Sunday, November 9, 2014

My Student Debt

The first blog post is always slightly awkward, but I am just going to jump into why I am starting this blog. There are really two main purposes to this blog for me. The first is to share my journey to debt free with others, and the second is to hold myself accountable.

How much debt to I have?

I know compared to some other people the amount of debt that I have doesn't seem extreme, but to me it is a large sum of money. I make less than $25,000 a year and a condition of my stipend is that I do not seek outside employment. This limits my options to earn enough to make a dent in my student loans, but I have found ways to earn small amounts (pennies) to make payments on my student loans.

Though I do not have the ability to earn large sums of money, I have a few things working to my advantage. My loans are currently in deferment so I am not required to make any payments which is nice in months that money is tight, but I am try to make a payment every month. The other big benefit to my loans being in deferment is that interest is only being earned on the principal amount. Once my loans come out of deferment, I will be earning interest on the principal as well as the interest.

There are two downsides to my loans being in deferment. Since I am not required to make payments on my loans, I cannot take advantage of the direct payment options that offer a decrease in interest rate. If I were able to take advantage of this, I could save about $50 a year. The other downside to my loans being in deferment is that all of my payments are put towards more accrued interest instead of my principal amount. I will have to pay it all back eventually, but the principal is what is accruing interest now so it would be nice to pay it down first.

I think I will wrap it for now, but I will share more details over the next few weeks. I have a fair amount of student debt, but I hope with you help that I will be able to decrease the amount I owe in the coming months/years.