I haven’t written in awhile because work has been crazy busy. I was inspired this evening to write this post because I AM PUMPED! Yesterday, I paid off my first of two college loans. Yes, I am only half way there – I count it as halfway because I previously had maxed out a credit card that was almost the equivalent amount of the loan I just paid off, which when added together ALMOST equate to the amount of the debt I still have left. Had I not maxed out a credit card, taken out a loan from the University of Michigan, and a loan from the good ole federal government, I could have the down payment on a house, as so many people my age I am sure can relate too.
I didn’t work in college, which at the time seemed like a GREAT idea. However, looking back, I think had my schedule been filled with work and water polo, my grades would have been better off than they were with the water polo and partying. I took out loans to pay for most of my education (thank GOD for financial aid) and then instead of getting a job, I deferred my loans once I graduated and took a trip to Australia where I continued to party and maxed out my credit card, did I mention that my interest rate was 18%?
When I was in college I had NO freaking clue about interest, savings, financial aid, investing or anything that I was getting myself into. Once I met Kevin (the boyfriend), I realized my spending habits were normal, but very inefficient if I wanted to STOP living paycheck to paycheck and get my ass out of debt. I have an emergency fund with Vanguard now where the money is invested in ETFs, and a savings account with a credit union which I cannot see and do not have easy access to the funds so it makes it harder to withdraw for that last minute trip to San Diego (pair of shoes, concert tickets, etc etc…). A portion of my paycheck is distributed directly into the savings account, after I do a budget for that month I take the extra money out of my regular checking account and put it into my credit union account, this extra money in my savings was just used to pay off loan #1!
I also had been making double the minimum payments on both of my loans- most loans make the minimum payment just enough to cover the interest you are accruing on that account plus a little bit of the principle, if you pay the minimum amount requested on loans, you will be paying them FOREVER, which banks and loan offices want. The longer it takes, the more money they get- if you can, put as MUCH towards you loans as possible, or talk to the company that has the loan out and see if there is anyway to have the interest reduced if you are always on time with your payment. I was able to reduce my credit card interest to 14%. Since I paid off my Michigan loan, I will be able to quadruple the payment towards my federal loan and hopefully have that paid off before I am 30!
The most important thing I learned is to live within your means- going out every night is not conducive to your bank account (at least MY bank account) or your hips for that matter (at least MY hips).