February 2010 Update – How much our debt cost
“He that hath no rule over his own spirit is like a city that is broken down, and without walls.” – Proverbs 25:28
Over the course of March, April, and May 2010 our debt cost us $37.08/day, down from 42.46/day back in February. This is just the cost of the interest on our debt, and does not include the principal amounts. That said, when we started our debt free adventure back in January of 2009 we were paying $1,328 – which was $47.43/day. Our debt reduction efforts over the course of the last 17 months are saving us nearly $10 every single day… money we now to funnel into our Capital One 360 Savings account to pay us rather than fat cat bankers! 🙂
I love thinking about how much more we can save because of how much less we owe. Hopefully this motivates you as much as it does me! Let’s take a look at the individual interest breakdown then talk about the progress in greater detail.
Here is the comparison between the last two months:
|February 2009 Interest Paid||March 2010 Interest Paid||April 2010 Interest Paid||May 2010 Interest Paid|
|Mortgage 1 – $584||Mortgage 1 – $583 = +1||Mortgage 1 – $582 = +1||Mortgage 1 – $0 (refi – free month)|
|Mortgage 2 – $292||Mortgage 2 – $292 = 0||Mortgage 2 – $291 = +1||Mortgage 2 – $291 = 0|
|Student Loan 1 – $160||Student Loan 1 – $144 = +14||Student Loan 1 – $199 = -55||Student Loan 1 – $112 = +87|
|Student Loan 2 – $120||Student Loan 2 – $120 = 0||Student Loan 2 – $105 = +15||Student Loan 2 – $111 = -6|
|Lending Club – $33||Lending Club – $0 = +33||Lending Club – $0||Lending Club – $0|
|Total Interest Paid – $1,189||Total Interest Paid – $1,139 = +50||Total Interest Paid – $1,177 = -38||Total Interest Paid – $514 = +81|
A few notes about the details of the numbers…
- We’re down to just four debts. Back in March we paid our Lending Club loan off and are left with four debts. 1st mortgage, 2nd mortgage, my student loan, and her student loan.
- Somebody screwed up. Although student loan interest varies each month, mine varied much more than expected over the last 2 months. Why? Either my student loan company, Capital One 360, or I myself screwed up. I have auto payments set up for all of our remaining debts, including my student loan. Regardless of this, and despite the fact that I have $1,000 worth of overdraft protection on our my bank account, Capital One 360 reported insufficient funds to my student loan company when they attempted to auto-draft the payment. The result? A spiked interest payment for the month of April. Although I know I should have, I never called Capital One 360 about this. The draft would have overdrawn my account by just a few dollars, but instead failed to go through… not sure why. I normally carry a $1,000 checking cushion but let that dwindle too far down and ended up paying for it in higher interest costs, along with a $15 late payment penalty from my student loan company. *sigh*
- Side hustle earnings still growing but could be higher. Thanks to continued earnings across the board and bloated TurboTax affiliate numbers through tax season our side hustle earnings reached nearly $2,000 in April, and were closer to $1,500 for March and May. Although these earnings are great, my decrease in posting frequency has hurt my income growth potential and I really need to bust my butt to get back on track here.
- Home loan refinance allows skipped 1st mortgage payment. Because we refinanced our home loan back in April our 1st mortgage lender allowed us the opportunity to skip our mortgage payment for the month of May while they paid off the old mortgage loan and opened the new mortgage loan. While this did free up a good amount of money, we were not able to save it all or put it all toward debt repayment because of a few unplanned expenses. Our budget has since been updated to compensate for similar future budget mishaps.
- Lapse in discipline. Although it isn’t easy to admit, we have had a few lapses in self-discipline over the last few months. These lapses have resulted in less scrutiny toward spending and less attention paid to my blogging. I am angry that I let either transpire and while our lapses were minute and affect our bottom line very little… they need to be acknowledged now and avoided in the future.
- Overall outgoing interest is way down. The average amount of monthly interest on debt we are paying now is $200 less than when we started out debt free adventure! That is music to my ears and just the motivation I needed to kick things into high gear again.
The “How Much Your Debt Costs” Spreadsheet & Graph
Don’t forget to check out the spreadsheet I created to calculate how much our debt costs complete with the nifty little graph allowing you to visualize your progress. I call it the How Much Your Debt Costs Spreadsheet… check it out.
The spreadsheet also highlights monthly interest amounts paid in BIG BOLD numbers so you can print and stick them on your fridge.
“Although I know I should have, I never called ING Direct about this.” You should call right now and straighten this up. It might happen again next month and you would hate to have that happen, right? It will probably take you less time than it did to write this blog post to sort everything out (well…maybe not if you’re on hold for a long time, but you get what I mean).
Khaleef @ KNS Financial says
Thanks for sharing your personal situation! It is very encouraging and motivating. The amount of your “hustle” side money is very impressive as well.
I agree with Jeff regarding your lapse in discipline. My wife and I experienced the same thing recently. Because you have made so much progress, it will be easy for you to recover!
Thanks again for this post!
Great job Matt! We’re down to around $20/day in interest — can’t wait till $0! Then the banks will be paying me 🙂