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Financial Priority List

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One of my new favorite things to do since signing my first full-time employment contract is to run numbers over and over again to determine our new debt-free date. 🙂

As a side-note, I ran across an old notebook from last summer (August 2014) where I’d written projected debt-free dates and was slightly heartbroken to see I’d originally hoped to have my car loan paid in full by January 2015. Crusher! Still about 15 grand to go on that one (latest debt update here). But I’ll be hitting it hard once the paychecks start rolling in.

Regarding pay, however, things are still a bit up in the air.

A reader who works in HR commented a couple weeks ago to say that I probably need to receive official permission from my new job to continue working at my online teaching job. I really hadn’t thought anything of it because I know lots of professors who adjunct teach at a community college on the side of their full-time professor gig. But as this is my first full time position and I absolutely do not want ANYTHING to jeopardize it in any way, I called HR to be safe. At first I got a casual response, “I don’t see why that would be an issue but I’ve never had the question before. I’ll check with someone else and call you back.”

So I go the rest of the day thinking I’m A-Okay until I get the call. Even though my part-time job can be completed at nights and on weekends, will not interfere in any way with my new position, and is only adjunct teaching (no additional responsibilities, etc.), the employee handbook has a little section stating that any employment for any other university or college MUST be approved by the department head AND college dean. Ouch.

I’m still hopeful about the situation. I really don’t think it will be a big deal given the parameters of my online teaching job (specifically that it can be completed any time so it won’t cause any impairment to my new day job, and it’s a simple adjunct position). BUT the bottom line is I have to ask for official permission to continue working for the online job and, if I’m told no, there goes my hopes of making serious progress on debt repayment.

Let’s step back a sec and talk numbers without actually talking numbers. Just follow me.

My new full-time job pays about 50% more than my current part-time online teaching job.

BUT

After running the numbers of all the deductions to be taken out from each paycheck, which are substantial (including: health, dental, vision, retirement, money for a flexible spending account for childcare expenses, taxes, etc. etc. etc.) I’m only going to actually be netting an extra couple hundred bucks a month. Soooo, practically the same monthly pay for my full-time job as what I make at my part-time job.

Of course, my money will stretch a lot further at my new full-time job because, unlike the part-time job, I won’t have to deduct funds monthly to pay my own taxes and health insurance. I’ll be paying for (part of) childcare with pre-tax dollars to save some money there. I’ll be paying for health care with pre-tax dollars to save some money there. I’ll be saving money toward retirement where previously I’ve saved nearly nothing. And so on.

But when you just look at the bottom line…. being able to keep my part-time job effectively doubles my take-home salary. So obviously I’m hoping I’ll be able to do that.

Cross your fingers for me. I meet with the department head the week of the 20th (exact date TBD) so I’m hoping to bring it up in our meeting and have it be no big deal.

In the meantime I have a just-for-fun list of financial priorities along with some projected dates.

Financial Priority List

  • September 2015 – Add $4,000 to Emergency Fund. With hubs’ no-income month of May and the fact that much of my paycheck was sucked up into an overdue tax bill, we basically lived on our EF for the month of June. We do have a little left (just under a thousand), but I’d like to beef it up to the $5,000 mark. If we put some aside in August and some in September, we’ll hit that goal. It’s tough to put so much toward savings instead of debt but I feel really strongly that we need to have a solid EF, if for nothing more than my own psychological well-being.
  • December 2015 – Pay off remaining car loan (approx. $15,000). This is still a bit of an aggressive goal, but as long as I’m able to keep both my jobs I think there’s a really good chance we can still pay off our car before the calendar year is over. I CAN NOT WAIT until this loan is paid because it will signify reaching the consumer debt-free mark – a huge milestone in my mind.

And here’s where things get controversial….

After the car is paid off, I definitely want to start paying more toward my student loans. But instead of diving full-force into paying off these loans with the gazelle intensity that I’ve tried to have for all of our other consumer-related debts, I want to split my priorities a bit. I still feel very strongly about paying off these loans as quickly as possible (especially the unsubsidized loans; and I plan to continue doing balance transfers to save some interest where possible, too). That being said, however, there’s something else I feel really strongly about too.

Home ownership.

