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:

A few notes about the details of the numbers…

1. 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.
2. 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*
3. 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.
4. 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.
5. 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.
6. 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.

February 2010 Update – How much our debt cost

Over the course of February our debt cost us $1,189 – which is $42.46/day. That does NOT include the principal costs… that is just the cost of the interest on our debt.  The good news is, one year ago we were paying $1,328 – which was $47.43/day.  Our debt reduction efforts over the course of the last year are saving us nearly $5 every day!  That may not sound like much, but if I were to put $5/day into my Capital One 360 Savings account, by this time next year I would have $1,825 plus any interest earned!

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… it’s just a matter of time, sacrifice, and hard work.  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:

A few notes about the details of the numbers…

1. Lending Club will be GONE next month! Unless something unforeseen happens we will have this debt paid off with our March payment!  That will mean we repaid this $11,000 loan in just 7 months!  We reduced this debt by $2,300 in January 2010 and by $2,318 more in February 2010 – because of this, the interest we pay to Lending Club decreases significantly every month.
2. Student loan interest amounts vary month to month. As promised last month, I wrote a post detailing how student loan interest is calculated to better explain why the amounts vary so much each month.
3. Side hustle earnings continue to fund large debt payments. Once again this month, the earnings from our side hustle have enabled us to make huge strides in repaying our debt.
4. Killing debt creates great motivation. 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 nearly $1,200 just in interest on our debt. This makes me sick to my stomach, but it also lights a fire under my britches to keep going full-speed-ahead!

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.

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:

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.