After a very successful month, March brings another new challenge: student loan debt. Can our couple eliminate this next debt? How long will it take? Find out how to use a budget to eliminate student loans in the March budget example.
Review of the February Budget
February was a very successful month for our couple. They had savings for the unexpected cost of snow tires and eliminated credit card debt. Some of their new financial goals include eliminating student loan debt and saving for their vacation again in the near future. However, they first want to make a plan to eliminate all their remaining student loan debt. Find out more in our March budget example.
March Budget Example- Paying Off Student Loan Debt
Our couple is feeling very encouraged following the elimination of their credit card debt. Now it’s time to tackle student education loans.
Luckily, our couple has been paying a little extra each month over the minimum payment. So adjusting that number even higher won’t seem so tough. The remaining student loan balance is around $10,000 with a 5% interest rate. How long will it take if they pay $500 instead of the current amount of $425?
Adding an extra $175 to the payment, it will take about a year and a half.
However, combining the current student loan payment with the money from the old credit card payment gives a total of $875. Using this Debt Payoff Calculator, it came out to 12 months. Making such a large payment will definitely shave many months off the timeline.
Finally, renter’s insurance premium and the Internet/cable went back to normal. The new monthly amount for the insurance is $20 per month and $125 for the Internet/cable.
- Salary 1: $2,700
- Salary 2: $2,100
MONTHLY LIVING EXPENSES
- Groceries: $600
- Household Items: $50
- Clothing: $100
- Cellphones (2 phones): $100
- Internet & Cable: $125 (back to normal)
- Rent: $1,100
- Electric: $120
- Gas: $60
- Trash: $10
- Auto Maintenance: $40
- Auto Insurance (2 cars): $175
- Health & Dental Insurance: $350
- Renter’s Insurance: $20 (increase)
- Entertainment: $50 (back to normal)
- Netflix/Hulu: $20
- Gym Membership: $60
- Student Loan Payment: $875 (increase)
- Auto Loan Payment: $175
- Vacation Fund: $0
- Pet Care: $75
- Savings & Investments: $695
- TOTAL: -$4,800
Hopefully, March will be a great month financially. Our couple has a plan for student debt relief. As a result, they can focus on retirement and other big financial goals that build wealth.
If you’re struggling to pay off debt, ACCC can help. Schedule a free credit counseling session with us today.