Student loans…they come standard issue with the American Dream, right? Well after paying off my student loans and truck a few years ago we were still diligently and stupidly only paying the monthly balance on my wife’s loan. The sum was so seemingly large we were resigned to “It will always be there.” What were we thinking?! After paying for our 2016 kitchen remodel and my wife’s car loan with cash in savings we were finally feeling the itch that maybe we could make this loan go away.
So, at the beginning of the year we did some math and found we were paying over $5 per day in interest on my wife’s student loan!!!
There is nothing like actually seeing the daily interest to light a fire in you like nothing else. With minimum payments we would have paid approximately $4,000 towards the balance this year and we would have accumulated roughly $1,800 in additional interest, leaving us only a little over $2,000 closer to paying the loan off. How crazy is that! Looking forward, we were dreading another decade of being saddled with this burden. So, right then and there we made a pact about the loan…
Kill it with Fire!
Looking back on the year, it is astonishing to me how far we’ve come financially. We’ve scorched through this loan faster than that stogie incinerated the Griswold’s Christmas tree. Through 11 months we’ve managed to pay down over $38,000.00. The last couple grand will be paid off before the year’s end. (12/16/17 update: Due to a year-end bonus this sucka is gone now!). I figured we would save over $6,000.00 in interest charges by paying the loan off this year compared to the minimum payments and decade payoff. During this period, we had a few Murphy’s Law moments and a few fancy indulgences to boot. Maybe the most satisfying aspect of burning through this student loan is that we did so with minimal changes in our spending habits (i.e., we aren’t living like poor monks).
“Real Life” moments included:
- Youngest daughter needed tubes in her ears.
- Tenant in our rental house broke the lease early, leading us to….
- Trying to sell said rental house and dumping a few grand in repairs, paint, and improvements into it.
- The real estate gods did not smile down on us and thus we had to pay two mortgages for four months. (and eventually found new renters instead of a buyer)
- Plumbing issues including a plugged floor drain in the basement and kitchen sink drain issue. (My DIY skills resulted in only the loss of some sweat and some sanity)
- My cell phone died.
- The AC went out. (after research I found it was a bad capacitor and I fixed this myself for $9!!!)
- The truck battery died.
Self-Inflicted Wounds (indulgences)
- $3,000 playset for the kiddos
- A beach vacation and a weekend getaway in Missouri Wine Country
- Increased kiddo activities (Dance/Gymnastics)
- College football season tickets
- An Apple watch & Fitbit
So how did we get here?
Let me first say that my wife and I both have good professional jobs with decent salaries. So we felt like we should be much further ahead than where we were at the beginning of the year. So, what changed? Well, the first step was to analyze our spending. What we found was frustrating… we were nickel and diming ourselves to death. The main culprits… food and booze. We had a habit of shopping at higher-priced grocery stores, going out to eat twice a week on average, and we (used in the royal sense) had developed a taste for craft beer and quality bourbon. One of us was also buying lunches daily at work. It was like we had a firehose of cash, but were trying to drink everything that was coming out of it!
Knowing this, we made the following changes to our eating and drinking habits:
- We made an effort to plan out our meals better, since we found a large portion of the dining out was due to poor meal planning. We currently eat out a couple times a month in comparison and have discovered several delicious recipes in the process.
- Switched grocery stores to Aldi, Sam’s and Walmart from the higher-priced stores.
- Limited the purchases of craft beer and hard liquor by switching back to regular ol’ Bud Light. I’ve found that when I drink nothing but craft beer, they all start running together. Now, when I crack open a craft beer after several weekends of Bud Light, I can more fully enjoy the subtleties and craftsmanship.
- Both of us switched to bringing our lunches to work. The culprit of the daily takeout lunches switched to bringing their lunch to work 90% of the time.
It’s hard to put an exact number to the savings, but I estimate we’ve saved roughly $8,000 from the measures outlined above.
We’ve implemented other measures, which are less exciting, and admittedly unoriginal. But the returns were eye opening.
- I decided, I didn’t need full coverage for my paid-off, decade old truck. So, I dropped the coverage to liability only, figuring the deductible was almost the market value of my old ride anyways. This freed up $290 in premiums.
- Our promotional price for cable was due to rise to a stupidly absurd $180. So, we dropped conventional cable for streaming TV (Playstation Vue to be exact) and purchased a couple digital antennas for local channels, saving $50 a month and enjoying the same channels.
- I bought a $45 grooming kit and I started cutting my own hair, saving over $100 annually for a whopping ROI of 222%. Further, I get time back and save on gas spent driving to get my hair cut.
- Using dishcloths in place of paper towels. We were buying giant packs of paper towel rolls twice a month at about $18 a pop ($36 per month). We purchased packs of dishcloths for $15.99 over 2½ months ago and have bought one pack of paper towels since. If this trend holds up it equates to an annual savings on the order of $345. Put another way, it represents a staggering ROI of 2,300%!! Beat that hedge fund managers!! We will probably even get a couple years out of them.
Now there’s a couple grand remaining on the student loan balance, but we can see the light at the end of the tunnel. I eagerly await the day when we, laughing maniacally, dance around the last dying embers of the fire that consumed the corpse of this monkey we’ve had on our back’s for more than a decade.
Looking back on the results of these rather minor changes, I am emboldened to find other areas to optimize. So how about you? What have you done to uncork your own firehose of cash?
UPDATE: As of 12/15/17 this sucka is gone… burnt to the ground! Now its on to bigger and better things!