Monday, August 19, 2013

control freak

So here's where I let my freak flag fly: I love Excel. I love everything about it. It is a magical program that I only use to like 15% of its capability. The thing I love to do most in Excel? Budgeting. Especially amortization schedules. They're awesome.

Now that my Sallie Mae loan is gone, all my money is going toward my law school loan. Now I may not have learned much in college, but I did learn about the compounding property of interest. I'll never forget how amazed I was that by splitting a loan payment into 2 and paying twice per month instead of once per month, you could save a lot of money in interest! As a result, I'm not about to sit idly by and just make one larger payment per month. No sirree.

So I'm also really bad at waiting. I like to be active in my pursuit of my goals, so any sort of waiting around for things to happen to me is not really something I can handle. And so we come to this morning's use of Excel. Cost/benefit analysis for direct debit of my student loans (plus one extra payment per month) versus making a payment every 2 weeks when I get paid. The only plus to direct debit is that my servicer offers a .25% rate decrease for being enrolled in it. All the other pros are firmly in the every-2-week column: ability to apply my payments to maximize the debt snowball, ability to have absolute control of submitting my payments, etc.

Therein lies the beauty of the Excel amortization schedule. I created one for each scenario. It turns out that with both options, I would pay my loan off on the exact same day: April 8, 2016. However, with the every-2-weeks option, I would pay an extra $151.29 in interest over the life of the loan due to the increased interest rate.

The question remains, is it worth ~$150 for me to have complete control over my repayment? I say yes. In the grand scheme of a $50k loan, $150 isn't much. And the psychic boost I'll get from making that payment every 2 weeks is worth every penny of that money.

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