Debt Progress Report #2

Alright everyone is has been 6 months since my last progress report. I have decided I am going to give a progress report at least every 6 months here.

You can read my last debt progress report HERE.

As a recap, I got married in March 2011. When we got married, we had a $17,000 car loan, $5,000 in credit card debt, and about $63,000 in student loan debt (I wrote $60,000 in previous posts, but I just added it all up now and it was $63,000).

That is a grand total of: $85,000 in debt. And that is at just 24 years old without a mortgage!

So we decided to get out of debt as soon as possible, and to stay out…forever. No mortgages, no car loans, no financing for purchases. Nothing. See the former post I referred to above to get a background on why we chose this.

So since we’ve gotten married, we decided to pay just above minimum payments on the student loans and wipe out the rest of the debt first. We decided this because the interest rate on the credit card debt was highest, and the student loan interest was partially a tax write-off, so the car debt and the credit card debt went first.

As of January 2012, we paid off all the credit card debt, and all the car debt. We then took what we were paying to those debts and put it toward the student loans starting in February 2012. So, in February 2012, we had $59,524 in student loan debt. OUCH!

But as of today, we have $50,983. In just 5 months of payments we have reduced out debt principle by $8,541. Now, we also have lost $1,815 in interest since February. Isn’t that just crazy?! The interest rates are not even very high and we have already lost SO much money. I can just hear the toilet flushing as our money goes down the drain. It just makes me want to work even harder to get rid of all of this nasty debt.

Let me also mention that our decision to stay debt free also means we need to have savings. So we try to save $100 per week until our savings gets to the point where we can absorb one of our cars going belly-up for example. This is money that is not going to our current debt, but rather going toward preventing future debt.

We have revised our goal so that by the end of 2012, we hope to have less than $35,000 in debt. Let’s hope!

I hope this is encouraging all of you to make sacrifices to get out of debt. I have found that the best encouragement is tallying the amount of money we are losing in interest. It is often much bigger than we expect.