Tag Archives: paying off debt

Financial Forecasting: Using a Financial Aid Loan Calculator to Strategize your Debt Repayment Plan

Financial Forecasting: Using a Financial Aid Calculator to Look in to your Financial Future - Fun on a Budget Blog

When I was younger, I used to play this weird game in my own mind where I would try to guess exactly what my life would be like in X amount of days or X amount of years. For the most part, this quirky pasttime, which I later dubbed “Future Game”, consisted of me interrupting my typical daydreams (something monumental I’m sure, like contemplating where exactly I should part my hair) to ponder some bigger and more exciting unknowns: Where will I be living? What will I be thinking about? Who will I be with? Will I have met my husband yet—or even weirder, have I met him already and don’t even know it? Will I be in good shape and still have all working body parts? But my favorite question to ask was always this one:

If I could see the future me, how would present me feel?

photo credit: www.moreintelligentlife.com

Clearly, I am not and never will be a world renowned philosopher, but I still think that playing “Future Game” and musing over what is to come is an interesting way to get lost in thought.  As I was playing “Future Game” a few days ago—wait did I give you the impression I quit playing—oh, I’m sorry, I should have made it more obvious that “Future Game” was invented in my younger years and is still going strong!  I know, I know, everyone probably wishes they could hang out with me on the weekends now that the secret is out about how cool and exciting I am 😉 All jokes aside, I recently created a more fact-based variation of “Future Game” that I’m calling “Five Year Financial Future Game” (creative I know).  I  used a Financial Aid Loan Calculator to plug in the numbers for two different debt repayment strategies:

  • STRATEGY ONE: Making only Required Monthly Minimum Payments
  • STRATEGY TWO:  Making Monthly Minimum Payments AND Contributing as much Additional Money as Possible

If you are having any second thoughts—or no thoughts at all—about putting extra money towards your debt, then I suggest you play “Five Year Financial Future Game” too. The results were MUCH more DRAMATIC than I had anticipated. Here is what I found:

Making only Minimum Payments on my Debt for the next 5 years results in…

Me making minimal financial gains. If this is the route I choose to take, five years from today I will still be putting $616.59 towards my student loan debt every month. My total debt numbers will be lower, but essentially nothing else will have changed because I will still be 2.7 years away from escaping my biggest financial burden. Even worse, when it is all said and done, I will have paid over $12,000 in interest alone! That is nearly 1/3 of the total debt I owe. Ouch!!

Financial Foreasting: Using a Loan Calculator to Determine where you will be Financially 5 years from Today.

Financial Forewarning: Minimum Payments will only take you so far…You get what you give.

Paying as much Money as I can towards my debt over the next FIVE 1.5 years results in…

Me only being in debt for 1.5 more years! That is no joke, folks. By putting more than 50% of my income towards paying off my debt, five years from now my debt-paying days will be 3.5 years behind me, and I will have paid just $2,700 in interest (that is only 6% of my total debt).  In comparison to using the strategy of scraping by on minimum payments, paying off my debt faster will provide me with an additional 3.5 years to do whatever with the money that would have otherwise been going towards loan payments, and I will save $10,000 in interest alone! Retirement savings, vacations, home buying, college funds–you name it, and I have the extra funds to work towards it. Yes, please.

Financial Forecasting: Using a Financial Aid Calculator to Look in to your Financial Future - Fun on a Budget Blog

Playing the “Five Year Financial Future Game” helped me discover that when it comes to paying off debt, a lot can happen in just 5 years. If I work a little bit harder, spend a little lot less, and pay attention to where my money is going right now, I could be debt free before potential BIGGER expenses and limitations (ex: children, mortgage, etc.) have a more significant impact on my life. Using the Financial Aid Loan Calculator makes the “game” a reality and allowed me to see accurate financial forecasts for each debt repayment strategy. After seeing the major effect that today’s actions have on my financial future, “present me” just can’t stomach the thought of choosing some instant gratification over long-term success and comfort.  How could I crunch these numbers and not buckle down sooner rather than later?!?!

Actually doing the math and facing reality can be so eye-opening. Did you use the Financial Aid Loan Calculator to play the “FIVE Year Financial Future Game”? Does looking at your Financial Forecast have an impact on how you are choosing to pay back your debts now, and what is the main factor in how you have decided to eliminate debt?

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This post is linked up at Alex and Cassie’s Thrifty Thursday, at Living Well Spending Less, Financially Savvy Saturdays, and Frugal Friday.

