Okay, frugal fans - I hinted at some big news last week, and I finally got confirmation to announce it.
Peanut and I have paid off all our student loans.
This is CRAZY. This is INSANE. We are now debt-free except for the mortgage.
We paid a very large lump sum from our savings account, leaving just a small emergency fund. It's enough to handle a couple months of unemployment, or replacement/major repairs for one of our vehicles, or all of our insurance deductibles (but not all of those things at once). It's big enough that I am not panicking, but small enough that I'm going to be watching our spending until we get it built back up again. (Technically, it wiped out all of our sinking funds for car repair and tax payments and deductibles and all that, so we'll build those back up too so we don't have to hit up the emergency fund for everything.)
You might remember I paid off my loans last fall. If we had kept up with only the minimum payments on Peanut's last loan, it would have taken us a little over 11 years to pay it off. We saved almost $4,500 in interest by taking the plunge now.
Overall, in the last seven years we have paid back more than $101,000 on what was originally $71,684 of student loans. (It is outrageous that it took only seven years to increase by 30%!!!) The highest interest rate was 8%, the lowest was 5.01%. I can't even imagine how much we would have paid in interest if we had only done minimum payments over the lives of the loans. Many times the original amounts, that's for sure.
Our reasons for paying off our loans now, when we are down to a single income, are many and varied, and I plan to do more in-depth posts on those reasons soon. But the biggest reason was freedom - it's one less bill to keep up with, one less burden hanging over our heads, one less obligation that could keep us tied to a situation we don't want to be in. In the end, I couldn't justify the pitiful amount we were earning on our savings compared to the amount we were paying in interest, and it made more sense for us to drop to a smaller emergency fund for a little while in order to be able to keep more of our money in the long term.
It's a crazy feeling, guys. Crazy. Wahooooooooooooooo!!!!!!!!!