Wednesday, January 20, 2010

Snowballing My Private SL Within a Snowball

I took a break from my snowball plan in November and I'm back on that horse. I'm now down to paying off my last two debts -- my private student loans and my consolidated federal student loans (subsidized and unsubsidized). As of 12/31/09, I owed $43,182.39 on my private SL and $53,568.28 on my federal SL.

With that kind of balance, I'm not going to be able to pay it off in a short period of time, especially since I've decided against using my recent windfall to pay down my debts immediately. Bummer. But I thought it might make me feel better if I snowballed within my snowball.

Specifically, my private SL is broken up into 5 separate loans. Three of the loans were taken out during each of my law school year and the fourth was a "bar loan" that paid for my living expenses while I studied for the bar exam. The fifth loan is a head scratcher. It looks like a supplement loan for the 1997 school year.

Anyhow, here was the balance of my private SL as of 12/31/09:

Private Loan Breakdown Original BalanceBalance As of 12/31/09
Bar Loan$5,000$4,139.63
1997 Loan Supplement$3,500$1,227.87
1997 Loan$11,479.00$10,535.84
1996 Loan$14,242.00$13,812.68
1995 Loan$13,104.00$13,466.37

My planned snowball payment towards my private student loan is $1,478/month. Rather than just letting the loan company apply the payment proportionally to each loan, I decided to aggressively pay down the smallest balance first.

My first snowball payment to my Private SL just posted and here's the current balance:

Private Loan Breakdown Original BalanceBalance As of 1/20/10
Bar Loan$5,000$4,101.98
1997 Loan Supplement$3,500$171.09
1997 Loan$11,479.00$10,465.23
1996 Loan$14,242.00$13,718.82
1995 Loan$13,104.00$13,376.13

Looks like I'm on my way to paying off the 1997 Loan Supplement next month and the Bar Loan by April. :-D

Why does this matter? Back in December, I pulled my FICO score and it dinged me for having too many accounts with balances. Now that I'll knock down 2 account balances within 4 months, hopefully my FICO score will improve. (Yeah, yeah. I realize my FICO score is irrelevant unless I intend to take out a loan. But I eventually want to purchase my first home so I monitor it couple of times a year.)


jpkittie said...

that is awesome! What a great plan. those two little ones will definately make a difference. not to mention the feel good feeling you will get to see them gone like that!

Sallie's Niece said...

Awesome, congrats on attacking that loan. I'm hoping to get rid of my smallest loan this year. Should be a great feeling.

Ms. MoneyChat said...

it's amazing how manageable the debt looks when you break it down into individual loans. i love the idea of snowballing within the group of loans. i think you can pay the entire balance off within 2 years and that's not bad at all!