Brittany’s February Debt Progress Report

Brittany's Debt Progress Report - Fun on a Budget Blog

January and February of 2015, mark a major turning point in my debt payoff journey. In the middle of February I gained an amazing husband, his additional income, and really the only raw end of the deal—his student loan debt (to be fair, he is getting stuck with my $43,000 of debt too).  Because of my recent change in income and the addition of a partner and partner’s debts, my progress reports will have to be adjusted as well. We still haven’t ironed out the details regarding how I will be reporting progress, but we have March to get all of that sorted out don’t we :)

Until then, here is my final single lady debt progress report. I nearly paid off half of my debt all by my big girl self in 18 months.  It’s pretty anti-climatic seeing the progress compared to previous months, but the events of the last couple of months are priceless and worth much more to me than a few thousand dollars extra put towards our debt.

The graph below summarizes my short term debt progress across all of my individual loans. The blue column represents my debt totals for individual loans as of December 31, 2014, and the green columns represent my debt totals for individual loans as of February 28, 2014. If you make payments above the minimum monthly requirements, looking at the debt progress in this format really emphasizes how paying more than the minimum has a significant impact on your debt decrease. In January and February I paid only minimum requirements on all of my loans, and as you can see the amount of “progress” I made was very, very minimal.

Monthly Progress on Individual Loans - Fun on a Budget Blog

The bar graph below represents the long term and short term progress I have made on my overall debt. The grey bar represents my original total debt amount, the blue bar is my total debt one month ago, and the green bar shows how much debt I have today. Sometimes it’s hard to feel like you are making progress when you look at your BIG number on a month-to-month basis, but looking back to the beginning can remind you how far you have come.

total debt progress

Having ONE target loan will increase the rate at which you can pay off your debt and decrease the amount of money you will pay towards interest to help you become debt free sooner!

If I was paying above the minimum monthly requirement on my focal loan, the percentage being paid towards interest would have been much smaller—I’ve been ranging between 10% and 16% of my total payment being applied towards interest; however because I paid only minimums on all my loans this month, 29% of my total payments across all loans went towards interest. You want to pay as much as possible toward the principal because that is what helps speed up the process of eliminating debt. The chart below gives you a visual representation of these numbers.

Percentage towards interest

It might seem like cash flowing money right now is rough, but if you make minimum monthly payments until all of your debt is gone, you will end up paying MUCH MORE than your original loan amounts in the long run.

Tell your Income Where to Go

Typically at this point in my progress report I share a pie chart that summarizes where I delegated my earned income during the past month. This month I don’t have a pie chart to share because I actually spent more than I earned. January and February were the final months of using my already-stashed-away savings to pay for the remainder of our wedding expenses. A pie chart wouldn’t represent the actual income and outgo of my cash, but I am considering writing a post to explain how I stayed organized during those two hectic months—well at least organized enough to stay sane 😉

January and February Roadblocks: The big road block was simply having the patience not to debt snowball as I sat on cash that I might need in the event of an emergency or unplanned expense for our wedding.

January and February Dollar Holllllllaaaaaas: No extra scrilla to write home about this month. I’m just happy to have experienced the most exciting day of my life without adding any debt to our already large mountain :)

 For more information on how to gain control of your finances check out our info on Getting Started by clicking the link in the menu bar at the top of the page. How do you stay motivated and track your debt progress? I recently read a blog post about living on a budget without a written budget—do you think you could do it?

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 Brittany

* You can find this post linked up with lots of other good financially blessed stuff at Thrifty Thursday, Frugal Friday, and Financially Savvy Saturdays!

Brittany’s October Debt Progress Report

This week you can also find Brittany’s October Debt Progress Report along with some other amazing financial posts at the Financially Savvy Saturday Link Up! Click the button below to get there.

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The graph below summarizes my short term debt progress across all of my individual loans. The blue column represents my debt totals for individual loans as of October 1, 2014, and the green columns represent my debt totals for individual loans as of October 31, 2014. Looking at the debt progress in this format really emphasizes how paying more than the minimum has a HUGE impact on your debt decrease. My Great Lakes Student Loan 3 is my current focal loan, and I paid as much as I could above the minimum requirement in October. Because of that, it’s total decreased by just over 9% this month, whereas in prior months it was moving down at a rate slower than 1% decrease per month. You can also see that its total is decreasing at a rate much faster than the two loans that I am making minimum payments on. What was once my largest and most mentally defeating debt actually no longer holds the title of “largest debt”. Can I get an Amen?!?!

ind. progress

The bar graph below represents the long term and short term progress I have made on my overall debt. The grey bar represents my original total debt amount, the blue bar is my total debt one month ago, and the green bar shows how much debt I have today. Sometimes it’s hard to feel like you are making progress when you look at your BIG number on a month-to-month basis, but looking back to the beginning can remind you how far you have come.

total debt progress

Having ONE target loan will increase the rate at which you can pay off your debt and decrease the amount of money you will pay towards interest to help you become debt free sooner!

