Some Strategies for Paying Off My Student Loan

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studentloanpayoffPaying off my student loan is going to be a humongous task which will take several years. My goal is to have it paid off in less than ten years. I’d like to pay it off quicker than that, but even the ten-year goal is a stretch based on my current finances. My expenses are about as low as I can get them so most of my strategies for paying off my student loan sooner will be related to earning more income. Since it will take years to pay off my student loan some of these strategies will likely change over time while others will be abandoned entirely and new strategies adopted as they become available and/or I become aware of them.

My first strategy for paying off my student loan quicker is signing up to have my student loan payment automatically debited from my checking account. Doing this lowered my interest rate from 6.875% to 6.62%. That isn’t much of a decrease in the interest rate but when you are dealing with six figures of debt it does make a difference. It will be about a $25 month decrease in interest on my loan.

I also want to refinance my loan. I applied to refinance my loan with Sofi. They have variable rates as low as 1.9% and fixed rates as low as 3.5% which would save me a lot of money. Despite my 798 credit score my loan application was swiftly rejected due to my income being so low relative to the amount of my debt. I can’t really blame them for rejecting my application. I’m considering reapplying to refinance just part of my loan later this year. I have found that there are a number of new refinancing companies with competitive rates and term lengths. Does anyone have any recommendations for a student loan refinancing companies? I’d love to hear in the comments below.

Another way to refinance part of my student loan is with my credit cards. One of my credit cards offered me a 0% interest rate for 18 months on a balance transfer with a 2% transaction fee. I signed up for the deal and am having my credit card company transfer part of my student loan to my credit card. The transfer is still processing so I’m not sure if it will work the way I planned. After this transfer is done I might do another balance transfer deal on another of my credit cards. I just have to make sure that I can pay the balance off before the 0% interest rate ends.

Reducing the cost of the loan is helpful but to make significant progress on paying it down I need to make more money. A lot more money. I should have a document review job starting next week and I’m hoping that there will be a steady amount of document review jobs the rest of the year. These jobs are currently my best source of guaranteed income so I’ll keep working them until I know for sure that I can make more money elsewhere. Whatever I make from the job above my basic expenses will go to paying down my loan.

One job won’t be enough to pay off the loan quickly though. That is why I signed up for Uber.  This weekend will be my first weekend driving for them. After the weekend I should have a good idea of how much I can make through Uber. If nothing else, it should provide me with a little extra income when I’m between jobs. My plan is to drive for them nights and weekends while working my regular job. I really like that I can drive for Uber whenever I have time and don’t have to commit to a schedule.

I’m still working my Amazon FBA business and I think I’m slowly learning and getting better at it. I’m hoping to make at least enough from FBA to pay my regular student loan payment.

Blog income has mostly dried up, but I’m hoping I can revive it somewhat.  I need to work on increasing my affiliate and referral income from my blogs. Posting regularly on my Bank Bonuses blog should help with that. I also plan to have one or two posts a month on this blog about products or services for which I have affiliate or referral links.  I only write about services/products that I actually use and think are a win/win so you don’t have to worry about this becoming a spammy blog.

This past week I’ve made some decent progress on my e-book. I’ve procrastinated writing this book for years, but I am finally going to get it finished. It should be done by the end of this month. Once that book is done I have a couple more ideas of books to write. If I am able to publish two or three books by the end of the year they will hopefully produce a nice bit of additional income.

Those are the strategies I currently am using/am planning to use to reduce the cost of my loan and make more money. If you have any suggestions I would love to hear them.

April Expenses – $1212.29

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Here is a breakdown of my expenses for April.

Household $404.32
Entertainment $90
Transportation $310.62
Food $99.29
Student Loan $183.15
Travel $0.80
Phone $26.30
Health $97.81
Total $1212.29

 

My April expenses were not too bad considering I bought a car and took a vacation to Niagara Falls. If it weren’t for the six month insurance expense of $198.66 and the car registration expense of $60.50 I would have made my $1000 target.

