Crystal and I did something special with our tax return this year. As soon as it came in, we took about 75% of it and made a BIG payment on her undergrad student loan. “Makes me giddy” big. “Oh god this is scary” big. Big enough that it means we’ll pay off her loan an entire 15 months sooner than planned.
In fact, we’d originally planned to sink ALL of our tax return into her loan, which would have cut repayment by a whopping 22 months, but our 25-year old washing machine finally gave up the ghost, so part of our return had to be earmarked for replacing it.
I track our student loans in YNAB, which shows me the current amount owed in big red numbers. I can’t tell you how good it felt to see those numbers drop by a few thousand in one fell swoop. And I discovered something:
Real tangible progress makes you want to do more.
Crystal and I have been paying on this loan the whole time we’ve been together, and Crystal paid quite a lot of it on her own before we met, but it’s so been so hard to see any real progress. We’ve often only been able to commit the minimum payment, which (after interest), really only reduces the principle owed by a drop in the bucket. What’s $50 or $80 on the principle when you owe $10,000 or more?
Just before we married, we were able to make a sizeable payment on Crystal’s loan, and that was our first taste of real tangible progress on paying down debt, but it was hard to get any momentum from it. Despite wanting to pay more, we simply didn’t have the means — we were getting married, moving, and struggling to find work.
Fast forward to now. Crystal earned herself a substantial raise at work. I’ve found some great freelance gigs. Through all that, we’ve been slashing our expenses and resisting the urge to splurge. For the first time since we got married, we’re finding that we have income beyond what we need for our basic expenses. Not much, mind you, but enough.
So, do you know what we did?
We’re so fired up to pay down this loan, that last night, we did some bookkeeping and discovered that we could sink another $600 into the loan. So that’s what we did. And today we’re returning an expensive gift and we’ll sink the money from that into the student loan too.
And in a few weeks, I’ll be receiving a few hundred dollars from a freelance gig, and that’s going into the loan too.
Right now, I want to throw every single penny we can at this loan. (Hey, pennies…maybe I can raid our piggy bank and find $60 or so to throw at the loan.)
I’ve got a new goal for 2014. By the end of the year, I want our repayment schedule for this loan to be 1 year or less. Right now, we’re on track to pay off the loan in 3 years, 1 month. We’ve got a long way to go, but I think we can do it, if we hustle hard enough.
Photo by Chris Potter.