After the TSP, I invest my money in Betterment and Vanguard. I track all of my investments with Personal Capital. I also wrote a short, 2 hour book summarizing this site. You can buy it here.
We have reached another milestone in our journey to financial independence.
After 2 years, 5 months, and 26 days of repayments, I made the final payment on my USAA Career Starter Loan! When I started repaying the loan, it had grown to over $26,000. With payments of $471 over the next 5 years, I was looking at nearly $2300 worth of interest.
Just six months ago the loan was still around $10,000. At the time, I predicted we’d have the loan paid off by Dec 1, 2013. We beat that goal by over half a year and saved over $1000 in interest payments. How did we pay if off 6 months earlier than our already ambitious goal?
How We Paid Off $26,000 in Less Than 2.5 Years
- Made extra payments towards our highest interest rate loan every month
- We didn’t accumulate any new “stupid debt” (we did buy a house though)
- We increased our income
By saving money on deployment, never paying for cable TV, increasing our income with AirBnB, and decreasing our monthly expenses by over 25%, we were able to make the final push and pay off the loan over half a year early.
We were already paying almost 75% more per month than the minimum. Every month, on top of the $471 minimum payment, we’d make an additional $304 payment. This debt avalanche saved us about $1000 in interest and cut 2 whole years off of the life of the loan. With the final epic $5000 payoff, we were able to slay the evil beat once and for all!
The most exciting thing about paying off this loan is it freed up $775 of cash flow every month. Because I’m about to hit a time in grade promotion mark this month and we’re about to finish paying off our PCS advance in July, we’ll see our income rise while our expenses are falling! This is the perfect time to begin maxing out our Roth TSP and Roth IRA.
While I still have $29,000 in student loans from Sallie Mae, the interest rate on these loans is ridiculously low (1.75% and 2.75%). As long as the rates stay below 3%, we’re not going to prioritize paying off these loans. By paying off the USAA loan, our minimum monthly payment for student loans dropped from $696 to $225. This means we can live safely with a smaller emergency fund and start prioritizing our investments.
We’re very excited to see the student loan payoff chart take a big dip this month. We’re even more excited to have the opportunity to begin contributing to our gap fund and retirement accounts in a meaningful way now, rather than later.
2 Websites I Use to Achieve Financial Independence Faster
I have investment accounts all over the place. To keep track of all of them in one place I use Personal Capital. It combines all of my accounts, shows me where I may be overpaying in fees, and provides beautiful charts showing my overall asset allocation and performance.
I use Personal Capital to track my Roth and Traditional TSP, Vanguard IRAs, banking accounts, SDP, and my Betterment taxable account, all in one place. It's free, secure and presents me with a one-stop dashboard so I can see all my money on one site.
Read my full review of Personal Capital and see how easy it can be to manage your investments in one place. Trust me, once you try it, you'll love it.
P.S. - If you have over $100,000 of assets and a 401k, you really need to run the Personal Capital 401k Fee Analyzer.
The best way I know to achieve financial independence is to keep your investments simple, diversified, automatic, and low-cost. Costs eat into your returns like you wouldn't believe! A 1% difference in expense ratios can mean $100,000s lost to fees over a lifetime of investing.
Even if you're a DIY (do-it-yourself) investor like I am, you need to check out Betterment. You can read my full review here, but the bottom line is for only $250 per $100,000 invested (0.25% expense ratio) you get simple, diversified, and automated investing. In addition every account now gets free Tax Loss Harvesting+ features, which should increase returns for the average investor more than the minuscule management fee.
If you're not a DIY investor or are just getting started with investing, then you definitely need to check out Betterment. It's what I recommend to my family and friends who aren't strong investors or don't care to learn about asset allocations, diversification, or rebalancing.