On the first of every month I open my servicer's site before I'm fully awake, copy the new balance into the club sheet and close the laptop. It takes about ninety seconds. This month the number was $21,640, and for once I sat there and scrolled back through every row since March.
Five months of payments, $2,960 less owed. Here's where that went, and where it didn't.
The balance, first of each month
- March 6 (the day I started this blog): $24,600
- April 1: $24,350
- May 1: $24,100
- June 1: $23,700
- July 1: $22,670
- August 1: $21,640
You can see exactly where the credit card ended. March and April were standard payments only, $330 each, because every extra dollar was going to the card at 27.24%. In May the card was paid off early in the month, so I added $150 to the loans for a $480 payment. Then in June I started sending $1,100 a month, and the balance finally started moving in a way I could feel.
Interest versus principal
This was the part I wanted to see. Over these five months I paid $3,340 toward my loans: $330, $330, $480, $1,100 and $1,100. The balance dropped by $2,960. The difference, about $380, was interest.
Broken down roughly by month, about $80 went to interest in each of March, April and May, and about $70 in each of June and July. That's the part I find motivating. The interest is going down because the balance is going down, and it's going down faster now. In March, a $330 payment put about $250 toward my actual debt. In July, a $1,100 payment put about $1,030 toward it.
Federal loans charge interest daily on whatever principal is left, so every extra dollar I send today lowers tomorrow's interest a tiny bit. On a single day that's fractions of a cent. Over a year it adds up to real money.
If I'd stayed at the standard $330, I'd have paid off about $1,700 less by now, with payments stretching all the way to 2033. I know that because I made the mistake of calculating it at midnight once.
When the 5.05% loan disappears
Since July, my extra payments go to one loan only: my freshman-year loan at 5.05%, the most expensive of my six. In April it was about $5,600. As of August 1 it's down to about $3,650, and it's the only loan whose balance is moving much. The others are getting just their minimums.
At $1,100 a month, roughly $830 of each payment is landing on that loan after the other five get their minimums. On its own, that would finish it around the end of the year. But I've been pet sitting and walking dogs all summer for neighbors, and that money is piling up in a separate savings bucket. If I put most of it toward this loan in September, the 5.05% loan should be gone in October.
That's the plan, anyway. I'll know the real summer total at the end of the month, and I have to set some aside for taxes first, because pet sitting money is self-employment income and nobody is withholding anything from it.
A few things I didn't expect. The first three months felt like nothing was happening. The balance moved $250 at a time and I honestly wondered if tracking it was pointless. Then the card was gone, the payment went up, and suddenly the monthly drop was four times bigger. If you're in the slow part, it's still doing something, even if it doesn't look like it.
The second thing: $1,100 a month is only possible because of where I live. I pay my parents $300 a month, made official at the kitchen table in May, and that covers my share of groceries and utilities. If I were paying Chicago rent, this post would look very different. I try to remember that when I feel proud of the numbers.
And the third: I'm not as fast as I'd like to be. I spent $186 on a weekend in Lake Geneva with my friend Priya this month, and I didn't put that toward the loan. I don't regret it. Walking the Shore Path and then getting frozen custard was worth it.
Next month's row goes in on September 1. I'll be up early.
