We Paid Off All Our Student Loans!
We finally did it! After nearly 10 years of constant monthly payments, my wife’s school loans are now finally paid off! We’ve been looking forward to this day for years and it has finally come!
How Much Were the Student Loans?
When my wife graduated with her doctorate about 10 years ago, she had a total of about $27,000 in school loans. Yikes!!! I know that’s not much these days, but it sure did seem like quite a bit at the time she graduated! Hell, most kids have $80K in loans or more these days! That’s enough to buy a fancy new BMW M3! Regardless, for us $27,000 is quite a bit of debt 🙂
What Was the Interest Rate?
Here’s where we got really lucky. My wife’s loans were only a ~3% interest rate. Also, these loans didn’t start to accrue interest until after she graduated. One other bonus is that my wife had several thousands of dollars forgiven because she worked in the public sector for 5+ years.
We could have actually paid off her loans years ago, but because the interest rate was so low we felt it was better to take our extra money and invest it.
What Was the Payment on the Student Loans?
All of this boiled down to a monthly payment of just about $255 a month. Not a big deal on the monthly budget, but still a constant monthly drain and something that anyone would be happier without 🙂
How Does it Feel to Be Rid of Student Loans?
It feels great! I mean really awesome! We are now completely debt free (other than our home loan)! I think my wife actually feals even better than I do about it. She really couldn’t believe it when she clicked the final button to make the last payment!
What’s Next Since the Student Loans are Paid Off?
We’re going to Disney World! Just kidding 🙂 Actually, we do have plans to vacation in Disney this year, but that has nothing to do with paying off her student loans.
Some would say that we should now start paying off our house early. Nope! We think it’s much better to take the risk and try to achieve higher returns out of the stock market. Our home loan interest is right at 4%. Once you figure in tax breaks, that equates to about a 3% risk free rate of return if we were to pay the house of completely. We’d rather take the increased risk and try to get 6%-8% out of various investments. This is a change in heart for me as I’ve come to realize the power of compounding interest.
Congrats, Derek – that’s a great feeling I’m sure!
Brock @CleverDude recently posted…Breaking The Rules of Frugality To Save Money
Thanks Brock!!
Great job!!
I remember the feeling when I set up final payment to my loans online a few years ago. I must have logged into their system 100 times over the next few days so I could see the $0 balance. It was a great feeling get them off my back.
Jon @ Money Smart Guides recently posted…What I Learned Managing $500 Million Dollars
Jon,
Haha – that’s awesome! Glad we both share such a cool thing in common!
Great article! Now that’s motivation for to get out from under my student loan debt