# Paid Off One of My Student Loans Early! Calculating The Interest I Saved

One of my goals for 2012 was to pay off the smallest of my student loans.  The balance at the beginning of the year was only \$4,300 (originally \$10,000 2007) and it was way down on the priority list considering the main goal this year (which I am getting close to finishing up) was selling and buying a home which takes (a lot of) cold hard cash.  Well, last week I did it! After selling our home I saw the cash sitting in the account and thought enough was enough I am getting rid of this account.

I am not sure when I officially signed for the loan, but I do know that:

• It was a 10 Year Note
• At 5% Interest
• Interest was deferred until the month my payments started (2/2007)
• Principal was \$10,000
• Loan was fully amortized

## Calculating How Much I Saved on My Student Loan by Paying it Off 4.5 Years Early

According to an amortization calculator if I were to pay the \$106.07 for 10 years I would have paid \$2,720 in interest payments.  Using my lender’s history:

 Date Interest 12/12/2012 4.35 11/12/2012 4.33 11/12/2012 10/23/2012 11.08 9/24/2012 11.48 8/24/2012 11.94 7/27/2012 12.35 6/25/2012 12.95 5/18/2012 13.82 4/24/2012 14.62 3/27/2012 17.04 3/13/2012 15.84 2/14/2012 16.63 1/18/2012 17.68 12/22/2011 18.89 11/29/2011 19.26 11/9/2011 10/12/2011 21.67 9/19/2011 22.86 8/24/2011 23.99 7/27/2011 7/14/2011 25.18 6/28/2011 25.51 5/25/2011 5/24/2011 26.29 4/19/2011 26.62 3/17/2011 26.95 2/14/2011 27.28 1/25/2011 27.6 12/23/2010 27.93 11/30/2010 28.25 10/28/2010 28.58 9/14/2010 28.9 8/30/2010 29.22 7/30/2010 29.54 6/8/2010 60.34 4/30/2010 31.1 4/1/2010 62.52 2/1/2010 31.42 12/31/2009 32.03 12/17/2009 32.34 11/4/2009 32.64 10/2/2009 32.64 8/31/2009 66.5 6/29/2009 18.22 6/8/2009 38.17 5/12/2009 38.47 4/10/2009 38.76 3/2/2009 38.76 1/22/2009 70.84 11/24/2008 72 9/29/2008 73.16 7/28/2008 74.32 5/27/2008 75.46 3/31/2008 38.29 3/11/2008 38.57 2/1/2008 38.57 12/27/2007 38.85 11/28/2007 39.13 10/31/2007 39.68 10/2/2007 39.96 9/4/2007 39.96 7/23/2007 40.25 6/4/2007 40.54 5/31/2007 37.18 5/2/2007 45.31 4/5/2007 41.38 2/27/2007 41.67 \$2,107.66

Not going to lie, I was pretty bummed when I first saw that I only saved  \$613 in interest payments (and that excludes tax savings).  Then I remembered my favorite thing about paying off debt; the \$106.07 while not a lot of money lowers my monthly and yearly nut.

By finally getting rid of this debt I have cleared up \$1,272/yr of after tax money that had to go out to someone else every year for the next 5 years! Every \$100/month extra I invest for the next 5 years could grow to be thousands by the time I decide its time to start drawing down on those funds.

Did you complete any goals this year?

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December 26, 2012 - 3:02 pm

My main goal this year was to get a new.job which I accomplished early on. So glad I [email protected]

January 2, 2013 - 1:03 pm

What are you doing now? What were you doing?

December 27, 2012 - 3:55 pm

Well that’s great news thanks for sharing that. You must be SO happy to know you paid that off. One thing people don’t see is the interest they pay on student loans which all adds up. Even if it is small or if you only saved a small amount by paying them off at least you keep that money and it’s not going to crappy interest. Can you tell I hate interest.. lol. Cheers mate. Mr.CBB

January 2, 2013 - 1:07 pm

Thanks for the well wishes! I think I am more excited to get that \$100 or so a month back for the next 5 years vs the interest saved. Although it is nice that I get both!

December 30, 2012 - 8:24 am

Hmmm… Freedom’s just another word / for nothin’ else to have to pay… 😉

Congratulations for getting that little monkey off your back.

January 2, 2013 - 1:09 pm

Freedom – When my monthly nut is lower than my passive income! This little monkey was a start.

January 6, 2013 - 11:31 pm

K – our son is going to law school in the Fall of 2013 – ugh. Law school is horrifically expensive and the job market sucks. We can’t help him with tuition/living expenses ’cause we have got to get our mortgage paid off and fully fund our retirement. He’s never had a payment in his life – we put him thru undergrad entirely. Now I’m beginning to think that may have been a mistake. He thinks he’ll just take out student loans to full finance his law school – ugh. He’s clueless re: what impact that will have on him for the next several years of his life. He’s living at home for the next 8 months and saving everyting he can make to pay for law school, but that’s hardly going to be a drop in the bucket. Any advice on how he can keep his student loans to a minimum? Thanks much.

January 8, 2013 - 12:31 am

I once received a pretty good piece of advice – live like a lawyer during law school you’ll live like a law student when you are a lawyer.

I would also urge him to fully understand what kind of employment situation alumni face from his law school. If you are saying he got into a top 10 or 20 law school – he’ll be fine if he keeps his grades up. If he is going to a 4th tier RESEARCH REAL LAW EMPLOYMENT numbers for that school (disclosure: I went to a 4th tier)

January 9, 2013 - 12:23 am

Evan,
Thanks for the input. DW is also an atty – I don’t know what “tier” her law school was, but she got a great education and got a great job many states away from where she was “schooled”. The only problem is that she: 1) went into public sector work and didn’t make a fraction of what she could have made in the private sector and 2)she stayed home with our kids when they were little – ouch (financially) great every other way.

My son won’t be “staying at home with his kids” or otherwise taking maternity leave (and leave and leave and leave) so I’m not really sure how to advise him on how to proceed. I am not an atty and have never incurred that kind of “higher” educational debt. Please help – seriously. I damn near stroke out at the thought of him taking out this kind of debt. We are sooooooooooooo old school – we actually pay cash for our cars. Just don’t get this whole spend \$150,000 plus on a “higher” education. Hell, our first house didn’t cost 1/2 that much.

Thx.

Jim