Goals set an outline for your life. Whether it be writing them down on a sticky note for the day, in a notebook for the week, on the fridge for a month, or shoot, even on a blog for the year, they guide you into the direction you envisioned for yourself. They help you along and give you something to aim for. Well, life doesn’t always go as planned and sometimes you may have to alter those goals and set new ones! That is ok!
I mentioned in my March Debt Pay Off post that we took on a NEW loan to put towards a much larger loan with a high interest rate. I never thought I would take out a loan again. Life happens and opportunities arise.
Why We Took Out Another Loan
At the beginning of March our largest loan was just below $70,000. It has a 6.75% interest rate. We were making a $465 payment a month and the loan balance was only decreasing $70! It was very hard to watch. With my new job, I had an opportunity to take out a career starter loan at a maximum amount of $25,000. The interest rate would be 2.99%. So, we decided to take out this $25,000 loan and apply it towards that $70,000 loan. We figured our $465 payment would make a little more progress on a $45,000 loan than a $70,000 loan.
Our New Plan of Attack
After evaluating our loan balances and looking at what loan we would should take on next, we decided to switch up our plan of attack. We have been following the debt snowball method where we pay off the smallest debt first and keep on moving forward with the smallest debt. That was working great for us as we were able to apply extra money towards each consecutive loan. We were also able to pay off a few things pretty quickly and those little victories were motivating!
Now that we are dedicated to paying off our debt and don’t need the little victories to stay motivated, we decided to finally attack this big nasty loan! Attacking a $45,000 loan is a little less intimidating than a $70,000 loan!
With that being said, how does this affect our 2016 Financial Goals? Let’s check it out.
First, lets reiterate our overall financial goal
- Pay off $145,811.88 in debt in 3.5 years. One year down, two and a half to go!
Now lets evaluate where we are standing on our initial 2016 Financial Goals.
Pay off my federal loan ($22,115 @ a 6.75% interest rate) by the end of May.Check! We accomplished this goal two months early!
- Pay off my Bank of the North Dakota loan ($20,601 @ a 2.01% interest rate) by the end of October. This loan has moved to the bottom of our list since it has the lowest interest rate. We will not get to this loan in 2016.
- Reduce the Parent Plus loan from $69,838 (@ a 6.75% interest rate) to under $60,000. April will be our first month making a large payment towards this loan. As stated earlier, it has now decreased to roughly $45,000 due to us applying that $25,000.
In order to hit those goals, I had figured out we were going to have to put over $50,000 towards debt in 2016. So that is still what we will aim for: putting over $50,000 towards our debt. Lets break that down into new goals.
- Paid off federal loan which was $22,115.
- Reduce Parent Plus Loan to $15,000. For the remainder of the year we will have to put roughly $3500 a month towards this loan.
Those are the updated overall goals for 2016! I think we can do it if keep our Italian travels under control 😉
Check out our mini goals to reach those big goals here!