Because I was paying above the minimum monthly requirement on my focal loan, the percentage being paid towards interest was small—only 7% of my total payment went towards interest. In contrast, 21% of the total amount I put towards the loans I am making minimum payments on went towards interest!! You want to pay as much as possible toward the principal because that is what helps speed up the process of eliminating debt. The chart below gives you a visual representation of these numbers.

percent toward interest

It might seem like cash flowing money right now is rough, but if you make minimum monthly payments until all of your debt is gone, you will end up paying MUCH MORE than your original loan amounts in the long run.

Tell your Income Where to Go

The pie chart below summarizes where I delegated my earned income during the month of October. About 55% of my earned income went towards debt—that includes my minimum monthly payments and extra cash flow. Just below 32% went towards my living expenses (food, rent, etc.), and 13% of my earned income was put into long-term savings this month to prepare for holiday season travels and any surprise wedding expenses I haven’t considered in my budget. As much as including wiggle room in my budget pains me, I am continuing to do it. L Deep breaths…and I’ll be thanking myself in about three months.

pie chart

October Roadblocks: October was the first month since this summer that my credit card bill wasn’t (in my own opinion) HUGE at the end of the month, and no other surprise expenses snuck up on me. I’m still saving up for my wedding/holiday buffer—which even though it feels like it’s hindering my progress on paying off debt, is not a roadblock. Saving AHEAD of time is smart, not debilitating. I’ve got a life to live here, right?!?!

October Dollar Hollaaass: No additional income on my end throughout the month of October; however I have been doing a lot of research in freelance writing and am looking to take a (baby) step in that direction come November.

For more information on how to gain control of your finances check out our info on Getting Started by clicking the link in the menu bar at the top of the page. How do you stay motivated and track your debt progress?

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♥ Brittany

Brittany’s September Debt Progress Report

Today’s Debt Progress Report can also be found on the Financially Savvy Saturday Link up happening over at BrokeGirlrich. Be sure to click on the button below to head on over and check out all the other savvy posts!

brokeGIRLrich

The graph below summarizes my short term debt progress across all of my individual loans. The blue column represents my debt totals for individual loans as of September 1, 2014, and the green columns represent my debt totals for individual loans as of September 30, 2014. Looking at the debt progress in this format really emphasizes how paying more than the minimum has a HUGE impact on your debt decrease. My Great Lakes Student Loan 3 is my current focal loan, and I paid as much as I could above the minimum requirement in September. Because of that, it’s total decreased by nearly 9% this month, whereas in prior months it was moving down at a rate slower than 1% decrease per month.

Brittany's September Debt Progress Report

The bar graph below represents the long term and short term progress I have made on my overall debt. The grey bar represents my original total debt amount, the blue bar is my total debt one month ago, and the green bar shows how much debt I have today. Sometimes it’s hard to feel like you are making progress when you look at your BIG number on a month-to-month basis, but looking back to the beginning can remind you how far you have come.

Brittany's September Debt Progress Report

Having ONE target loan will increase the rate at which you can pay off your debt and decrease the amount of money you will pay towards interest to help you become debt free sooner!

Because I was paying above the minimum monthly requirement on my focal loan, the percentage being paid towards interest was small—only 6% of my total payment went towards accrued interest. In contrast, 18% of the total amount I put towards the loans I am making minimum payments on went towards interest!! You want to pay as much as possible toward the principal because that is what helps speed up the process of eliminating debt. The chart below gives you a visual representation of these numbers.

Brittany's September Debt Progress Report

It might seem like cash flowing money right now is rough, but if you make minimum monthly payments until all of your debt is gone, you will end up paying MUCH MORE than your original loan amounts in the long run.

Tell your Income Where to Go

The pie chart below summarizes where I delegated my earned income during the month of September. Just over 45% of my earned income went towards debt—that includes my minimum monthly payments and extra cash flow. Just below 49% went towards my living expenses (food, rent, etc.), and 6% of my earned income was put into long-term savings this month to prepare for holiday season travels and any surprise wedding expenses I haven’t considered in my budget.

pie chart

 

Roadblocks: There were no major roadblocks this month—which is nice because the months leading up to September were full of plenty crazy. A moment to breathe was very much appreciated, and it gave me an opportunity to jump start my holiday saving without feelings of stress or anxiety.

September Dollar Hollaaass: I have felt pretty good about how my income is funding my life and debt progress lately, and because of that, I haven’t gone out of my way to make additional income. I don’t see that changing anytime soon, but never say never :)

For more information on how to gain control of your finances check out our Getting Started page by clicking the link in the menu bar at the top of the page. How do you stay motivated and track your debt progress?

Follow us on FacebookPinterest, and Twitter!

Follow on Bloglovin

 Brittany