The Terrible Tale of the Interest Monster!
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I’m frustrated. I’ve made $1791.00 in payments on my Private Student Loan, and I’ve only reduced the payoff balance by $1321.23. The interest monster ate $469.77! All these payments were made between September 1 and October 9, so it isn’t like we are talking years here. So, it only took that little demon a little over one month to eat all this money! And this is for a 7% loan of about $25K. The interest monster is really gorging over at Sallie Mae where I have $76,617.19 in various loans ranging from 6.8% - 7.5% fixed. Over at Sallie, this little bugger has eaten $956.63 since May! With such a hungry monster eating away at my efforts, it can be very discouraging to try to get these huge sums of money paid off. I wish I could do a 0% balance transfer for the whole thing and just pay it off that way, but needless to say that isn’t too feasible since no one is going to give me that much credit and since I wouldn’t be able to pay off the whole amount in the time that 0% offers are good for :(
So, anyone have any suggestions for me? I’m trying to consolidate with Direct Loans, but unfortunately I don’t think thats going to lower my rates too much, if at all, since they take the weighted average of your loans and rates to determine the interest rate. I wish I’d never consolidated with Sallie Mae, but there was so much hype at the time about “lock in these rates now, they’ll change forever, this is your last chance (anyone remember this, it was pressure to consolidate before July of 2006, although now I don’t remember why.)
I really wish I’d never taken out the loans in the first place, but hindsight is 20/20 as they say. Now, I guess I just pay and let the interest monster have his fill. The closer together I make the payments, the less goes to interest, at least that is a plus. And it should give me incentive to make a lot of payments as quickly as possible… Now, to find a good secondary source of income for those payments…. (Or a government bailout?!?!?)
October 10th, 2008 at 12:06 pm
no ideas short of joining the army honestly
although they do have some for teachers in low-income schools
how about that?
October 10th, 2008 at 1:09 pm
Somethings wrong with that math… A $25,000 loan at 7% is only $146 in interest a month…. Ask them to double check… are they posting for a month on every bimonthly payment, or what? That’s 3 months worth of interest they have charged you for…. So it’s NOT right and they need to redo their figures. Ask for them to look at it.
If they can’t take more than once a month payments and get it right, then you’ll have to save up and send one bigger check a month, but then you lose out. Whatever extra you put on the bill each month is pure principal.
Your Sallie Mae loan should be $446/mo interest on a average of 7%. So sounds like that one is below what it should be. But I wouldn’t complain about that to them
Sorry - no suggestions except to just keep throwing big $$ at it.
My only suggestion is just to keep plugging away at the smaller loan and when it is done, throw it all at the bigger loan. It will ease the cash flow some in case of emergency if you are done with the smaller loan and that minimum payment.
If you could get a 0% transfer on the smaller one, whatever you threw at it would be pure principal tho, leaving you a smaller amount of interest to pay in the long run, IF you could pay off the transfer card in the same amount of time…. Not knowing how much you have to throw at it, I don’t have a solution.
Hang in there tho - the balances are declining!
October 10th, 2008 at 4:31 pm
I will have to look at it more closely. I know they calculate interest daily instead of monthly, does that make a difference? Plus, I hadn’t been paying on the loan for like a year, so there may have been outstanding interest. Its pretty confusing the way they apply the payments, what percent goes to principle and interest, etc.
Hopefully, I’ll be getting some more income from the company I’m trying to start, which will allow me to get rid of that $25K loan really quickly… it would be such a relief to only(!) owe $77K, lol.
October 10th, 2008 at 4:33 pm
GC I thought about doing public interest to try to get some of the loans forgiven, but they make it pretty hard, and you can only get a small percentage forgiven each year
Plus, I can’t teach here without a teaching certificate, which would cost more money. And I can’t move, because we live free here.