When was the last time you logged into your student loan account and actually paid attention to how far your minimum payment was getting you? This past Saturday I did just that with my husbands student loan that we’re diligently making a $355 minimum payment on each month. Let’s just say what I saw was worse than any scary movie I’ve ever seen!
Just to give you some back story we’ll be finishing up our 1st student loan (original balance $21K) by the middle of this month. Our goal is to have the second loan ($4K) paid off by the end of March allowing us to start on the third loan hopefully come April. We are making a minimum payment of $355 to my husband’s student loan. Now to any normal person a payment of $355 is a good amount of money. Like there is so much I could do if I didn’t have to pay out $355 every single month. In revisiting our debt snowball, I decided to take a look at how much headway we’d made on my husband’s loan. We’ve been paying the minimum payment for over 11 months so while I knew we hadn’t made a huge dent I wasn’t ready for what I saw at all.
Out of a $355 payment we were barely clearing $100 towards the principal most months. All I could think was that this was highway robbery, this was brutality, this was a scam! We were being completely bamboozled by Navient except it was all legal. Out of $3905.00 paid to Navient over the past 11 months less than $1000 has gone towards paying down the principal balance. This is why I make such a big deal about not falling for “minimum payments”.
Minimum payments look good, they smell good, and they come delivered with a bright red bow, but they are a wolf in sheeps clothing. This is why my Husband and I are working so diligently to pay off these loans as fast as possible. If we continue to pay only the minimum on this student loan it will not be paid off until the year 2038 and we will have paid over $88,000 on a loan that had an original balance of $53,962.
I challenge you to take a closer look at your Student Loans. Make note of what portion of your payment is going to principal and what portion is going to interest. If you’re working the debt snowball and haven’t gotten to that debt yet this should motivate you to work harder so that you can start paying it off. If you aren’t working a debt snowball think about paying extra on your student loan each month. You’d be suprised at how far an extra $20 can take you.
Related Post: How your unknowningly keeping yourself in debt forever.