Dang Melly, back it again with the debt payoff reports! Okay, that doesn’t sound as corny when I say it in my head, but yep I’m back with another debt payoff report. This past month we made a massive switch with how we’re paying off our debt. Since starting Broke on Purpose we’ve been using the Debt Snowball and this method has helped us pay off over $41K in debt so far. It’s seriously a great method for when you’re just getting started as you can see your progress so much quicker and once you see something is paid off it motivates you to continue on in your journey. Now that we are moving on to our larger debts such as the student loans we decided that it would be smarter to switch to the Debt Avalanche method of payment so that we could get a handle on the enormous amount of interest that is accruing monthly on our student loans. I go into more detail on why we made the switch in this post.
We started the month working on paying off our AES Student Loan that had a total balance of $39,665.00. $1265.99 of this was the interest that needed to be satisfied before we could begin to attack the principle (which is why I say you should start paying off your interest immediately when it comes to student loans). After paying the interest on this particular loan, I took a look at the interest that had accrued on our largest loan and almost had a heart attack. We then decided to switch gears and focus on paying down the interest on our biggest student loan debt ($72K) with the higher interest rate (6.8$), which had accrued to a whopping $18,536.00 over the past six years and was growing at a rate of $13.58 EVERY SINGLE DAY!!!. After doing the balance transfer to a 0% interest credit card and paying the 4% transfer fee ($741), our new total was $19,277.
So, you can see a lot went on this month when it came to our finances and figuring out how to make it work in our favor, but after breaking it all down and looking at the math Mr. Broke on Purpose and I felt making the switch to the Debt Avalanche Method was a good idea. In all, I’m happy to report that we were able to pay off $3684.00 in debt this month! When I compare what we paid off this year to the amount we were able to pay off the same month last year I am amazed and humbled to see how far we’ve come. This is why it’s so important to stay the course. There have been several times where I’ve felt like stopping or maybe just skipping a month, but getting out of debt is a process and the harder you work the larger the reward.
The total on our balance transfer now sits at 17674.00. We will be focusing our efforts on paying this balance transfer off ASAP, as it’s on a credit card and we get all itchy at the thought of carrying around a balance. We’ll also be paying the accrued interest every single month on two of our student loans that are in deferment, something we weren’t doing before to keep it from ever piling up like it did again.
This year we have paid off a total of $16,203, and since living Broke on Purpose we’ve paid off $45,609!
How was your month living Broke on Purpose? Share it with me in the comments below!