We’re paying off $80,000 in student loan debt! However, unexpected expenses always seem to crop up. Luckily, we have a special way to handle them so we don’t ruin our debt payoff progress!
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It’s time for another student loan update! We had an unexpected expense pop up this month, so I’m going to share how we handle unexpected expenses at the end of this post.
If you’re new around here, let me fill you in on our particular student loan situation. If you’ve been here before, feel free to skip this section.
Our Student Loan Story
I graduated from college without any student loan debt. My cosmetology diploma, associate’s degree in business administration, and bachelor’s degree in business administration all came from affordable schools. I even took most of my classes online, so I didn’t have to pay for expensive student housing!
My debt-free education was a blessing since Josh had enough student loan debt for the both of us. Growing up, he didn’t have the same support system I had. He didn’t have anyone there to help him pick an affordable school, so he ended up at a very expensive for-profit university.
Don’t get me wrong. We’re very grateful for his education. His bachelor’s degree is in computer information systems, so he was able to get a good job one month after graduating. But that education came with a hefty price tag, one that he wasn’t fully aware of when he signed up.
The Grand Total
In all, he ended up with $75,000-$80,000 in student loan debt. We aren’t sure what the exact amount was because he had been making payments toward the private student loan before we got married. I didn’t keep track of his payments back then, and he doesn’t know how much he paid from March 2014 to August 2014.
When we got married that September, I began paying the bills and keeping meticulous payment records. That month, we paid off the remaining $11,000 private student loan out of our savings account and focused all of our energy on the federal loan, which totaled $64,000.
It’s kind of cool to see how much we’ve been able to pay from year to year. Here’s what our payments in 2014, 2015, 2016, and 2017 looked like:
So let’s talk about our most recent payment!
When I made February’s payment, the student loan balance was $38,949.66.
I made a payment of $700, which brought the balance to approximately $38,249.66. This is only an approximation because the loan still accrues interest in the few days it takes for our payment to go through.
Y’all, I still feel giddy when I see that student loan balance. We’re in the $30k range!!
I know we still have more student loan debt than the average person (about $37,000 is average), but it’s such a relief to see that number getting smaller and smaller. When we first got married, that federal loan balance was right at $64,000. We’ve come a long way!
Thoughts on February
February was a good month. We actually paid more on the student loan than I projected when I made February’s budget! And that’s with us having another unexpected home repair.
If you remember from January’s student loan update, my dad discovered a scary amount of termite damage under our house. Fortunately, he was able to fix everything for just $400.
Now, you might be wondering why we’re just now learning about the termite damage since we bought our house a little over two years ago. That’s an interesting question, my friend. This post will tell you everything you need to know:
Seriously, go read it right now so you don’t make the same stupid mistake I did.
How to Handle Unexpected Expenses
Unexpected home repairs remind me just how important it is to have a fully-funded emergency fund.
Dave Ramsey recommends only keeping a $1,000 emergency fund while you’re paying off debt, but that number is just too small for us. We’re a one-income household, both of our cars are over ten years old (mine is 16 years old!), and our home has been one repair after another.
For us, it makes more sense to keep about 4-5 months’ worth of expenses tucked away.
I love Dave Ramsey’s method to financial freedom (read The Total Money Makeover if you want financial freedom too!), but we still have to exercise good judgement based on our personal circumstances. That’s why we choose to have a fully-funded emergency fund even though we’re still in the process of paying off our student loan debt.
Wrapping it Up
If you’re trying to pay off student loan debt, don’t neglect your emergency fund. It’s the cushion that turns a major crisis into a slight inconvenience.
So even though building an emergency fund may cause you to take a little longer to pay off your debt, it’s worth it to be able to sleep at night knowing that you’re covered in case of an emergency.
Other Posts You May Enjoy
- How We Cut Our Spending to Maximize Our Student Loan Payments
- How to Know Which Financial Advice to Follow
- 7 Free or Cheap Ways to Exercise on a Budget
- How to Budget Using the Cash Envelope System (and why you should!)
What about you? Do you have an emergency fund in place for unexpected expenses?
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