I’m still here and reading the blogs, but took a break from posting for a while because my current job will be ending this summer and I’ve been job hunting. Until I have a new contract, I decided to slow down the extra payments to my student loans and to stockpile some extra cash on top of my current emergency fund instead.
There have been a few expenses related to this -got a new interview outfit and shoes, since I hadn’t bought a suit in years and they were looking a little dated. Looking professional and feeling confident was definitely a good investment though, and I did get it on sale! I’ve also paid $2230 in professional and licensing fees so far this year, which are not negotiable for my position and are required for any future jobs as well. A tax refund of $500 went toward these fees.
Viewing the 'Education' Category
Yesterday was a no spend day. I was going to stop for some over the counter medication, but traffic and parking were terrible, so I came straight home after work and found a little bit left in my medicine cabinet! Brought food and coffee to work.
I also got a check for some previous overtime in December- $260 for retirement savings. Current total before this deposit is $1535, with a goal of $3000. The plan is to switch back to paying down debt after meeting this goal.
Just to put things in perspective, I also have $3195 of unavoidable education expenses coming up in 2018 (required for my career), which I’ve had to save up for.
Longtime reader, first time blogger. I love reading these blogs for inspiration, and I am hoping that starting one will be a way to hold myself accountable as I get serious about my debt repayment goals.
The situation: Graduated debt-free from undergrad thanks to generous help from my parents. Took out loans for professional school totaling about $240,000 (with the in-state discount!) and graduated a couple years ago. After graduation I started a training job that will last for several years at relatively modest pay, followed by a significant jump after all training is complete. I was hired at a good salary (a little under $50K/yr), but had to move for my job to an expensive city with high cost of living, where rent ate up a huge portion of my income. I totally deferred one small loan from a private group with a very low interest rate (this is allowed for up to 5 years) and put my federal loans into income-based repayment, which has kept them in good standing but isn’t touching the principle. I recently found a much cheaper (for the area) apartment and moved to free up some extra money each month.
This is the only debt I’ve ever had and it needs to go! I feel like it limits my retirement savings and my general sense of freedom. With no dependents to take care of right now, I have a great opportunity to buckle down and set myself up for a more secure future.
I currently have a paid-for car with over 100,000 miles on it that is thankfully still running well and a good emergency fund (can cover 6 months of expenses plus a small extra cushion to reflect the fact that my car is well over 10 years old with a ton of miles and you never know). I have a Roth IRA that I started with my very first summer job at age 15 but have not been funding it consistently since college, which also has to change! My employer does not offer any type of match for retirement savings and the investment vehicles they do offer for automatic withholdings for are significantly less attractive than a Roth IRA due to the management fees. They do offer health, dental, and vision benefits for a reasonable rate.
The ugly numbers:
Accrued interest: 13,266.37
Interest rate: 6.55%
Current monthly payments on IBR: 368.32
GradPlus: Total 13,671.78
Accrued interest: 1,086.20
Interest rate 7.65%
Current monthly payments on IBR: 17.14/month
Other private loan: 17,000 principle, deferred, lower interest rate (don’t recall offhand)
Roth IRA: 14,322
All payments are applied first to interest, then to principle, so my IBR payments are not making any headway on actually getting out of the hole. I also think the interest rates are a little shocking- this much educational debt is essentially a mortgage, and 7.5% seems a little harsh, Uncle Sam! Talking to older colleagues, many of them mentioned that their loan rates a couple decades ago were more like 2-3%. Feeling like you are being gouged is certainly more motivation to pay if off quickly, I guess.
My first goal is to make extra payments to the GradPlus loan, both because the rate is higher and because it is small enough I could realistically start seeing some progress in paying off the principle to keep me motivated. I also plan to start contributing to my Roth IRA again- it’s ridiculous not to when you consider the time value of money at my age (under 30).
I'm still tweaking my new budget and will probably post that at a later date.