If you missed Parts 1 and 2 of the Our Progress Series, catch up here and here. You’ve seen where we stood as far as income went the last 5 years or so. Thankfully, we have seen a steady increase in both our gross and take-home pays over the last several years, the reasons for which we went into in the last post.
Today, we’re going to look at our student loan payments over that same time period. One would hope that if our incomes were increasing, our student loan payments would increase as well. I’m happy to report that aside from one exception, that was true for us.
In my opinion, paying debt down is addicting. I’m not kidding. Maybe I’m a weirdo, but watching those loan numbers get smaller and smaller every month is a rush.
We know a guy who is a stone carver. He works for hours outside in the heat and the cold, grinding intricate patterns out of shapeless blocks. I was talking to him in passing one day, and as we were saying goodbye he mentioned he was going to work on a sculpture he had spent many weeks on already. I told him, “Have fun,” and was surprised by what i heard.
“Sculpting isn’t fun for me,” he replied. He was dead serious.
“Really?” I asked. “If it’s not fun, why do you do it?”
“It’s like climbing a mountain,” he said. “Oftentimes, the actual climb isn’t all that much fun; in fact, it’s usually really hard work. What makes it worth it is reaching the top and seeing what you’ve accomplished.”
That conversation has stuck with me, and in a funny way it can apply to making progress financially as well; paying off our student loans gives us that sense of accomplishment that gets addicting.
Without further ado, let’s look at how we’ve done over the years.
Year-by-Year Debt Payments
Graduation year. Low incomes. Poor job selection. Made the mistake of deferring our loans as long as we could because we didn’t think we could make minimum payments. Total loan payment for 2011 was $498.11. Woof.
First full working year for both of us. Loan payments were much better, but only amounted to $15,242.40. Don’t have to be a math whiz to realize that $15k isn’t going to put much of a dent in a $466,000 loan that’s pulling 7% interest.
This was the year we made a big decision to relocate, and it improved the income significantly (our AGI increased by about 17%). Thanks to a combination of a higher income and a cheaper living situation, loan payments increased as well. In fact, this was the year we really made a concerted effort to focus on paying as much off on the loans as we could, and we were able to make a little dent.
All told, we paid $41,635.11 in 2013. Just over $24k of that was interest payments, which kinda makes you want to puke, but still, we made progress.
Something to note is that although our AGI only increased by about 17% from 2012 to 2013, our loan repayment actually increased by 173%. I’m not sure what that means, but it sounds good to me.
This was a weird year, the “exception” I mentioned earlier about loan payments increasing with income. Let’s just get the numbers out of the way real quick: Loan repayments totaled $39,817.55.
From our perspective, 2014 was a disappointment as far as making good progress on the loans went. Even with an increase in income of almost 43%, we saw a decrease in our loan payments; the exact opposite of what we want to see.
To be honest, I’m not really sure why our loan payments lagged behind that year. I’ve tried to figure it out, but I just don’t have good enough records of our other spending from that year, so I can only make a few educated guesses about why things slowed down.
- We bought a house with a small down-payment at the end of 2013. So, from 2013 to 2014, we went from paying (very little) rent to having a (very small) monthly mortgage payment.
- We paid for a wedding and a honeymoon in 2014.
- We held back a little more in cash than we had been to increase our emergency fund.
To me, the above don’t really explain why we weren’t able to commit more money to the loans, but that’s the best I’ve got for now.
On the positive side of things, $39,000 is still a lot of money and we were able to throw that at the loans in 2014. Progress, even if it wasn’t as much as we had preferred, was being made.
Back on track! Our biggest year income-wise was also our biggest year repayment-wise, as it should have been.
We dropped $85,294.07 on the loan monster’s head that year; a 114% increase over the prior year! Pretty impressive when you consider our income only increased by 15% that year.
There’s all kinds of thoughts out there about what percentage of income should be spent on loans, living expenses, entertainment, what percentage should be saved, etc., etc. It’s hard to find any real agreement on the numbers, but I know when you’ve got a crushing amount of debt that you’re trying to get out of, no percentage you throw at the loans seems big enough!
Another year, and a milestone was reached: For the first time, we paid over $100k towards our student loans in a single year! $102,091.55 to be exact. Just over $20k in interest. Almost a 20% increase of what we paid in 2015.
Any way we slice, 2016 looked like an absolute success to us. We had a baby, we increased our income, increased our loan repayment, and even increased our savings (which will be examined in a future post).
This year started off a little slower in the loan repayment category (mainly due to having the new family member), but the last several months have been great for loan repayment and we feel good about where we’re at. We’ll have an update down the road, so until then you’ll be kept in suspense on how our 2017 repayment is going. All we’ll say for now is that we’re still climbing that mountain.
The final post in our series of looking back on how we got here is going to summarize the last 5 years and talk about our plan moving forward. If you’re enjoying the posts, please read on!
What do you think about our loan repayment efforts? We know we started slow, but feel like we’ve made a lot of progress in the last couple of years. How do/did your repayments stack up? Let us know in the comments!