With the COVID 0% student loan interest rate coming to an end, I had to make a choice. I pondered whether my 3.4% interest rate which I considered low would be worth keeping so I could invest the money instead.

As August was coming to an end, with a remaining balance of $4,317.17 on my federal loans, I realized I’d rather take the guaranteed return. So down to the very last day before my loan would start re-accruing interest, I paid it off! 🎉

August Budget

Fixed Spending

As previously mentioned, the big update this month was the extra payment to my federal loan which is way above the minimum payment I usually make to my private loan.

Variable Spending

Utilities – This included my bi-monthly water bill in addition to gas & electricity bill.

Gas – Drove out of town a few times this month.

Food/Drink/Entertainment – Went a tiny bit over-budget on food. As for “entertainment”, I got over my fear and went to my first dance/workout class! It was pretty fun and I’m considering making it a routine to get my fitness back up.

Shopping – Some personal care items and a few hobby purchases. 

Travel – I booked a couple of hotels for my fall trip. I will actually cancel a couple of the bookings so this is actually an over-budget on what I’ll actually be spending.

Miscellaneous

Vehicle Registration Renewal – It’s that time of year, my registration renewal was due.

Investments/Savings

I invested quite a bit in the stock market earlier this month before deciding I wanted to make extra student loan payments. I probably wouldn’t have made the same choice as I ended up dipping into my savings to cover the extra expenses this month.

Student Debt

Student debt paid this month: $5,197.94

Student debt remaining: $15,581.06

Finally an update to the second and third line of my debt statement! Here are all my previous student debt statements.

I’ve officially paid off my federal student loans! Wohoo! It’s bittersweet to finally leave Nelnet. I actually have never had a bad experience with this servicer. To be honestly, my biggest regret was leaving Nelnet (or more accurately, leaving federal loans) to refinance my student loans before COVID hit.

I refinanced $50,000 just one month before COVID forbearance was announced and lost out on 3 years of 0% interest.

Today the payment finally posted on my account and I am officially federal loan free! I can’t wait to say I’m completely student loan free, but for now I can celebrate getting that much closer to being in the 4-digit.

I’m officially on the home stretch, with my debt progress page indicating I’m 90% of the way there!

Goals for Next Month

I’ll have to beef up my savings again after taking from it to cover the student loan payment this month. I’m also getting impatient seeing how close I am to being student loan free.

This isn’t quite a goal for next month, but I’m now debating if I want to finish paying off my student loans entirely by the end of this year. I am quite serious about taking a sabbatical and if I take it next year, I’d like to be able to have my student loans paid off so I’m not dealing with $881 monthly payment.

I’ll have to look into whether First Republic still offers the 2% rebate if I pay off my loans within 48 months. 2% of my original loan would be $1,000 back.

If the deal is still active, it may make sense for me to take it as my loan term is 5 years so it’s a difference of only 1 year. Plus with First Republic officially acquired by Chase, this incentive could (if not already) expire anytime. So I might as well take advantage of it.

The dilemma of course is, would I be better off just investing it? S&P 500 is up 16% YTD. Investing $15,000 on a 16% return would yield far greater benefit than the 2% rebate.