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Ch-Ch-Ch-Changes!!!!

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There are a couple of big financial changes happening over here. I’ve been hinting at these, but I wanted to wait until things were official before sharing with you guys.

Let’s start with the first financial change….

  1. I’m starting to pay on my student loans now. This is actually something that was brought to my attention when Liz from Great Lakes posted on my very first debt update (nitty gritty debt details. Side note: some of you thought we should declare bankruptcy when you first saw those numbers! My, how things change in 4 short months!). I don’t even have Great Lakes as a carrier of my loans, and I know Adam had mentioned issues with them (and I’ve seen other commenters complain about payment problems), but I am very grateful for that post.

Liz mentioned that I may qualify for Income Based Repayment (IBR) to get a lower monthly payment. The real “cincher” though, in me deciding to sign up for IBR, is this: the total cost of my student loans continue to rise every month due to accumulating interest. Under IBR, “the government will pay your unpaid accrued interest on your subsidized loans for up to three consecutive years from the date you begin repaying your loans.” (see here: http://askheatherjarvis.com/blog/pay-as-you-earn-hotter-than-IBR). That means I can continue focusing on paying down my car debt without my student loans continuing to gain interest.

There is some controversy about IBR plans. Under this plan, any remaining student loan balance is forgiven after 20 years of qualifying payment. Obviously people have a lot of strong feelings about this. Let me be perfectly clear: I fully intend to have my loans paid off well before the “20 year” period. This means I intend to pay my loans in full without relying on the government for any forgiveness (big exception = forgiveness of some unpaid interest, but none of the principal). Additionally, I will actually pay for most of the interest because, after the car is gone, we will start attacking the student loan debt more seriously and will be paying above the minimum IBR payments. But in the meantime, I really appreciate that my loans won’t continue racking up interest.

What does this mean for my budget? Overall, the amount we pay toward my student loans is going to go up (since most are currently in deferment). The monthly payment is going to be in the $500ish range (about $250 each toward Sallie Mae and ACS). But that’s a far cry from $1100 (which is what it would be otherwise after deferment ends), so it’s a fair trade. Instead of waiting until February when my loans come out of deferment, I’m starting repayment with IBR now. (side note: see current budget here)

  1. We are starting a new childcare situation. This is the change I really didn’t feel comfortable talking about until it was “done.” And, because of this whole situation, I also really don’t feel comfortable explaining my reasoning and rationale for this. We’ll simply have to file it under the “personal” label of “personal finance” and roll from here, knowing that this is what is best for our family right now.

Unfortunately, our childcare changes have come at a cost. A BIG cost. Instead of paying $50/day, we’ll be paying $125/day. Yep. A BIG increase. To try to offset these costs a bit, we’ve reduced our child care to two days a week (instead of 3). This means we’ll be paying more, but for less care. Instead of $150/week (for 3 days of care), we’ll be paying $250/week (for 2 days of care). Just to continue with the math for you, this means our monthly cost will be roughly $1000 (for a 4 week month), instead of only $600.

My hope is that this will not be the situation forever. Once the girls (who just turned 2) are potty-trained, a bunch of additional and more cost-effective options open up. My goal is to try to get them potty trained by about 2.5, so we’ll be able to switch to a different place in about 6 months and pay significantly less. We shall see.

So I hope this explains some of the vagueness of my posts the past couple weeks while I’ve been trying to sort the whole childcare situation out. I am not going to lie – going down to 2 days a week has already been tough work-wise. I’m having to work a lot more late evenings when the girls are in bed and just generally trying to be more efficient. If this were a “forever” situation, I don’t know that it would be viable given my work-load. However, I keep reminding myself that this is a temporary, relatively short-term solution (for hopefully only about 6 months). Also, my work-load is extra heavy right now as it is summer session for the courses I teach, which is much more condensed than the regular semester. When the Fall semester starts, my grading will be spread out further, meaning the courses won’t be quite as demanding as they currently are.

In the meantime, I apologize for some of the babbling and otherwise hasty posts you may be seeing from me! I used to have the luxury of spending much more time writing and editing posts and now I feel more of a need to get them thrown up quickly so I can move onto my next task.

In this spirit, I need to get going.

I hope you all have a Happy Friday and a safe and happy weekend! See you on Monday!!!


31 Comments

  • Reply Cheryl |

    Ashley, I assume you removed your girls due to someone at your daycare finding out about you blogging. Only you know how comfortable you are with the situation there. That is so much money for daycare, but if you are happy with the decision that is all that matters. Cheryl

  • Reply Morgan |

    I assume the same thing Cheryl, they left the current daycare because somebody found out that they are blogging. I can’t agree if that is a wise choice, or that moving daycare will somehow prevent it from happening again, but it must be a pretty serious deal to pay such an INSANE amount of money for child care. You could have an in home nanny share for that much money!

