Friday, 29 February 2008

Gives With One Hand And Takes With The Other

Remember how happy I was when my bank increased the interest rate on my online savings account?

It was of course a glimmer of hope in sea of bad news about rising interest rates here in Australia. However, that bad news has caught up with me and the same bank has now increased the interest rate on my personal loan too. It was so great while it lasted those few heady days in February...

This of course increases my minimum monthly payment, which reduces my ability to save anything in that high interest savings account with all it's delightful extra interest rate!

My personal loan now has the second highest rate of all my debts, which at 14.2% is more than all my credit cards except one. (That one is both my highest interest rate and lowest balance, so it's my focus debt at the moment)

With that in mind, and a strong desire to achieve as many of my 2008 financial goals as possible I've decided to permanently increase the amount I’m paying off my loan each month. One my goals was to get my loan balance under $20,000. The minimum payment has jumped to just $4.00 less than I’m paying now (I was paying an extra $10-15 per month since the beginning) and won't come close to achieving that goal.

After crunching the numbers I’ll be increasing the loan payment to $700 ( was $570) per month from March. This means I can set it to be paid monthly, comfortable in the knowledge that I’ll easily meet one of my goals for the year. This change alone will save me over $1000 in interest over the term of the loan, even without taking my debt snowball and snowflaking into account. It will make a bit of a dent in my snowball amount, I still have one, it's just smaller for the credit cards.

How are your goals for 2008 tracking so far?

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  1. hi dd, good idea to increase the amount you send to that loan. It's a defiant move towards the bank!

    My 2008 goal to pay off £15k is behind so far, but the 'making extra income' every month is going quite well and I'm determined to do it.

  2. I'm sorry to hear that your interest rate increased on your loan. But it's great that you noticed! I used to never look at the interest rate on my credit, did I have a heart attack when I saw one was 24%!

  3. Thanks no more spending and savingdvia, if nothing else, actually reading my bank statements & mailings has been a great learning for me.