After re-reading yesterday’s entry regarding my most recent student loan debt drop I couldn’t help but think that I should add a brief explanation of why the debt drop was only $1 thousand over the course of a month and a half. Well, it’s actually quite simple and no, it’s not because I purchased a new car in February that requires me to pay about $525 per month.
The reason why my student loan debt hasn’t dropped to a greater extent is simple – the United States government demanded my money. That’s right. Remember the $3,690 that I paid to the Internal Revenue Service a few months ago? That’s the explanation of why my student loan debt hasn’t dropped more than $1 thousand in the last month and a half. The government demanded my money and – like any good citizen – I had no choice but to pay.
One could argue that the several thousand dollars that I put down on my new car could have also gone towards reducing my total student loan debt. The difference between the money I owed to the IRS and this down payment, though, is that I had been budgeting to buy a new car so the money for the down payment was available. On the other hand, the IRS tax liability was a very quick turnaround and required me to tap into my savings account. Sure, I’ve got more than enough savings to take care of the tax liability, but I’m anal about my savings account and investments so I really hate tapping into them. I’ve been spending the last few months replenishing the money I had to withdraw for taxes (as well as my regular deposits into the savings account). That’s what happens when the IRS rapes depletes your free cash flow.
If I didn’t need a new car and the IRS wasn’t greedy for this working man’s money, my total amount of student loan debt outstanding today would not be $28 thousand. Instead it would be $18 thousand. In fact, I’d be less than 12 months away from totally eliminating the student loan debt once and for all.
But the government called and my car failed. Your classic one-two punch.
Bastards.