  • Reply Ashley |

    Hi ladies! I will say that I do not know for sure if our old childcare provider knows about me blogging or not (I did spill the beans on Facebook, but I can’t be certain one way or another – there was never a conversation about it). I will say that even if they did know, that is NOT the reason we decided to switch providers. I’m sorry that I really don’t feel comfortable expanding on the reasoning (in case the old provider does read this blog). You may remember an old childcare post where I talked about having a personal friendly relationship with our old childcare provider. So, really, I’m trying to prevent the possibility of hurt feelings and/or strained relationships (which is already difficult, given our change in childcare situation).

    • Reply Morgan |

      Sorry for the assumption! Your IBR plan sounds pretty neat- and it’s refreshing to see a government program working and truly helping! I read somewhere years ago that the WIC program was the only gov. Program to successfully meet all the goals and stipulations set forth when it was created. Not sure if that’s true, but it just makes me happy to see things working well! Good job!!

  • Reply Shaun |

    It definitely varies by region but $125/day sounds decent for childcare for 2 kids. It is less than $8/hr per child for an 8 hour day. I had assumed the $50/day was a family member/close friend doing it as a favor. The higher number may be one that is more accurate of what your childcare costs will be for out of home care until your kids are in elementary school, you may want to use that for budgeting. Even public school after care in our area is $7-$9/hour per child (usually with $1/hr sibling discount, so not much savings for 2).

    • Reply Anonymous |

      Yes, it does depend on the going rate in a region for childcare. My daughter was paying $15,000/year for an infant in Minneapolis.

      • Reply Ashley |

        Yikes!!! That hurts!!! When my daughters were newborn (6 month-1 year) they were in 2 day/week infant daycare while I completed my Ph.D. and we paid $1200/month for those 2 days per week (in comparison, we lived in the “hood” and only paid $595/month for rent!!!) Pretty disturbing when 2 days per week of childcare can be double the cost of rent, but child care (particularly for helpless infants who cannot yet communicate) is not something to be compromised on, in my opinion.

        • Reply Laura |

          When my son was a baby daycare was as much as our mortgage. Like you said though it’s not something you can cheap out on

          • Anonymous |

            Yes, indeed. My granddaughter went to a beautiful childcare center. I did prefer this over a private home because I feel there is much more oversight of the caregivers and accountability too compared to a private home daycare. After the first year, the costs dropped to $12,000/year. This is standard in Minneapolis, although I know that in places like NYC, the cost is even higher.

            Gone are the days when people paid some poor woman $25/week to watch their children. That wasn’t right or fair either. Today, if you are a working parent, you will pay a lot for daycare. They deserve a wage too!

  • Reply Morgan |

    I wish I could say I’m surprised. When reading it I also thought it felt familiar, but couldn’t place it. I do hope Jeffery addresses this soon.

  • Reply Susan |

    I am also not surprised. My initial impression of Jim was that he is a shyster and my impression has not changed. He thinks he can fool the readers, but his continued inconsistencies jump off the page like red flags to me. Also, it is very obvious when he plagiarizes because the wording, the grammar and the SPELLING change from his usual haphazard way of writing.

    I agree — Jim needs to be removed from this Blog.

    And, to Ashley, I LOVE your posts. As busy as you must be, it is obvious that you put a lot of time and thought into your responsibility as a Blogger on this site. Thank you.

    • Reply Halle |

      My initial post informing of how Jim plagiarized again was removed…which is very odd considering Devin, the reader who initially informed me that the piece was plagiarized, stated that almost all of his posts about Jim plagiarizing were also removed. What is going on here, Jeffrey?

  • Reply Jackie |

    Ashley, I just wanted to say that I LOVE your posts. I personally think a $1,000/month for child is a little high, but I respect that this is what works best for your family right now. Hopefully once they are potty trained, you guys can find a program that is a little less.

  • Reply Susan |

    I pay $470 a month for childcare for one three year old child, so I don’t think that Ashley’s new costs are terribly high. Children are VERY expensive, that is for sure!

  • Reply Theresa |

    The only thing you can depend on is change. Or something like that? I will look forward to seeing how your budget shakes out. Have a great weekend.

  • Reply Matt |

    Why are comments about JIm being removed? What happened to Halle’s comment on here? I personally looked up everything she said and it’s true and disturbing that Jim has done this a 2nd time. And if what Devin is saying, it’s the 3rd time. What’s going on here??????

    • Reply Ashley |

      I have no idea why Halle’s comment was removed. I haven’t reached out to Jeffrey or anyone else yet, but I just want to be clear that I am not editing/removing comments.

      • Reply Halle |

        Thank you for clarifying Ashley…although I had a strong suspicion you were not involved 🙂

  • Reply Halle |

    For anyone who missed my original post that was DELETED:

    “Ashley,
    First, please let me take a moment to apologize for my upcoming comment. Unfortunately since you were the most recent post, I’m placing it on yours even though it does not involve you (at least not directly…but in a way since you are part of the BAD community).
    Readers-

    Everyone please take a moment to look a Jim’s last post, “Eating From The Pantry,” and then also take a moment to check out this site: http://fabulesslyfrugal.com/extreme-coupon-education-6-tips-to-prevent-food-waste/

    Jim has plagiarized once again. “His” tips on saving are actually stolen and reworded (somewhat, also some direct lines) from this site.

