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 June 1, 2014, and the green columns represent my debt totals for individual loans as of June 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 ACS Student Loan is my current focal loan, and in the month of June its total was nearly split in half by the end of the month, whereas loans I am paying minimums on only decreased by an average of 1%.
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!
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 am paying above the minimum monthly requirement on my focal loan, the percentage being paid towards interest actually dipped to 0.4% of my total payment this month! In contrast, 40% of the total amount I put towards the loans I am making minimum payments on went towards interest!! My largest loan is being paid off SO SLOWLY because 86% of my monthly minimum is going toward 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.
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 June. Fifty percent of my earned income went towards debt—that includes my minimum monthly payments and extra cash flow—and the other 50% went towards my living expenses (food, rent, etc.). I did not delegate any money to long term or short term savings this month.
Roadblocks: I experienced a couple of roadblocks during the month of June. The first was that I have SO MUCH free time since the school year ended, and this has really increased the temptations and opportunities to spend more money. Sticking to my bi-weekly allotted cash amount has been more difficult than it was when 8-10 hours of my day were consumed by work. I’m not complaining too much though 😉
The second roadblock I faced was a credit card payment that was about double what I typically pay each month. I had been ordering bridesmaids dresses from companies that offer free returns so that I can try them on, make a judgment, and send them back to get refunded and pretend like the whole thing never happened. It was an excellent plan until it my payment was refunded AFTER I had received my monthly statement. In other words, by the time my credit card payment was due; my current balance was LESS than original statement of money owed for my previous month’s purchases. I always pay the full statement amount because paying interest on a credit card is a complete waste of money. Instead of calling the company and trying to get my refund applied to the previous month’s statement (the statement whose payment was due), I just paid the whole thing off at once knowing that I will have little to nothing to pay in July and won’t have to waste any of my time dealing with the credit card company or worry about potentially earning interest. A roadblock for now, but I know that it will put me a little bit ahead in July.
June Dollar Holllaas: Other than my regular paycheck, there were no dollar hollaaas in June. I think I may be hollering a bit louder on payday though—does that count? 😉
Looking Forward: My goal is to have my ACS Student Loan completely paid off by the end of July. Because I can see my next smallest loan—my car loan—decreasing each month I feel pretty good about it, and I have decided to tackle my biggest loan (and biggest headache) as soon as the ACS is wiped from my slate. After nearly a year of minimum payments that $21,000 loan has only decreased by about $500, and it is MAKING ME FURIOUS. It’s time to grab a life vest and save myself from drowning in those Great Lakes….too much? I’m sorry, I couldn’t help myself.
For more information about how to start making progress on getting out of debt or gaining control of your finances, check out our Getting Started tab at the top of our page.
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