When I set my goals for 2015, I decided paying off my student loan would be my top priority. I had hoped to pay it off in 2014. But hoping and planning are two different things. I ended the year still owing $4,843 on my student loan. Not exactly chump change, but I figured I could probably knock it out before summer ended.
The more obsessive I became about the goal, the more extra cash I managed to find. I paid off $1,289 in January. With the addition of my tax refund, I managed bump up my payment in February to $2,445. I started March with only $1,109 left to pay on the student loan. Between my regular payment and extra payment, I should be able to end March with less than $550 remaining on my student loan.
My drive to make that loan disappear has me questioning whether I should just shift some money around and be done with it by the end of March. After all, I have $500 sitting in my house fund right now. Squeezing another $50 out of the budget shouldn’t be a big issue. Why not go ahead and pay it off?
I was holding on to that $500 house fund as extra cushion, in case I needed it to sell the house. I don’t think I’ll need to do any more work to the house, but who knows what kind of feedback I might get from potential buyers? Then again, is $500 really going to make that big of a difference? On the other hand, is waiting one more month to pay off the student loan really so bad?
If I pay off the student loan in March, that means I can switch my focus to the car loan in April. My plan is to up my “regular” monthly payment from $380 to $500. I’ll then stockpile my extra $140 per week during the month, making an extra payment of $560-700 at the end of every month. Since April has 5 pay periods, paying off my student loan in March means putting an extra $820 towards my car loan in April. But it also means I don’t have that extra $500 in my house fund. And my emergency fund is still short $500 from when I lent Bryan money; So if something unexpected happens, I only have $2,500 set aside to deal with it. I could pay off the student loan in March, and then use some of my extra payments to put back the $500 I used from the house fund. But then, how is that any different than paying off the student loan a month later?
What are your thoughts? Keep to the original payoff plan, and finish the student loan in April? Use the house fund to payoff the student loan in March, and then pay back the fund in April? Get rid of the house fund all together, and move on to the car loan? Invest the $500 house fund in a good therapist, so I stop obsessing over payoff dates and fund amounts?
– Cindy W.
Update: Running the numbers again, I’ll actually owe closer to $460 at the end of March, if I follow the original plan. I forgot to account for the regular monthly payment!