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Nickel & Diming my way out of student loan debt

Nickel & Diming my way out of student loan debt

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piggy bankThis month, I’m trying a new strategy to tackle the student loan beast.

Last month, I paid $1000 toward it, and ended up having to borrow from my emergency fund to cover all my bills through the end of the month.

I still have ways to go to really live on half my income.

This month, I’m taking a new approach. My first step was to take away automation. For some reason, the student loan website isn’t like a normal bank or credit union. You can’t set up recurring payments or anything.

So in the past, I’ve done billpay through my credit union (which is free, join a credit union, they are awesome). But I decided I’ll pay the rest of the loan manually.

I think it’s more satisfying that way.

So, on payday, I paid $400 toward the loan. Then, after a few other bills cleared, I paid another $400. Then, I cancelled some catastrophic-not-really-going-to-help-much health insurance, and set up a payment toward the student loans for that same amount.

Then, I made a few dollars advertising. That money, it could be argued, should just go into my regular account, since my costs still outweigh my earnings, but no. I’ll pay myself back after this student loan is gone.

On Father’s Day, my dad gave me some cash (because he’s backwards like that — he doesn’t realize that he should be getting instead of giving at least ONE day a year!) because he’d bought my sister’s dog some foofy expensive dog food, and he knows I don’t eat dog food, and he wants to keep things fair between his two daughters.

Since I put the cash in my wallet, it’ll get spent. But I logged in to the student loan website and made a payment for that same amount.

Sure, it’s a bit ridiculous, and no, I won’t be doing this every time I skip going out for coffee, but every time I save money, or every time I bring in a few dollars, it gets directed to the right place.

It’s like putting money in the piggy bank. And instead of getting bored with my automated payoff plan, I get to be more active.

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11 Comments

  1. Michelle
    Jun 19, 2012 @ 22:27:07

    I like to put little amounts throughout the month to my student loans. Makes it hurt less, yet I'm paying more!

    Reply

    • Frugal Portland
      Jun 20, 2012 @ 07:01:55

      Yep! I’m happy to do it anytime unexpected money comes in.

      Reply

  2. Nicoleandmaggie
    Jun 19, 2012 @ 23:17:29

    Sounds like a great idea! Keep up the good work!

    Reply

  3. Daisy
    Jun 20, 2012 @ 00:02:00

    Great method. I believe they call this snowballing. it will save a lot of money for you in the long run in interest costs!

    Reply

    • kathleen
      Jun 20, 2012 @ 01:22:58

      It's funny b/c it's not like I paid more this month than last, but the active part has made it actually more fun!

      Reply

  4. Paul @ The Frugal To
    Jun 20, 2012 @ 00:31:59

    It may seem like a small amount now, but if you continue making additional payments your debt will disappear much quicker than you would imagine. I also try to take any cash windfalls and save at least half, that way I'm not tempted to spend it on something I probably don't need.

    Reply

    • kathleen
      Jun 20, 2012 @ 01:24:16

      All cash windfalls get put to something very specific, which is that student loan monster now.

      Reply

  5. Kris @ BalancingMone
    Jun 20, 2012 @ 15:09:14

    I like this method too. We're working on two credit cards right now, both of which I can do online payments with. Every dollar counts!

    Reply

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