    I have e-mailed Jeffrey asking for his immediate discharge from the blogging position, but I also wanted the other readers to be aware as well.

    Ashley, again, I am sorry to be posting this on your page. You have been such a successful and honest example of what someone who is truly committed to ridding themselves of debt looks like.”

    For some reason my post was deleted after it was posted (proof of this is that people commented, i.e. Morgan and Susan). I cannot even begin to understand what is going on here. As I previously stated, Devin, the person who initially informed me that Jim had plagiarized again, told me that his comments about Jim’s plagiarism were being deleted on previous posts (you can see this comment on Jim’s Pantry entry). It was hard to believe till it happened to me! Jeffrey, we need answers and action! What is going on?

  • Reply ND Chic |

    Ashley, as a mother, I totally understand that you feel you needed to change daycares for your kids. Life isn’t all about money. I would do whatever decision is best for my kids Andy make it work from there. You are doing an amazing job.

  • Reply Candice |

    Ha! I love your post. Generally, because there is always something that I can pull out that impacts me or is something I have experienced. I’m such a narcissist. 🙂

    That being said, when I called on Thursday about my currently deferred loans I learned a lot. Hopefully they gave you all this information but if not, I wanted you to have it:

    1) The only interest that is subsidized on IBR are loans that are subsidized. If you have unsubsidized loans, the interest on these loans will continue to accrue and be capitalized on the principal.
    2) The maximum loan period is 25 years not 20. Not that I suspect you’d allow these loans to linger for so long. 🙂
    3) And here is the kicker: “In addition to discharging the remaining balance at the end of 25 years (10 years for public service), the IBR program also includes a limited subsidized interest benefit. If your payments don’t cover the interest that accrues, the government pays or waives the unpaid interest (the difference between your monthly payment and the interest that accrued) on subsidized Stafford loans for the first three years of income-based repayment. Interest on unsubsidized loans and interest that accrues on subsidized Stafford loans after the first three years will be capitalized upon status changes (e.g., a borrower is no longer eligible for IBR or chooses to switch to a different repayment plan). Borrowers who are concerned about the potential for negative amortization, where the amount owed grows because the payments are less than the interest that accrues, always have the option of increasing the payment to at least the interest since federal education loans do not have prepayment penalties.

    http://www.finaid.org/loans/ibr.phtml

    This means that if your payments cover the interest that is accumulating on your loans, then there is no additional subsidization benefit AND the government only does this for three years. The only real benefit, from my perspective, of IBR is that it lowers your monthly payment and gives you a bit of breathing room.
    4) You have to reapply each year. If you don’t then they consider this a “status change” and you are no longer on the IBR.

    I say this not to dissuade you from using IBR, but to make sure that you got all the information you need. It took me asking a lot of questions and then reading before I figured out what the plan actually does/does not do. I guess I should have done that when I borrowed hun? Young and dumb 🙂

    Granite State Management manages my federal student loans and they have been great; I have heard some of the other federal student loan servicer horror stories, so I am genuinely grateful.

    • Reply Ashley |

      Oh god, I was aware ore #1 and double checked on #2 (you’re right, its 25 years, not 20 – my mistake!), but I was not of #3. I did know you had to reapply every year, but did not realize that if you switch to a different plan or are no longer eligible that you get slammed with all the “forgiven” interest at that time. Ugh, this makes my head hurt! I think it may still be a beneficial option for me since the lower monthly payments will allow me to focus on paying down car debt first. At this point, I believe the interest, alone, is approx $900/month, so even interest-only payments are a BIG deal. *sigh* I will have to think about this a bit more.

      • Reply Ashley |

        Oh wait, I re-read it and it sounds like the interest only hits AFTER the first three years (“interest that accrues on subsidized loans after the first three years will be capitalized upon status changes”)….so I may be “okay” if there are no status changes during those first 3 years. Still a lot to think about…

  • Reply Candice |

    “Oh wait, I re-read it and it sounds like the interest only hits AFTER the first three years….so I may be “okay” if there are no status changes during those first 3 years. Still a lot to think about…” This is correct. The reason I made a comment about needing to reapply is that if you fail to reapply by the deadline, then this constitutes a “status change” and the above also applies if you have a “status change” before the three years is up. Again, like you concluded, I think it may still be beneficial to you by lowering your monthly payment, I just wanted you to have all the information. Till the next post… 🙂

  • Reply cad |

    if you work for a university you qualify for public service loan forgiveness and can do IBR + PSLF! it is what SAVES everyone in medicine- $$$$$$ for school but after 10 years its discharged

    • Reply Ashley |

      I don’t think I’d qualify for PSLF because I’m adjunct and unlikely to be in the same position for a full 10 years. I’d have to look into it further, but I think one of the “things” to qualify for PSLF is that you have to work at a qualifying place for 10 consecutive years, so if my job situation changes I wouldn’t qualify.

      • Reply cad |

        you don’t have to work at the same place the entire 10 years- its like qualifying for Social Security where you just have to make 120 qualifying payments- you can take breaks, switch jobs, etc. honestly you should look into it! you might have been making qualifying payments already

So, what do you think ?