How Much Our Debt Costs – January 2010

by · 17 comments

January 2010 Update – How much our debt cost

One of my least favorite things to think about is the amount of interest we pay toward debt each month.  The good news is that it is shrinking with each passing month.  Pretty soon all the money we line others pockets with will become our own.

What a concept eh… being able to keep the money that we earn rather than paying it toward interest on debt!

Here is the comparison between the last two months:

December 2009 Interest Paid January 2010 Interest Paid
Mortgage 1 – $585 Mortgage 1 – $585 = 0
Mortgage 2 – $293 Mortgage 2 – $293 = 0
Student Loan 1 – $155 Student Loan 1 – $160 = -5
Student Loan 2 – $106 Student Loan 2 – $117 = -11
Lending Club – $65 Lending Club – $51 = +14
Total Interest Paid – $1,204 Total Interest Paid – $1,206 = -2

A few notes about the details of the numbers…

  1. Student loan interest amounts vary month to month. I have mentioned this before… basically student loan interest is calculated using the “simple daily interest formula.”  Interest calculated using this formula varies slightly from month to month… maybe I will dedicate an article to this soon to better explain – but for now this will have to do.  🙂
  2. Interest to Lending Club loan is falling fast! We reduced our Lending Club debt by $1,500 in 12/2009 and by $2,000 more in 1/2010!  This means that the interest we pay to Lending Club decreases significantly every month.  We hope to have this debt eliminated by 3/2010 or 4/2010 at the latest.  This is great considering that will be an $11,000 loan repaid in just 7 or 8 short months.
  3. Seeing these numbers recharges my batteries. I hope this article makes you think… and if you are not currently tracking how much your debt costs you each month hopefully it motivates you to do so.  Think about it – right now we are paying $1,200+ just in interest on our debt. This knowledge makes me sick to my stomach while simultaneously lighting a fire under my britches to keep going full-speed-ahead!
  4. Huge extra debt payments funded by side hustle. If you are in debt and do not have a side hustle, 2nd job, or some other form of secondary income… go remedy that ASAP.  The earnings from our side hustle are enabling us to put an extra $1,000 toward our debt – and that number only stands to increase going forward.  Frugal living is great, but so is extra income – and when the two are combined… LOOK OUT DEBT – HERE WE COME!  😀

The “How Much Your Debt Costs” Spreadsheet & Graph

A few months back I released a spreadsheet that does all the above calculations for you and also gives you the nifty little graph allowing you to track your progress.  I call it the How Much Your Debt Costs Spreadsheet… check it out.

The spreadsheet will also give you the interest amounts paid for each month in HUGE BOLD numbers for you to print off and stick on your fridge.

Betterment is one of my two favorite ways to earn interest on my savings! They have an awesome program for the Average Joe to save and invest simply and effectively. There are no minimum balance requirements and no transaction fees. Read my Betterment Review or open an account to get started earning now.

1 Ben

I love the spreadsheet! I am going to start using it! Thank you! Hopefully my “side hustle” will start making that kind of cash!

2 Matt Jabs

Just remember… the tortoise always wins the race. Slow & steady baby… slow & steady. 🙂

3 Jizzo

My side hustle is bringing in zero so far (blog)
Gotta love tax time with 5 kids to help with debt reduction.
Now that would be a sweet side hustle- making babies.

Bravo Mr. Jabs for your wisdom. I think you need to only write for your blog every other day and work on writing some songs. Maybe get involved with the music ministry at church?

4 Matt Jabs

I’m working with another fella at church right now to form a “Financial Services Ministry.” We will lead both Dave Ramsey FPU courses and Crown Financial courses. We also hope to enlist the aid of church members who are certified financial counselors and planners to give more personal help to those in need.

Songs? Nah… 😉

5 Credit Card Chaser

My church uses the Crown Financial courses – I have looked over the course and it looks pretty good from what I have seen (my Dad also speaks highly of it and I think he has taken the course to be a Crown Financial counselor).

I also went to a church before that used the Dave Ramsey courses and I heard a lot of good things about FPU as well.

6 BG

Excellent job Matt! That’s interesting that your two mortgages didn’t have interest reductions. Mine drop a few bucks a month.

7 Matt Jabs

Yeah, mine both go down just shy of a $1/month… this month it just so happened that they didn’t (after rounding the dollar amounts.)

8 BG

Ah, must be because you have 30-year notes? Mine are 15, so the interest portion is reduced real fast. Took only a few years for the principal portion to outway the interest portion (normal monthly payments).

Keep chipping away at that debt — gonna feel great when the LC loan is gone I bet!

9 Matt Jabs

Yep, 30 year note. Plus we are not quite 3 years into it… so it’s slow going for now.

10 Keith Morris

Thanks for the post, Matt. This is pretty motivating. Hopefully I can find some extra time to start up a side hustle of my own.

Laura from Green Panda Treehouse recently wrote a guest blog entry for LifeTuner on the very topic:

11 Matt Jabs

Find the time… set it up. 🙂

12 Ken

Yeah…that interest stuff can be humbling for sure…hats off to you for continuing to knock that debt out…fyi…I am coordinating FPU at my church..just had 1st meeting last night…off to a good a class of 25.

13 Matt Jabs

That’s awesome Ken… I’m sure you’ll be blessed by leading it – probably in ways you did not first imagine. God is great!

14 oregonsun

Hi, I would really appreciate it if you would explain the simple interest. We have a loan that the interest is charged that way and I feel even though we are paying extra on the principle it isn’t affecting the amount of total interest we are paying. Help..I am confused.

15 Matt Jabs

Okay… I will write something up. Look for the post to go live tomorrow (probably in the a.m. hours.)

16 Frank @ Turn Key Consulting

Hrm, I should run this calculation, but my student loans haven’t gone into repayment yet. I’ve been putting the money that would go to paying my loans towards building a small cash cushion.

I’ll have to bookmark this and do it after Christmas, when all my loans have been paid once.

17 sarah

Ahh what great motivation!! thanks for the spreadsheet and helping to keep us all on track!

Previous post:

Next post: