If I tried to pay it off first, I wouldn't see any impact on my cash flow for probably 14 years, making it discouraging to try to find extra dollars to put towards paying down debt. My larger student loan is the size and duration of a mortgage, and I'll treat it like it's one.
Although that will cost me some in NPV, it means I can pay off my car loan in a few months (freeing up $250 per month in cash flow), and can pay off my smaller student loan in a few years. After listening to Ramsey, I'm going to do it in the opposite order. If I were to approach this according to the pure net present value financial principles taught in school, I would start with my big student loan (highest interest rate), then my smaller student loan, then my car loan (lowest interest rate). Furthermore, I have a better plan for paying down my debts.
for next month's rent), and how much disposable income I have in my current checking account. for a wedding in the fall), how much will go to short-term savings (e.g. I know how much of each paycheck will get immediately transferred into long-term savings (e.g. Now, I have an Excel spreadsheet with a separate column for each upcoming pay check. After re-listening to The Total Money Makeover, I got a second savings account to hold my emergency fund and long-term savings, making it easier to separate between current accounts and short-term savings. Before, I always felt at a loss when it came to budgeting.
Now, with a steady income (and some monstrous student loans) the lessons are relevant, actionable, and empowering. The first two times, I was still in school and had no income, so felt powerless to act on its lessons. I recently listed to The Total Money Makeover for the third time and it clicked. I have business degrees from Wharton (BS) and Stanford (MBA), but like most Americans from middle class backgrounds, I never got much training in personal finance and always felt bewildered by it.
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