The reported monthly total doesn’t reflect all of my personal expenses for this month. I left out the purchase price of my car since it would throw off my expense average. Also, since the car is an asset it doesn’t make sense to immediately count the entire cost as an expense. My friend JK at MyFrugalMiser has a good way of dealing with the car expense. He expenses the car depreciation monthly according to the amount of miles driven. Although this is a reasonable way of tracking the car depreciation expense I will not be doing this. Mainly, because I don’t want to bother tracking my mileage. Also, because a lot of miles will be business miles and it doesn’t seem accurate to count the depreciation as a personal expense when it is also part of the business mileage expense.

The monthly total also doesn’t reflect the extra $2383 I paid towards my student loan since including that amount in my monthly total would throw off my monthly expense average. Although, I won’t report the extra amount paid on my student loan in my monthly total I will always report it in my expense post and possibly elsewhere.

For some reason my monthly phone bill declined from the usual $26.81 to $26.30. That decline will be short-lived. I bought a new phone last month because my old one wouldn’t run the Uber app I needed to drive for Uber or the Amazon Seller app which is extremely helpful to have for my FBA business. Since I upgraded my phone I lost my grandfathered $25 a month rate on Virgin Mobile and will now have to pay a $35 a month rate. That is still a pretty good deal and I plan to write off the extra $10 a month as a business expense.

Even though we took a three night vacation in Niagara Falls my travel expense for the month was only 80 cents. That is in part because some of the vacation expense was paid in the previous month and a lot of the travel was free or almost free. For the amount of the vacation expense I did have to pay during the month I was able to get reimbursed for most of it by my travel rewards credit card.

This month my expenses should be about the same other than the car expenses. I might also have increased medical expenses since I’m guessing some of my medical bills will become due. Other than that it should be another low expense month.

Niagara Falls Trip Report

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CAM00518After the end of tax season my GF and I took a weekend vacation to Niagara Falls. If you have been reading this blog for very long then you know we did not spend very much on this vacation. Our total spent for three nights hotel, two round-trip tickets from KC to Buffalo, three days car rental, and admission to several attractions came to just a little over $200. This post will explain how I managed to keep the cost of the vacation so low.

 

The airfare was basically free. I still had lots of Rapid Reward points left over from signing up for two Chase Southwest credit cards last year which allowed me to book my flight for free. I also earned a companion pass last year which allows my GF to fly for free with me as well.  This is pretty nice since we get double the value out of my points.  The only thing I had to pay for the two round-trip flights was the tax of $5.60 on each flight each way.

The hotel room was completely free. I received 25,000 Starwood points for signing up for the SPG American Express card and meeting the spending requirement earlier this year. Three nights at the hotel used up 10,000 of those points. We stayed three nights at the Four Points by Sheraton in Niagara Falls, NY.  The room was pretty nice by my standards. It was a little smaller than our room at Excalibur, but much newer and a little fancier than Excalibur. From reading reviews of the hotel I knew to request a river view room and I’m glad I did. We wouldn’t have gotten the river view otherwise and it was a great view. The hotel had free cookies by the front desk which were delicious and a nice perk for staying there. The hotel was about five miles from the Falls, which wasn’t a big deal since we had a rental car. If we ever go to the Falls again I’d probably get a hotel on the Canadian side though.

view from our room
View from our room

As you might have guessed, our main reason for visiting Niagara Falls was to see the Falls. The first day we went to Niagara Falls State Park and did some sightseeing there. A plus to being early in the season is that we didn’t have to pay for admission to the park or for parking. Also, it was not at all crowded. The minus is that some parts of the park were off-limits due to being covered in snow and ice so we couldn’t get quite as close to the Falls as we would have been able to later in the year. Also, the Cave of the Winds tour and Maid of the Mist boat ride were not yet operating. At the park we were able to view the American Falls and Bridal Veil Falls from Goat Island and we also walked on the bridges to the Three Sisters islands and observed the rapids above the Falls.

