Being Broke and Getting out of Debt

This blog post is basically the sequel to Being Broke on a Budget.  If you haven’t read it, it will give you good background to this post!

I did some math the other day (I’m not a math person, so I’m fairly certain my soul died a little bit), and I came up with this simple conclusion: thanks to interest on loans and crappy teacher salaries, we’re going to spend the rest of our mortal lives in debt.  But then I started thinking, what if that didn’t have to be the case?  I started wondering if there was anything we could do so that future us wouldn’t be stuck in the infinite loop of loan repayment?

We are blessed to own our cars, and blessed again because my husband’s education was paid for.  Our two debts are my student loans and our mortgage.  I did math (yes, it hurt) and calculated how much interest we would owe if it took us as much time to pay off as our payment plans anticipated.  My $49,000 student loan became $57,000, and our $123,000 home loan became $192,000.  Ouch!  I am going to start splitting my new monthly unallotted money two ways: $300 toward savings, and $700 toward getting out of debt.

My goal?  Be debt-free by 2030.

That’s an ambitious goal for a couple of teachers who owe nearly a quarter of a million dollars!  I figured we’d start with the smallest debt and work our way up.  My student loan is split into ten different little loans, ranging now from $1,815 to $14,260.  I already pay $300 per month on it, so adding my new $700 will make my payments $1,000 per month.  I just assume my ultimate total to be what I calculated it to be with interest over time, although if I pay it back sooner, that total will be smaller.  With the math I did, I estimate that I will have this loan paid off in four years and nine months.

My student loans will be paid off by July 2022.

That’s so exciting!  With that taken care of, I will have an additional $300 unallotted every month. That means that, with the new unallotted $700 per month, I will be able to put an entire $1,000 toward my house payment every month!

Now, by July 2022, my $192,000 loan (I included interest over time) will be down to roughly $135,000.  Assuming that I pay $2,000 per month instead of the original $983, this will take me an additional five years and eight months.

My house loan will be paid off by October 2028.

There are variables that I know will come up.  By 2028, we will need to buy at least one car.  Lord willing, by that time we will also have children.  Thankfully, we get paid a little more each year we teach, so that will help.  Also, by 2028, our $300 per month in savings will add up to over $38,000, so that will be there in case we absolutely need it.  Assuming two years of wages for whatever unexpected financial craziness the next 13 years will bring (and you know that where there is money, there is unexpected financial craziness), we will be debt free by 2030.  Now, that sounds good to me!

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