I am so excited to make today’s post. I have actually had to stop myself from writing it for over a week now. Because I did not want to write it until what I was saying was actually true. We have paid off my graduate student loans!

We will start 2013 with $17k less debt. In fact, our non-mortgage debt will now only be my undergraduate student loans, which are less than $15k and at a 3.5%APR.

C and I have been diligently saving up to create a cushion that will allow us to pay all adoption fees in cash. However, once we have our foster care license (January, hopefully), we still may have a long wait- years, even –for a placement. And there’s no point in having money sitting in a savings account paying 1.25% APR when we have a loan out there charging us 5.55% APR. But, we want to have the money (and have it liquid) because our wait time to adopt could be weeks. So, we had an agreement. If we got to a savings total that was $10k more than what we owed on my graduate student loans, we would pay them off.

We reached that point this month, so we scheduled the pay off and the money came out of the account today.

This also means that starting January 4 (the day the GSL payment would be due), we have $550/month in our budget that needs to be reassigned. C likes the idea of sending it all towards the undergrad student loans and getting them out of the way, too. I’m not exactly against that (these are my loans, after all), but I kind of want to build savings back up a bit, maybe to $15k, first.

Most likely, we’ll do a compromise- put some extra toward the USLs and some toward savings until I’m happy with the savings balance, and then throw it all at the other loans.

On some level, we would have saved more money in the long run if we’d put that “extra” $17k toward our mortgage, as it’s the highest interest rate we have (at 6% APR- an no, we can’t refinance, not even with HARP). In fact, that might even have gotten us to the point of not being underwater on our mortgage. But, it wouldn’t have changed our monthly budget at all. We would owe less money, but our mortgage payment wouldn’t have gone down. We wouldn’t have money back on our pockets from one less payment to make.

The extra joy of freeing up the money from our budget is that it also gives us flexibility. Right now, we can put that money toward savings or making extra payments on the undergrad loans. But in the future, once we do get a placement, that $550 that can come right back into our regular operating budget to compensate for the additional cost a child will bring.

This is what passes for excitement in my life. I think that might mean I’m a really boring person, but it doesn’t change the fact that I am ridiculously happy about this. It’s a birthday and Christmas gift all rolled into one. (For the record, I hate when other people try to do that to me.)

What exciting things are happening in your life?