Last week I posted a huge announcement on the Beautiful.Minimal.Millennial Instagram account. It’s really huge. Like make the biggest extra payment ever in my life HUGE!
Well that just happened last night. Mr. BMM and I were on a walk talking about finances and paying down debt. He made a suggestion on the order that I was paying on my debt.
After a couple blocks of me pondering the idea, I decided to take action to pay off my car earlier despite the fact it has the lower interest rate.
When we got home, I opened up the computer to asses my cash situation and decided to make a $3,000 payment. A whole $3,000! And THEN pay an extra $1,000 per month on my car.
Before yesterday both my student loans and car would have been paid off by August 2023. Now after adjusting to this new plan, my debt will still be gone in August 2023 but I will save an extra $700 in interest!
I woke up today realizing that I owe $8,700 on my new car 🚙 that I just bought in November 2018!
👆👆👆this is why I stopped shopping 🛍. This is why I’m on my second no spend year in a row. This is my WHY for all of those seemingly cheap, frugal, or weird decisions I have made over the past couple of years.
I am rewriting my debt story, my money story, and I’m making the life I have always dreamed off a reality!Beautiful.Minimal.Millennial
Why did I make this extra payment? Honestly, having the $3,000 additional money in my emergency fund is great but it’s only making me 0.01% on interest. I made $0.73 so far this year in interest. My car and student loans are costing me 2.89% and 4.41% in interest respectively. Mr. BMM and I agreed that a $10,000 emergency fund is too high considering these debt amounts and agreed that $5,000 for my personal emergency fund is sufficient.
What am I going to do with a $5,000 emergency fund that only earns 0.01% interest? MOVE IT TO A HIGH YIELD SAVINGS ACCOUNT EARNING 0.90% INTEREST! I chose CitiBank due to ATM access in the event of an emergency. Do you research on which bank is best for you. Don’t take my word for it because I’m just trying to figure this stuff all out and have no financial license to actually recommend a product to you.
Being in a high yield savings account grants me the same access as a traditional savings account but for a higher interest rate. I chose this option over a mutual fund because I wanted to ensure that these funds were always available. Remember FDIC!