A little about me: I am a single female, late 20s (closer to 30 than I care to think). I’m heavily in debt, due mainly to student loans from law school. More about that later…
In February, I added up all my debts and came up with a whopping $101,104. Roughly $85,000 was for student loans, $15,000 for my car loan, and the remainder in credit card debt. That really scared me. I knew that my debt was high, but had been living in ignorance for a couple of years while just sending in the payment each month.
Anyway, I realized that I don’t want to live in debt, and I decided to make some changes. First priority was to pay off credit card debts, then set up an emergency fund, then start tackling the rest of my debts from there. I have been struggling with that for the past three months, and here is my current debt:
Federal loan $68,946.66 (2.625%)
Private loan 1 $6,846.66 (6% varies)
Car loan $14,718.32 (6.6%)
Private loan 2 $7,747.54 (6.9% varies)
Credit Card $458 (27% varies)
Total $98,484.82
I am happy to say that I’ve paid off almost $3,000 in a little over 3 months. I am hoping to start paying off in a rate of $1,000 per month, once I start snowballing payments. I am paying off debts in the reverse order that they are listed, based partly on interest rates, and partly on tax consequences for some of my student loans — some of them qualify for tax deductions for the interest I pay, some of them don’t. I hope that by the end of June 2008, I will have paid off my credit card completely. I’ll spend the rest of the year working on my emergency fund. At the start of the next year, I’ll start big payments on the student loan that doesn’t qualify for a deduction, then the car, and so on. To be continued…
Tags: car loan, credit card, debt, emergency fund, interest, pay off, snowball, student loan, tax deduction
