Submitting my final loan payment two weeks ago is officially my biggest achievement with the smallest celebration. Selecting “Loan Payoff” felt cool, seeing that final amount was nice and making sure the full payment was in my account was good. But then I clicked “submit” and that was it. No balloons fell from the ceiling, no celebratory gif on the screen, not even Kool & the Gang to cheer me on. It was just me and my screen, by myself at 6:30am with some peanut butter toast and a yogurt. Talk about underwhelming.
In contrast, the process of paying off debt was a ton of fun. Those who haven’t played the debt game will probably think I’m crazy, but winning at the debt game is an excellent time. There is so much strategy to it. You have to choose your repayment plan, how you pay, how often you pay and what loan to target. Each day while you are paying off debt is a challenge.
“What can I do today to add a little more snow to my snowball?”
Then you can create elaborate spreadsheets to track everything. SPREADSHEETS, FTW!
Now that I’m shifting into Save Mode, I struggled to find the game in it. There are no payment plans to strategize, I don’t get an extra bonus for direct debit, I suppose I could save as often as I want but there aren’t really any savings accounts to target.
Paying off debt was like running a race from the back of the pack. Every success felt like passing the next competitor as I got closer to the finish line. Saving feels like I’m the only one in the race. Don’t I win no matter what?
To combat my feelings of blah-ness, I have a plan. I think it’s a good plan. Feel free to steal it for your own savings adventures.
*Ding!* Round Two!
I am going to save, in cash, the equivalent of my student loan debts. I will break it out by the 5 loans I originally had. To make it even more aggressive (because I love aggressive goals) I’m going to try to do it in less time than it took to pay off my loans. 459 days? LET’S GO FOR 458!
- $2,125 (Baby saver)
- $2,125 + $5,828 (Middle saver) = $7,953
- $7,953 + $8500 (Thing 1) = $16,453
- $16,453 + $8500 (Thing 2) = $24,953
- $24,953 + $20,377 (Big Momma) = 45,330
Timeline: July 12, 2016
I submitted my final student loan payment on March 27, 2015. I’m giving myself 2 weeks to breath, which brings us to April 10, 2015. 458 days from April 10 is July 12, 2016.
Potential Road Blocks:
1) What about the savings? To pay off my loans, I cashed out 2 savings accounts. The value of these accounts credited to my loans was $6,863 I don’t have any money stashed that I can magically deposit in my House Fund. This makes it more difficult.
2) What about the interest? My loans had an interest rate of 6.55% that chipped away at the value of my money. My savings account has an interest rate of 0.75%. That’s a swing of 7.3%. This makes it a little easier.
3) What about your income? For 2 months of my student loans repayment, I was unemployed. Today, I have an income. Pending any disasters, I will have an income for the next 458 days. (and beyond!) My income is also greater now than it was last year. This makes it easier.
4) What about other savings goals? I save much more for retirement these days. I increased my 401k contribution by 10% and went from quarter maxing my Roth IRA to maxing that sucker. This is going to make saving for a house harder, especially because I still have urges to max my 401k. I know I’ll max that eventually, but hopefully it will be after this savings challenge is complete.
I also have a travel fund that needs to be funded, but it’s nearly full for my 2015 travel plans. Next year’s travel goal of Japan is different. That’s going to require a lot more cash. This is the great unknown. Worst case scenario, I can just charge the trip and deal with it later. I’m kidding!!
5) What about Hubs? For at least the first 9 months of my loan journey, Hubs didn’t help. These were my loans and I wanted to pay them back by myself. Then we wised up and realized that my loans helped both of us achieve a higher joint income. A higher income means more opportunity for both of us. Hooray! Hubs will be helping from Day 1 of this experiment. However, his income will be partially diverted to save for travel. This makes it a little easier.
6) What about reality? On paper, this plan doesn’t work. I have too much money being diverted, most notably to retirement. But, on paper my student loan payoff shouldn’t have worked either. I started with small goals when I paid back my loans. I want to go big from the beginning this time. I may get there, I may not but this goal will challenge me from day one.
It was fun the first time, it should be fun again.