25 Apr Using Your Line of Credit to Eliminate Student Loans – Part 6
Use CashMap and Your Line of Credit to See Your Future!
Over the last few posts, you’ve seen how seemingly small changes in how you manage your money can have a cumulatively big impact on your future cash savings. In my last post, we reviewed the impact of saving a percentage of future raises can have on paying off your student loan and your future cash savings. Let’s take it one step further. What impact will changes in our current budget have on our future?
Three New Scenarios
For our first time readers, to review your financial profile as a recent college graduate, review part two of this series. After all your bills are paid in full, you have $452 left and you plan on saving 50 percent of each year’s three percent salary increase. In fifty-five months (December 2018), you student loan will be paid in full. You will have saved $6,722 in student loan interest payments and in fifteen years your savings balance will grow to $221,766. That’s impressive. Here’s your baseline Savings CashMap
What if you spend just $75 dining out instead of $100. What if you break your budget and spend $175 instead of $100 on dining out? To make matters worse, what happens if you’re unable to save any of your salary increase?
Scenario 1: If you spend just $75 dining out, your monthly positive cash flow increases to $477. You’ll pay your student loan off one month earlier, save $104 in student loan interest and boost your savings by almost $6,000. Here’s your Savings CashMap
Scenario 2: If you spend $175 dining out, your monthly cash flow drops to $377. You’ll pay your student loan off four months later, spend $440 more in student loan interest and reduce your savings balance by almost $17,323. Here’s your Savings CashMap
Scenario 3: If you spend $175 dining out and you also fail to save any of your future salary increases, the impact isn’t pretty. Your student loan is paid off ten months later, you’ll spend $821 more in student loan interest and you reduce your savings balance by $90,291. Here’s your Savings CashMap.
CashMap Demonstrates the Power of Compounding Using a Line of Credit
The difference between our best and worst scenario is huge. There’s an eleven-month difference in paying off your student loan, there’s a $925 difference in student loan interest and $96,119 difference in your savings account balance.
This boils down to one simple question, Is it worth spending sacrificing an additional $25 a month on dining out and saving 50 percent of each year’s raise over the next fifteen years? It’s up to you to decide what’s most important to you about money. In fifteen years, what would you do with an additional $96,000?
Use CashMap to create your scenario.
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