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February Debt and Net-worth Update

We have officially made it through month 2 of 2021! what a ride it’s been so far. I wanted to start creating these net-worth updates to document my progress to paying off my $75,000 student loan. So before we begin, I’ll give you a brief background of how I got into this mess. 

Why I got into $75,000 in debt.

I simply could not afford college. Growing up,the expectation in my family was that I HAD to go to college. However, I did not think further into the fact that my education would total $250,000, and affect my net-worth for almost a decade. I made the mistake of playing into the rat race hype, and going for that private prestigious college in Chicago Illinois. Honestly, the things that I learned there, and the relationships cultivated were priceless. I have many fond memories of my time at this institution. However, because I couldn’t afford it, I spent way more time worrying about finances than I did actually studying.

How I ruined my net-worth.

You just don’t stop to think about things like net-worth, or debt to income ratio before going to college. I ended up taking out the loans and not looking back. My mindset was that I would finish college, and cross that bridge when I graduated. I didn’t realize that I would be crossing the same bridge for about 7 years total. I took out a $10,000 loan from Sallie mae, and my grandpa was kind enough to cosign this loan due to me having zero credit. Eventually the interest grew the principal to $15,000 total until I graduated and started to pay it back. My other loans are serviced through Nelnet, and totaled around $60,000. I sadly accepted that I had a hard and long road ahead.

how I ruined my net-worth

I started out paying the private loan from Sallie Mae because they did not allow me any income based payment options. I Also did not want to disappoint my Grandpa. I spent the first year paying the minimum amount required.how I ruined my net-worth

Eventually I realized that my minimum payment was rising every few months. I was so confused and decided to check my account. To my horror, My loan did not have a fixed interest rate.  My interest rate started at 6% and climbed to 12%  by the time I sold my stock portfolio and paid it off in 2019. There was no better feeling than receiving this email:

My latest debt payment.

I currently have $44,823 left in student loans, serviced through Nelnet. I started out paying the minimum while aggressively paying Sallie mae. Now that I only have one debt payment left, I upped my payment amount. I have been paying them religiously since graduating from college in 2016. My plan has been to pay $1,000 towards my loan every month, and then throw whatever windfall that comes towards it as well. 

my latest debt payment

It’s not the fastest debt payoff, but it allows me to invest in the stock market at the same time. I feel like it’s important to let interest work for you, while fighting the interest building against you. 

My current net-worth.

Now for the good stuff! I accepted that I would be living with a negative net-worth very early on in life. Eventually something clicked, and I realized that no one was going to save me from my financial decisions. At the beginning of my net-worth tracking in 2019, I was sitting at $54,000 under water.

my current net-worth

Can you see why the beginning of this journey can be daunting? I have never seen 5 figures in the negative before learning about my net-worth. What a punch to the gut! Thanks to my investments through my employer 401K, and other brokerages, my net-worth is now less than 5 figures negative!

my current net-worth

Conclusion

My future net-worth updates will be a lot shorter. I just wanted to give you all a full background of how I accumulated this much debt to begin with. For full transparency, I have never had any other debt. I use my credit cards very responsibly, and credit actually benefits me greatly! With my current payment schedule, I will be in the positive in June of this year. I cannot WAIT to celebrate with you all!

It’s important to realize that you are not alone in your financial journey. My debt payoff isn’t the prettiest. Showing the facts and figures is important to showing others that debt isn’t a life sentence. How are you, or did you, pay off your debt? I’d love to hear about your journey’s in the comments below. 

This Post Has 4 Comments

  1. Tyanne

    As someone who does not know anything about loans, I thought this was super interesting! Sally Mae sends me emails all the time. I am glad I did not take out loans from them now.

    1. bonitalynn

      YES! do not get a loan with them. the year that I paid them off, I saw on the news that the em[loyees of Salliemae went on a hawaiian vacation!
      Private loans in general are never a good idea.
      Thanks for reading!

  2. Sierra Rae Koon

    Way to go! You’re making wonderful progress on your student loan debt! I’m currently focusing on my credit card debt, but really want to start squashing my student loans next year. Your post is super motivating!

    1. bonitalynn

      Thank you so much! It really helps to hear encouragement every once in a while.
      Thanks for reading!

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