The next day we headed to Canada to observe the Falls from the Canadian side and to visit some tourist attractions.  It was also the first time either one of us had been to Canada so we were excited to visit Canada for the first time also. The previous day I had bought us two Wonder Passes which included tickets to Niagara Fury, Journey Behind the Falls, the Butterfly Conservatory, and 24 hour passes for the WEGO bus system. The tickets were $19.95 Canadian each which I think is a great bargain. The visit to Journey Behind the Falls was worth that much all by itself. This was another plus to coming early in the season as Wonder Passes are only available in the off-season. The view of the Falls the previous day was awesome but seeing the Falls from the Canadian side is much more awesome. This post is already getting unwieldy so I won’t go into detail about everything we did. I will highly recommend going on the Journey Behind the Falls tour. You actually do journey behind the Falls. There are tunnels dug behind the Falls and you get to walk through the tunnels and observe the Falls from behind the Falls at a couple of different windows. There is also an observation deck where you can view the Falls outside at a pretty close range.

We both really enjoyed our visit to Niagara Falls and will probably go again sometime. On the next visit I would plan to stay on the Canadian side since the view is much better from there and most of the attractions I’d want to see are there also. A lot of the American side seems to be run-down and the roads are in terrible condition. The next trip we would also like to explore a little further into Canada. We didn’t feel like we experienced much Canadian culture in Niagara Falls since it was pretty similar to any other tourist town. Is there anything else you would like to know about our Niagara Falls vacation? If you’ve been to the Falls before do you have any suggestions on what we should do on our next trip?

April Income – $2747.38

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Here is a breakdown of my income for April.

Online Income $105
Interest $2.53
Cash Back $45.06
Amazon FBA $159.91
Jobs $2434.88
Total $2747.38

 

April was a good month for income. It should have been a little better. I was expecting to receive two full paychecks in April. Unfortunately, I missed three days plus a couple of hours due to being hit by a car. Getting hit by a car is not good for your finances. I should get paid for that time eventually, but it will probably be a while.

My Amazon FBA income was my best yet. It is still a long ways away from being a full-time income though. I’m trying to ramp that income up and hopefully I will be successful.

My other sources didn’t contribute much and that probably won’t change this month. This month will likely have a big drop in income since I no longer have my full-time job. There is a possibility that I’ll be starting a temporary job tomorrow. Since I haven’t heard from the employer yet I’m thinking that job probably isn’t going to happen. If I don’t get the job I plan on driving for Uber to make up some of the job income. In order to keep paying down my student loans I can’t have any poor income months. I plan on working full-time hours at my various endeavors and I’m hoping that results in a full-time income.

 

 

Paying Off My Student Loans

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studentloanpayoff I have decided to pay off my student loans. This is something I’ve been considering since last year. After doing some calculations on a student loan calculator I saw that when my student loans are finally forgiven under the income-based repayment plan I would owe almost six figures in tax on the forgiven amount. Financially, I come out about the same whether I pay the loan off over the next 10 years or pay the minimum allowed under the IBR plan. It makes more sense to pay down the loan now while I’m able to make decent money though. Under the IBR plan the loan would be forgiven when I’m 67 years old and I don’t want to have six figures of tax debt at that age.

At the beginning of April I owed $138,690.66 on my student loan. Hopefully, that is the highest it will ever be. At the end of April the balance was $136,888.70. I managed to pay off about 1.3% of the loan during the month. I’ve added a widget in the sidebar to track my progress. I wish I had started paying the loan down earlier, but it wasn’t until 2013 that I was making enough to pay down the loan. I need to increase my income a lot more to be able to pay off the loan in reasonable period of time. The interest rate on my student loan is 6.875% and I incur over $600 of interest each month. That is over $7000 a year down the drain. That makes it tough to make progress. If I were on the 10 year plan my monthly payment would be approximately $1383. Therefore, I need to pay more than that if I want to have the loan paid off sooner than 10 years. That will be extremely difficult, but I don’t think it is impossible.

My main strategy for paying down the student loan is to pay everything I can towards my student loan. It is a pretty simple strategy. After paying my modest expenses, the rest of my income goes toward the student loan. Since I don’t have a steady income right now I am keeping a cushion of $3000. Once I have a steady source of income again I will reduce that cushion down to $2000. If I hadn’t bought a car in April I would have had an additional $6000 to pay towards the loan. I need the car to make money so that was a necessary expense. I’ll have a post next week on my various strategies to pay down the loan. If you have any tips on how I can pay down the loan quicker I would love to hear them.