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DebtFreeClimb v2- Our Debt Freedom Progress Report

June 17, 2020 by Gary

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It’s been a little bit since I last delivered a Debt Freedom post to you all, but I felt like this was a great time to get back in action. I wanted to recap you on the last six months of my life and to let you know that, yes – I am back in debt, and I’m ready to go back on my debt free climb 2.0 once again. I have conquered Student Loans before, and now it’s time to pay off my Wife’s Student Loans. 

Back in January, I got married. The wedding turned out better than I could have ever expected. It was indeed one of the best days of my life.

After the wedding, we went on our honeymoon to Bali, Indonesia, and Singapore. My trip was amazing, and I recapped it here in this post. While we were on our honeymoon, the Covid-19 crisis began, and it was running rampant throughout Asia. Fortunately, we had a great time on our honeymoon and got out of Asia before things got worse. After returning to the United States in early February, we were ready to get on our debt free climb and crush my Wife’s student loans.

My Journey – DebtFreeClimb 1.0

To give a brief recap, I paid off $55,000 in student loan debt back in  April of 2017 after graduating and started paying back in Nov 2013 (3.5 years).  I created Debt Free Climb to chronicle my journey through my student loan debt in the hopes of inspiring others to do the same. Now I am on (what I call) debt free climb 2.0, and this time we’re paying off my Wife’s student loan debt. I hope to bring the same intensity as I did on my first debt freedom journey.

My Wife’s Debt Freedom Journey


My Wife graduated from the University of Texas, with over $65,000 worth of student loan debt. For the first four years of her debt repayment, she was on an Income-Based Repayment plan (IBR). She was on IBR because she was focusing on other debts while working her first jobs out of college (medical debt, some credit card debt, and a car loan (she paid off her car loan in 2019)). She was following the Snowball method (paying debts with lowest balances first), which helped her pay off over $35K in debt before her Student Loans (which is an accomplishment on its own).

Although she got into a financial hole in college – she still graduated from a top school in the country, pushed through years of lower-paying jobs making a name for herself, learned about personal finance, and set financial goals. Now she paid off all her old debts and has a great job at a top tech company in the country (while increasing her salary by 60%). 

Her Student Loan Balance


Since she was only making the minimum payment on income-based repayment, her student loan balance grew over the four years of her IBR payments. IBR helped out as it allowed her to tackle all of her other debts, but it definitely wasn’t a solution to help reduce the Student Loan principal balance.

In 2018 and 2019, she began to make larger payments on her student loans; however, her balance and interest was substantial, with over $65,000 in Student Loan debt at 5.63% interest rate. Due to this, not much damage was done on paying down the principle ($3k off principle). It was time to make a change, but we hadn’t combined our finances yet, and in 2019 we are still prioritizing paying for a wedding. We agreed once we were married, the plan was to tackle her Student Loans harder than ever to make sure this debt cloud wasn’t hovering over our head during the rest of our marriage.

 

Debt Freedom Honeymoon


We needed a Plan of Attack.

Fast forward back to February 2020, we combined our money and figured out how much income we made together. It started with a new budget based on our combined income and figured out how much money we were able to put towards student loans each month. Our starting place was $62,000 in student loan debt at a 5.63% interest rate. Yikes!

We used the debt reduction calculator to type in our total balance minimum monthly payments and interest rate to project how long it’ll take to pay off our student loans using the Avalanche or Snowball method. This calculator inspired us to prioritize paying off student loans and trying to project the date when we can achieve debt freedom. 

It was time to Refi


Next, I knew we could see a lot more progress if we refinance our student loans.  And that’s what we did. We refinanced student loans from 5.63% federal student loans to a private student loan with Earnest, and we were able to get a 3.92% interest fixed rate.  On top of the interest rate, we also received a $500 promotional bonus from my Wife’s employer for refinancing a student loan through a program that they offered.  Between the interest rate reduction and the $500 bonus, we could save thousands of dollars throughout the life of the loan.

Time to Execute the Plan to Crush Student Loans

Starting on March 1st, we began aggressively paying off our student loan.  First,  we used some of our wedding gift money to put down a $4,000 first payment toward the student loan. After that, we used our combined income to make an additional payment for $3,500 plus the agreed-upon amount of $1142.  Between these three payments, we were off to the races and ready to crush those student loans. 

