We made another extra payment on a loan yesterday! Loans can be so complicated with their interest rates, different due dates, etc. For example, when I went back to school to get my EdS, the loans fell under a different category (for whatever reason). If your loan total is over $30,000, you can spread your payments over 25 years to make your monthly payment lower. This isn't the best plan for interest, but if you plan to pay it off early, it can't hurt! We have done this for most of my loans even though we hope to pay it off MUCH sooner. This allows us to have money if we need it instead of HAVING to make a very large monthly payment (about the same as our mortgage!). My EdS loans could not count towards that $30,000, meaning that the cost to get that degree (approximately an additional $20,000) had to be repaid in the standard ten-year repayment plan. That being said, we are focusing on that large loan. It started at $18,000 with a 6.8% interest rate (interest is terrible!!). We have gotten it to just below $5,000 in a little less than a year. Each time we make an extra payment right now, it goes directly to that loan because it has the highest monthly payment. Once it is paid off, we will make extra payments on another specific loan. Doing this allows us to pay smaller figures off which creates a lower monthly payment, which allows us to save more money to put on other loans, etc. It is all a big circle...but it is fun seeing that circle getting smaller and smaller as the overall amount due drops and drops:) Consolidating loans is a not a smart option in our situation. We could never pay the loans off early if we had the lump sum to pay (and unless I get on a game show, that's never going to happen). Keeping the loans separated allows us to focus on one amount at a time while we are making our standard monthly payment (with any extra payments possible). Doing it this way helps us to get the overall debt total lowered.
We keep track of our spending on a monthly budget in excel. It's pretty simple. Some months we go over certain categories (i.e. we have about ten birthdays in September and October so our gift budget for those months is shot); however, we are under budget in other categories or at others times in the year so it all balances out. Below is a list of our GOAL spending each month. It is doable:)
- Food- $300 (for two adults, includes eating out)
- Gas- $200 (includes oil changes)
- Miscellaneous $100 (includes entertainment; things at the store that aren't food items like paper towels, napkins; animal care; etc.)
- Car insurance $120 (we are now under this thanks to being over 25 and for being 'safe drivers.' Rockingham Group is the best!)
- Utilities $165 (heating/cooling and water- in Staunton the water bill is every other month)
- Doctor/Dentist $65 (this obviously isn't something we use every month)
- Cell phone $140
- Cable/Internet $120 (direct TV keeps us way under that these days! Especially if you refer a customer- if you are interested in direct TV, let us know! We can both save $10 a month off our bill for 10 months)
- Blow money $120 (Luther and I each get $60 a month to spend on whatever we choose)
- Gifts $40
I enter receipts into the excel sheet throughout the month and it keeps a running total for me. At the end of the month, I look at the excel sheet to see how much money we had left over in all categories combined. I take that amount, plus the difference from our promotions that were never figured into our budget, and make a transfer to savings. Within a few days, we call good ol' Aunt Sallie Mae and make an extra payment:)
We don't budget in our mortgage, regular school loan payments, or tithing because they come out every month before we start our monthly budget. More on tithing in a future post. Let me know if you have questions!
No comments:
Post a Comment