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…
- 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.
- 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.
- 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!
- 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.