The other night, TurboTax and I were having our long overdue discussion about how much money I would owe the government this year.
Turns out, I have already given them PLENTY for 2012, and I will be receiving a hefty refund. Man do I love exclusions from income (exlusion = never shows up in your wages on your tax return; deduction = potentially taken out from the wages you report on your tax return).
So, the age old question popped up of: what am I going to do with all this money??
For those of you who've been reading my posts for awhile, you know exactly what I am going to do: pay down my student loans!
I love putting a big fat amount towards student loans - I instantly see a reduction in the amount of interest charged every month, and I instantly see that big balance go from a certain number past the first comma go down.
Once I saw the impact of that student loan, I started schemeing. How can I get these paid down even faster? Let me tell you..
A few months ago I got nervous about my emergency fund being too small. Since I only have one income, if for some reason I had to stop working all cash flows in would stop. So I made a plan to aggressively build it up to about 4 months of expenses. Phew - so glad that was over!
At the same time, I got nervous about not putting enough into my 401(k) now while I am still working - what if some day down the future I have a family, comprised of myself, hungry mouths, and a husband with a small 401(k)? What would we do once we get to retirement - share what little he has? Certainly not. So I started adding to my 401(k) again.
Well, now between the refund check, the "additional" emergency fund (over $1,000 per Dave Ramsey), and a reduction to my 401(k), I have a plan to pay off these student loans by MAY!!!!!
Total payoff time: November 2011 to May 2013, or 1.5 years.
Last year I took a few liberties with my budget, so honestly I could have been paid off by now if not for those; however, I made memories with those liberties and I am still on track, so I will not regret them.
For the next 5 months, I am going to be very nervous - with just a little E-fund as back up, I have to pray that Ole Betsy doesn't break down, the economy doesn't kick me out of my job, and my health stays sharp.
However, I know the reward of sacrifcing a little now will pay off with a HUGE peace of mind come May. I am being this aggressive with my debt not just for me, but for my future family, whom I hope to teach these same values of maintaining a debt-free financial peace of mind.
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