Student Loan Payoff Progress December 17, 2011

If you follow me on twitter, you know I’ve been thinking a lot about paying off my student loans.  I already have my loans set to auto-pay every month, and, while that was slowly whittling away at the total amount, I felt like it was going to take FOREVER to pay it all off.  One of my loans had recently been sold off to Sallie Mae, and when I logged into their site, it showed the daily accrued interest.  Seeing that every day I left these debts unpaid meant more I had to pay in the long run made this really hit home.  I knew in my head that I was paying interest, but seeing it accrue gave me the kick in the pants I needed. At one point I was going to pay all of one loan off, then I went to half of that one loan, then I was afraid to do anything.

My final decision:  Pay $4,000 towards a loan currently at 3.5% interest.

I still have $4,584.34 to pay off on that 3.5% interest loan, and $30,330.61 total on a group of loans at 2.75%.

I headed over to the What’s The Cost’s snowball calculator to see how long it would take me to pay off these loans.  If I keep paying the minimum that is auto-paid every month, I’ll finally be free of these student loans by March 2018 (assuming that when I finish paying off the 3.5% loan, I’d use that money to pay down the remainder of the 2.75% loans). That is WAY too long.  I don’t want to wait that long.  That’s a lot of extra interest accruing.  And with interest rates on savings accounts now below 1% for pretty much every account I know of, it would make more sense to pay down the loans more quickly. So, I went back in to the snowball calculator, and tried to figure out how much I’d have to pay if I wanted to be rid of the debt by the end of 2012 (a wild goal I considered making after I felt so good paying the $4k).  Turns out I’d have to pay around $3k PER MONTH to get rid of all my debt within the year.

Here’s the thing:  I have a lot of money in savings.  Possibly too much, considering other things I could have done, like pay down my loans more quickly, or put more in my 401(k).  I’m basically like the people on Hoarders, but with money.  I’ve got a solid emergency fund, plus I’m saving up for a down payment and maybe eventually a wedding.  But those are still a long way ahead of me.

So the question is:  should I use my savings to pay off my loans?  In the long run, networth-wise, I should just get rid of my debt.  Granted, I was more keen on getting rid of it back when I graduated, with it being at 8.5% on $70k or so.  Most people would be willing to do almost anything for a 3.5% interest rate on a loan.  Part of me really just wants to get rid of that debt.  And if I draw from my savings, I think I can do it. But I should keep an emergency fund.  You know, for emergencies.

I think my best bet is to just set an amount that I will pay every month beyond the minimum.  I’m thinking $500-$1000 extra per month.  I think it can be done.

For now, I’m really glad that I made a big dent in my loans.  And that meant I met my first goal that I set on Payoff.com (and earned the First Goal Complete badge!).  And I earned 4000 credits on SaveUp.  So, besides lowering my debts, I got a few virtual rewards

So, would you pull money out of savings to pay low-interest debts?  Is there an amount or an interest rate that would make you change your mind?

Christmas Car Commercials, I Hate You: 2011 Redux December 2, 2011

You remember when I posted about my hatred of Christmas car commercials?  Well guess what.  I still hate them.

Again, it’s the Lexus ads driving me nuts.  This year, all the gift giving occasions revolve around recognizing the somehow universally known “Lexus song”.  You know, because when you hear that song, you know your significant other dropped a minimum of $34k to surprise you.  Was it on your Amazon wish list or something?

I did a little research, and it turns out that “Lexus Song” is actually called “Family & Friends“, written by Steve Kujala, a prolific composer and flautist.  I actually listened to the whole piece.  Luckily, listening to the actual piece doesn’t fill me with infinite range.

So, back to the commercials.  The couples are together, and then they hear the song, played by some clever means, like in a music box, as a ringtone, or the Muzak playing in the elevator.  I will admit, as a video game fan, I was least annoyed by the one where they programmed the song in Guitar Hero.  But still.  You don’t buy cars for people.

Unless, of course, you’re a millionaire:

Like last year, I was able to make an exception for commercials that amuse me and make fun of other ads.

So, what commercials are making you angry this holiday season?