When I first started calculating how the heck I was going to pay off $26,000 of student loan debt, I knew that I would have to start making extra payments on my debt, above and beyond the minimum payment of $300.00 per month.
I started out my very first payment in November by adding $50 per week to my extra payments, or $200 per month. It seemed like a lot at the time, but before long I realized I wasn’t happy with how slowly my debt was decreasing. I’ve been becoming more frugal every month and over time I’ve been able to increase my extra weekly payments incrementally. Here’s a brief timeline:
November 2011 – $200/month in extra payments.
January 2011 – $240/month in extra payments.
May 2012 – $326/month in extra payments.
September 2012 – $400/month in extra payments.
Is Paying Off Debt with Every Available Cent Worth It?
It’s taken a lot of effort to squeeze my budget to a point where I could make those kinds of payments, and I often wonder, is it really worth it? Is the sacrifice I’m making to make $100 payments versus $50 payments every week going to make that big of a difference in the long run?
It’s exhausting making those extra payments, and I often think about what I could be doing with that money instead of spending it on debt. I think about how $20 seems so small when considering my current student debt load of $16,768, how could it possibly help?
Debt Free Dates
I ran some numbers to illustrate the difference. To simplify the mathmatics, I’m calculating using overall monthly extra payments (not weekly).
The debt free dates I’m calculating below, assume I’m following the course I mentioned above, but held steady at different points instead of increasing my payments. For example, at $240/month payments, I’m assuming I made the same $200/month payments for a few months, increased them to $240 in January, and then held steady from there on out.
With No Extra Payments ($301.46 per month) – Debt free by April 30th, 2021.
With $200/month extra payments starting in November, 2011 – Debt free by December 30th, 2016.
With $240/month extra payments starting in January, 2012. – Debt free by June 30th, 2016
With $326/month extra payments starting in May, 2012 – Debt free by February 28th, 2015
With $400/month extra payments starting in September, 2012 – Debt free by Oct 30th, 2014
Answer: Yes It Makes a Difference
Adding just $10 to $20 in weekly payments over the months, makes a huge difference in my overall time to debt freedom. It doesn’t seem like it’s making much of a difference at this point, but it definitely does! Knowing the math on just how much extra payments affects overall debt makes it a lot easier to keep up with the debt repayment. Lately I’ve been thinking about all of the stuff I’d like to do with that money, calculating it out like this is another way to keep my enthusiasm up for my debt repayment.
So the next time I’m tempted to take some of my hard earned cash and blow it on something silly, I’m going to think twice and seriously consider tossing it at my debt instead. After all, every dollar counts!
Do you make extra payments towards your debt? What difference has it made towards your debt freedom date? I want to know!