Yesterday, I made a lump-sum payment of a little over $ 8 000, effectively putting my consolidation loan to its final resting place.
Beyond the excitement of being finally rid of this loan, I felt a huge relief and also like a weight had been lifted off my shoulders.
until i saw the balance at zero, I hadn’t realized how much this loan was weighing me down
I initially took out this loan in 2011 to consolidate my student loans, a pretty much maxed-out line of credit and a couple of credit cards. At the time, the total amount was about $ 25 000, with almost half of it in student loans.
If you are wondering how I got to be $ 25 000 in debt, please read my story.
Fast forward to 2014, the loan was down to $ 13 000.00. Clearly, consolidating worked for me.
Unfortunately, I had bought a condo in a building that was not in great shape and I found myself faced with a special assessment of $ 6 000.00 for repairs.
Alas, I did not have that money saved. I had bought the property the year before, and my savings were at around $ 2 000.00. So, I went back to the bank and consolidated again.
I was back to being $ 19 000.00 in debt
It was crushing, and not just financially. I started suffering from debt fatigue. I felt like I would never get out of debt. This loan and the payment amount associated with it started becoming a permanent part of my identity.
then, i decided to fight back
After all, I had dug the financial hole I was in, and it was my responsibility to climb out of it.
I decided to throw in an extra $100 per month towards the “beast”, on top of the bi-weekly payments I had to make.
I had calculated I would pay off this loan 9 months ahead of schedule by doing this.
i lucked out with the sale of my condo
Yes, the very same condo that got me further into debt got me out of it. Ironic, I know. I sold the property last year, at over-asking price. Initially, I hadn’t planned on selling just yet. You can find the details here and here.
So why had this loan not been paid off earlier, you are probably wondering. Because I also had other competing priorities, like a lot of people.
I repaid the amount I had taken out of my savings for the deposit on the purchase of my second condo. Then, I bumped up my emergency fund, which was, for me, a necessity.
The lack of emergency fund is what got me into debt in the first place. I don’t want to be in that situation again.
My parents also came to visit me, and yes, I used some of the proceeds to enjoy my time with them. I don’t regret doing that for one bit!
Last but not least, I initially wanted to pay-off my car loan instead, as the amount was slightly lower and I would have owned my car outright.
I debated quite a bit and it took time to reach this decision. I am glad I did. The consolidation loan amount was for a longer period and a higher interest rate. I also had it for too long.
i saved $ 2 000.00 in interests
My bank periodically sent me information about my loan agreement. If I had let this loan run its full course, I would have paid an extra $ 2 000.00.
i now have more options, and it is freeing
It is really liberating not to have that bi-weekly payment above my head anymore. I am now on to tackling my car payment and increasing my retirement savings.
2018 will be the year of becoming debt-free!