got a better job than I thought I would have at this point, so I’m going to be kicking this loan–hard–very soon.

My loan information:

Principal balance: $31,784.72

Interest rate: 6.625%

Monthly payment: $241.45

Repayment term (months): 235

Interest paid: $24,997.22

Total amount repaid: $56,738.02

Okay, maybe that doesn’t look scary, or maybe you aren’t used to looking at straight numbers, so let me put that into regular English. I borrowed $31,000+ to pay for school. My interest rate is 6.625% (keep in mind, some mortgages are going for around 5% or less these days) and the repayment term they’ve given me is 235 months. In real terms, this is nearly 20 years to repay this loan–20 YEARS! You’d think that’s great, right? I can take my time, only pay $241 a month, and that it’s… but wait. What’s this ‘interest paid’ category? Take a closer look. That’s right, if I take 20 years to pay off this $31,000 debt, I’ll pay AN ADDITIONAL $24,997 in interest. That means I’ll pay $56,738 for my $31,784 education. Yikes!

Seeing those numbers makes me angry. This is good, because this anger and frustration is what propels me to do something about it. This debt happens to be Debt #3 in our ‘snowball,’ so it’s going to be last in our series of debts.

Debt #1 in our snowball is already paid off, and right now, we are focused on paying off Debt #2. Right now, Debt #2 is getting paid each month, plus the amount we were paying toward Debt #1, and whatever other money we can throw at it. We are putting a very minimal amount into savings each month, because our debt interest is much higher than the interest we’d earn on money in a savings account. We are putting a substantial amount to our student loans each month. And then what? Then I’ll have an additional $24,000 in my pocket 20 years from now…

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