I talked about this a few months ago, but we sat down and took a hard look at our finances last weekend and we decided to go for it. It could be an unpleasant year, but if we live off of one income and funnel the other towards student loan repayment, we will be completely debt-free by our first anniversary. What a present that'll be!
Our student loan debt, as of today, is $45,746.32. The highest loan (which will probably be paid off by the wedding) is at 8% and the lowest is at 5.01%. Peanut has already consolidated and there's no value to me consolidating, so that's where they'll stay the entire time. The total breakdown:
According to whatsthecost.com, if we put $3,000 per month against these loans, we'll pay them off in 16 months. BUT! If we dump large amounts of cash on them right after the wedding ($3,000 from tuition reimbursement, another $1,000 I can pull from various non-emergency savings, and an estimated $6,000 from wedding money that we get as gifts and/or don't spend since my mother is covering a lot of the wedding now), we can cut the time to pay down to 12 months, and be debt-free by our one year wedding anniversary.
Obviously, this necessitates some budgeting changes. There will be no more saving for a car, or sunny beach vacations, or travel home for holidays, or non-necessary clothing or movies. We will be trying to cut our grocery budget and we'll be eating out less. I might even go back to mystery shopping and/or dance jobs to bring in extra cash we'll use to throw at it.
The good news is, it's only for one year. One year! That's like nothing! And then we will be completely, 100% debt-free AND we'll be used to living on one income, so we can BUILD UP $45,000 in savings in just another year. (Or we could really go crazy, loosen up a TON, and still save twenty grand without even trying.)
What an amazing prospect.
Now, we do have a couple of ground rules:
Retirement savings comes first. We'll continue to contribute up to the match at our respective 401(k)s, and each max out a Roth IRA. We're in pretty good shape already to do so for 2010, and will top them off with wedding money before we start throwing cash at Sallie Mae.
It starts after the wedding -- and after the honeymoon. We'll take the trips that we've currently got scheduled, we'll have a lovely honeymoon (that's a future post!), and then the day after we come home, we start killing debt.
We can re-evaluate if something changes. A job loss, a move, a major medical problem--we can easily drop back to paying minimums and get back on track when we're able.
More on how our budget will change for this endeavor in a future post.