Getting out of Debt: One year down.

Well we've been making payments on Brandon's student loans for a year now.  That in an of itself is awesome considering almost a year ago we weren't sure how we were going to pay rent.  Still I sometimes get discouraged when I think that at this rate we still have 14 years to go.    That's where this quote comes in handy.  

I just have to keep in mind that slow progress is still progress.  So even though our debt payoff chart may still have 14 years left on it I need to remember that at least it still doesn't have 15 years on it.

At the beginning of the year I didn't even know the exact amount of what we owed.  Or who exactly we owed it to.  In fact it took me about 3 months to sort through all the paper work, make a spreadsheet, and get everything all figured out.  The first few months I made most of the payments over the phone.  Then as I got everything more organised I was able to get the websites figured out and start making payments there.

Brandon had loans managed by 5 different student loan management organisations.  UHEEA, AES, ACS, Utah State, and Fedloan.  We could have consolidated them into two groups; one group for the private loans, and one group for the federal loans.  However, we decided to keep them all separate because we should be able to use the snowball effect more effectively if they are in separate accounts.  There was some sort of special consolidation thingy that we did take advantage of to consolidate the UHEEA and Fedloan accounts together. So now we only have to worry about making 4 separate payments instead of 5.

At the beginning of the year most of the accounts were still in deferment/forbearance.  We took the money that we would have paid to those accounts and funneled it into the smallest of the loans which is with Utah State.  As each of the loans came out of deferment and forbearance we started paying to those loans.  I some how miscalculated the minimum payment amount for all 5 loans and so our total "minimum" is actually about $85.00 more than the real minimum.  That extra $85 goes into the small Utah State loan.

Thanks to all the extra money that goes into the Utah State loan it should be paid off by about the middle of this year.  Then that extra $85 plus the regular payment will go to one of the other loans (I haven't figured out which one yet.)  This is what it known as the snowball effect.  As each loan gets paid off the amount put into the other loans gets larger and larger like a snowball rolling down a hill.  It's one of the things we are counting on to help us get out of debt quicker than 15 years.

Making double payments is another thing that will help us get out of debt faster.  I was hoping to start doing those as soon as Brandon started getting his army paychecks.  Then I decided it was better to build up some good savings before doing that.  I'm glad I made that decision because between the car repairs, going to Georgia, getting Brandon home for Christmas, and moving to Texas (with more car repairs) we used up ALL of our money.  Once things settle down a bit and we get our tax refund we'll look into the possibility of starting double payments.  At the very least I'd like to start making 1.5 payments or something like that.

We did find out something kind of discouraging.  We'd heard that the army would help pay off at least some of Brandon's student loans.  However, apparently they don't do that anymore.  We're kind of bummed about that, but in the end it's okay.  As misguided at is was, we took out these loans expecting to repay them.  We should be accountable for that decision.

So there you have it.  One year of payments closer to our goal.  Hopefully before the end of the year I'll be able to let you know that we've paid off another years worth of debt.