As you can tell from the Debt Free Journey Series, we are on a journey to get rid of all debt that we have accumulated. Recently, we paid off our very first loan. This was so exciting and I felt that it would be fun to share this experience with you all.
This was a personal loan that my husband got before we were even engaged. The original loan was for $2,500 with an interest rate of 14.2461%. I am so happy that we were able to pay it off earlier than the maturity date. We got this loan because my Mr. Kay Saga’s car payment was $300 per month and that was too much money leaving his bank account each month. He was a typical college student with a part-time job, so $300 a month in addition to rent and groceries was a bit stressful on his wallet. Honestly, the purchase of his car (and mine) should not have been made at this point in our lives. That is a different story for a different day.
The total cost of his car was a little over $8,000 at a “buy here, pay here” dealership (another mistake). The payment amount was ridiculous so we decided that we had to pay this car off quickly. He had been making payments on his car for a little over a year. The down payment, approximately $3,000, and the payments each month plus the interest left $2,080 before his car was paid in full. Looking back, he probably should have continued paying the $300 for another seven months and been done with it, but we were young and thought that we knew everything. So, we researched the loans at Mr. Kay Saga’s bank and he decided to go with a personal loan for $2,500.
We went together to get the loan because he wasn’t able to get one alone. He needed a co-signer because he had typical college student credit. I was able to co-sign for him (also another mistake) and he was approved for the $2,500 loan. He originally applied for $2,000, but the bank wouldn’t approve a loan for less than $2,500. The monthly payments were something like $85.61 per month and an administration fee of $225 had to be paid up front. This brought the total loan amount to $2,725.
The loan was deposited into his bank account shortly after approval. The next week, he went to the shady dealership with a $2,080 money order to pay off the car. He was able to walk out with the title of the car in hand. I’m honestly not sure what happened to the rest of the money from loan. Mostly likely college frat boy shenanigans.
So now, he has a car that is paid in full and a $2,725 bank loan. We didn’t really start buckling down to pay off debt until a year later (we were engaged at this time), so he just paid the minimum payments of $85.61 until that then. When we started our debt free journey, we added this loan to our snowball. There was other debt in the snowball before this one so we were still only paying the minimum payment per month. We finally got momentum and began paying off the smaller debt and eventually this one was at the top. Any additional money that we received during the month was paid directly to Synovus for this loan.
As of July 2016, we have officially paid off this loan. Our total payout was about $3,300 and it only took about 3 years. The loan would have matured in November of this year and the interest rate would have been raised to 16%. Learn from our mistakes and do not take out loans. We ended up paying over $3,000 for this loan and it feels so good to have this payment off of our backs.
We still have a good amount of debt, so we will continue to chip away at it. We will take the $85 that we were paying for this loan and apply it to the next debt on the list. This is the first actual loan that we have paid off so it makes me feel like we have accomplished something. I’m so happy about this and I can’t wait to post more of these debt payoff stories soon.