In April and May, we kept up the pace and continued to pay off the student loans aggressively. We use our combined incomes, Side Hustles, and money received from extra paychecks (we received two additional checks in May per 26 paychecks per year payment schedule from both of our work as well as a work bonus).  

We also did not have a mortgage payment in May due to refinancing my mortgage in April. That allowed us to put an extra payment from what usually would be our mortgage to our student loan. In addition to that, we both received a stimulus check for $1200 each, which helped us out too. 

 

Wait, Are you allowed to Refi again??


In June, we got another promotional offer this time from Sofi (another private Student Loan company). The promotional offer was for $350. The offer also included a reduction in the interest rate from 3.92% fixed to a 2.95% variable interest rate.  Since we are planning to pay off our student loan in a very aggressive manner, the variable interest rate allowed us to get even a lower interest rate than we could in a fixed interest rate.  After doing the math on the debt reduction calculator, this move can potentially save us an extra month of additional payments.

Keeping tabs – All in from both Refi’s, we received $850 in promotional payments towards our student loans and a reduction in interest from 5.63% —> 3.92% —> 2.95% – not bad for about 1 hour of comparing Student Loan offers and interest rates.

Emergency Funds are Important while paying off debt

Now that we refinanced through Sofi (our second refinance in the last three months), we have our foot on the pedal to pay off our student loans as soon as possible. 

I want to point out that we do already have a healthy emergency fund (5 months’ expenses). Having an emergency fund is in case one of us were to be let go of our jobs during the Covid-19  pandemic.  However,  both my wife and I work in Tech, and our jobs are a little more stable than other industries. We are both very thankful that we both still have our jobs. *knock on wood that this stays the case*

With that being said, anything still can happen, and that’s why we have our emergency fund.

Our Debt Freedom Progress Report

Currently, after 2 Refi’s and aggressively paying off our Student Loan debt, we now owe ~$31,000. That means we have paid off  $30,807 in a three and a half months thus far.  Comparing that to my original journey when I was tackling my student loans on my own,  we are addressing this debt at a four times faster pace than what I worked on initially.

debt freedom student loan payments
First 4 months into paying off my original Student Loan – $8,179.50

 

debt freedom progress
Debt Freedom Progress in 3.5 months this year

Our goal is to be able to pay off $62,000 in student loan debt in less than one year. By doing that, we will be completely debt-free and ready to conquer our next financial goals. Only time will tell how this will play out, but I am pleased with our start thus far with the beginning of my 2nd debt freedom journey. 

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Gary

Gary is the author behind Debt Free Climb, a blog that shows how to live intentionally, pay off their debt, build a side income, and travel the world

Gary's favorite free financial tool he’s been using since 2017 to manage his net worth is Personal Capital. Each month he uses their free Investment Checkup tool and Retirement Planner to track his investments.


His favorite way to save automatically is Capital One Performance Saving, a bank that allows him to create multiple high-interest savings accounts and create an automatic savings plans for each account. He uses these features to meet short and long term savings goals.

His favorite way to save money on car insurance is by using Root, an app-based car insurance service. He saved $240 this year after switching from Geico to Root

Latest posts by Gary (see all)
  • Debtfreeclimb 2020 Update - October 23, 2020
  • DebtFreeClimb v2- Our Debt Freedom Progress Report - June 17, 2020
  • Trip Report: Our Honeymoon (not on a budget) - February 7, 2020

Filed Under: Debt Freedom Tagged With: Debt Freedom, Debt Journey, Debt Reduction Calculator, Marriage, Student Loans

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Zion National Park DebtFreeClimb My name is Gary, I graduated college overwhelmed by my $55k in student loan debt. It took 3.5 years to climb out of debt and officially debt free in April 2017. I created DebtFreeClimb to share my story and help others in the process. I'm passionate about helping people live intentionally, pay off their debt, build a side income, and travel the world. Check out my full story Here

Student Loan Payoff Progress

My Wife’s Student Loan


Student Loan Paid: $32,500
Student Loan Total: $62,000
Remaining Balance: $29,500
Projected Payoff March 2021

Gary Student Loan


Student Loan Paid: $55,267
Student Loan Total: $55,267
Remaining Balance: $0
Paid off April 2017!

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