{Debt Management} How to Shorten the Length of Your Loans & Reduce Interest

She Makes CentsWanting to get control of your finances is great, but there is nothing like the empowering feeling of knowing when this MAJOR life goal could actually be attainable. After examining my debts, pay off amounts, and interest rates, I am proud to announce that my magic number is 8 years and 3 months to be debt free! Having an end date for a goal helps to make it more tangible and keeps me encouraged to hit my payment milestones from my personalized Financial Plan.

One Year from Now- Operation Credit Card

In January of this year, I revealed that I racked up $5300.00 in credit card debt, after getting it down to a zero balance. It happened by not adapting my spending habits to my drop in income. Today, that balance is now around $3400.00 by paying a little more every month on the minimum and doing the 52 Week Money Challenge (Bingo Style). Dare I say it out loud, I will have NO credit card debt by this time next year (insert fireworks here)! I’m truly proud of the way I have tackled this particular debt obstacle because I’m doing it at my own speed. I don’t even miss the extra money that I’m using to knock the balance down faster. If I were okay with just paying the minimum, it would take me 4 years and 3 months, instead of one year, to complete step one of my financial plan. Once the credit card is paid off, my monthly credit card payments will become extra payments to my student loans and so on…this is called the Snowball Method.

Four and a Half Years from Now- Goodbye Sallie Mae

debt-freeI have a love/hate relationship with Sallie Mae. Although we go back about ten years, she is not my friend nor is she yours. Don’t let her fool you. Yes, in times of financial need, she was there but in reality most people end up paying more than double for their educational loans. Currently, I pay the minimum $200 per month for my educational loans with more money being applied toward interest and not the principal. As I’m sure you know, paying just the minimum and nothing more will result in years and years of interest and a longer pay off timeline. In fact, by adding the money I would normally use for Operation Credit Card to make two or three lump sum payments per year toward the principle, not interest, I will shorten the length of my loan by 10 years and 11 months. Five years ago, I was a recent college graduate and while a lot has happened in that time, I still feel like time flew by. Knowing that these next five years could go by just as quickly helps keep me motivated. One day, four and a half years from today, I will be able to say goodbye to my financial frienemy- Sallie Mae for good.

Eight Years and Three Months- Debt Free

A lot can happen in eight plus years that could slow down my timeline or cause me to come up with a new goal altogether. Regardless of what life throws my way, I hope a victorious sprint toward financial freedom is in my foreseeable future. In eight years, my home will be a rental property providing is a great form of passive income. Having it completely paid off allows a greater financial contribution to my household. The idea of never having to think about another mortgage payment for my current house is a blessing in itself and I plan on tackling this debt by using the Snowball Method. In the same breath that I say goodbye to Sallie Mae, I will be begin this last phase by saying hello to extra payments, consisting of my monthly credit card payments and Sallie Mae payments, on top of my current mortgage.

What’s the point of all of this? Sure, I could continue to pay the minimum on my bills every month and I will forever owe someone but I have 17,636 reasons why that won’t work for me. Yep, having a plan and attacking my plan will help me save an overall of $17,635.15 in interest payments. While yes, I am at the beginning of my journey, I take solace in knowing there is light at the end of the tunnel.

How Long Will It Take You to Be Debt Free?


Email SMC: shemakescents@gmail.com

10 thoughts on “{Debt Management} How to Shorten the Length of Your Loans & Reduce Interest

  1. Pingback: she makes cents
  2. Rock on girl! I currently have only two things I owe on, car and student loans. Perhaps your can write an article about this b/c I’m still having trouble deciding what I should do… I have about three years left on my car… but if I play my cards right I can get that bad boy paid off in about 6 months. At the same time I’m trying to up my credit score and I was reading that many ppl’s scores have dropped b/c they paid their car off early. Do you happen to know anything about this? I really want to be willing to take the drop b/c that means I’m not paying anymore in interest than I have to… AND my car insurance will drop since I will own the vehicle, Essentially saving me about $350 a month. Do you have an opinion on this?

  3. Thanks for sharing this. I think about my debt daily. I don’t have any credit card debit just massive amounts of student loans…like 90k. Most days I can’t see a way out but I am clear on the number and actively engaged in digging myself out way sooner than Sallie Mae’s estimate of 2041 o_O

  4. Thank you for sharing your journey, and these insights with the rest of us. Like you, I am struggling to pay off debt – much of which hit hard after my husband’s death two years ago. But I can say that in the last two years I have (1) paid off all medical bills, and (2) paid off two of the four credit cards. I have not used the credit cards at all for anything in three years, and will have the other two cards paid off by this time next year (if not before.) Then I tackle our home loan at the bank, which will take a little longer. But it feels so good to be moving in the right direction and feeling the weigh lift from my shoulders a little at a time. 🙂

    1. I’m glad that you are feeling the weight lift from your shoulders…even if it is a little at a time. When you get overwhelmed, take a moment to take a step back and see how much you have accomplished thus far. You are doing an amazing job and I am very proud of you. Thank you so much for sharing your story and feel free to comment anytime!

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