No, we aren’t looking at places today. No, we don’t even know what the next year may bring (examples: (1) my dad’s scary health issues, and (2) I’ve still been in talks with the out-of-state university where I did my not-an-interview earlier this year). But all that being said, once the consumer debts are paid in full I think it will be important to start saving more aggressively for an eventual down payment. At this point I don’t know specifics (no idea the amount per month we’ll save versus the amount put toward student loans every month), and I really do want to stress that I want my student loans gone ASAP! I hate dealing with them every month. I hate the amount of interest they cost me. I hate their drama. I hate that they’re this huge, scary, black hole of debt on my credit report. So in no way am I suggesting that I’ll only pay minimums or drastically reduce debt payments. No way!

Look. It’s never been a secret that I really want to put down roots somewhere. I said it in my very first “Meet Ashley” post that I wrote when I interviewed to be one of the bloggers here. It’s important to me. The American dream and all that jazz. And the older my kids get, the more I want it.

I’m sure I’ll be talking more about this as time moves on. But for now, we’ll just say that I’ve got these two concrete goals (restock EF by September, and consumer debt-free by December), and then we’ll have to do some reassessing at that point. Either way, 2015 is shaping up to be a pretty kick-butt year in terms of debt repayment. Full throttle ahead!

 


Lackluster June 2015 Debt Update

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So remember how we had a no-income month of May with hubs’ business?

That really hurt us in terms of our ability to make big debt payments. I even said at the beginning of the month that we were going to cut out some of the debt payments all together (like the car payment and balance transfer loan, which don’t have minimum payments currently due), and pay minimums on everything else.

Well, its one thing to say something and another to actually do it.

And although we really didn’t have the funds to do so (I had to tap into EF funds), I made some payments toward all of our debts for my own psychological satisfaction. That being said, it’s not like I was able to do an awesome job on debt payments this month. In fact, I believe this is our lowest debt payment since I started blogging here (back in March 2014).

And there’s one thing thats certain in regard to debt eradication. If you aren’t moving forward, you’re moving backward. There is no “stationary” option available.

So, unfortunately, I also have to tell you that our debt actually increased this month (not due to new debts, but due to accruing interest on the existing debt).

However, the additional debt has been totally puzzling to me. It’s all from my student loans and, although I have a lot of student loan debt, every single month my debt has been going down. This month I actually made a larger student loan debt payment than normal and my debt somehow went up.

I called Navient to ask about what happened.

How is it that every single month I pay (X) and my debt decreases. This month I paid (X+$67) and my debt somehow increased? It doesn’t make sense that I paid more and somehow my overall balance has gone up?

The person I spoke with had no idea. She took down some information, said she’d file a report, and someone would get back to me. That was two weeks ago and still no news.

I called back another time to try to figure it out.

This time, I was told that even though I’m on income based repayment where unpaid interest is forgiven on my subsidized loans, apparently the unpaid interest is only forgiven on a quarterly basis? Meaning, the interest continues to accrue and is only forgiven once every three months.

This makes no sense to me. Navient is a little bit trickier, but it’s clear as day from looking at all my debt updates (you can go through the archives for yourself), that my ACS loans (which are all subsidized) have had the same balance – to the penny – ever since I applied for income-based-repayment (last August). But my minimum payment doesn’t even cover the interest, so it’s clear that the unpaid interest has been forgiven every month, not just once a quarter. Otherwise, my balance would have continued to rise every month as I make my minimum payments.

My IBR status hasn’t lapsed, supposedly this policy isn’t new (in regard to only forgiving interest once per quarter), and there’s absolutely no logical reason I can think of that explains it.

But with BOTH of my student loan carriers this month (Navient and ACS), my balances have gone up.

Can anyone explain this to me? Pretty please with a cherry on top?

It’s absolutely maddening! It’s such a helpless feeling to know I owe this money, but to feel like somehow I’m getting screwed over – only no one believes me and no one seems to think anything is amiss.

To sum up…

  • I’ve made the same payment every.single.month. My balance has always decreased.
  • This month I made the same payment PLUS an extra $67 payment.  And somehow my balance increased.

Part of me still thinks maybe this is a new policy (only forgiving interest quarterly) and the representative I spoke with simply didn’t know or realize it. Otherwise, how do you explain that BOTH of my loan service providers had the same issue in the same month?

It really makes me want to knock out my car loan debt ASAP so I can start to kill these student loans. They absolutely need to die.

Now that I’ve gone on my rampage, let me show you the actual debt numbers.

PlaceCurrent BalanceAPRLast Payment MadeLast Payment Date Original debt, March 2014
Capital One CC-17.9%-Paid off in March 2014$413
Mattress Firm-0%-Paid off in May 2014$1381
Wells Fargo CC-13.65%-Paid off in May 2014$7697
BoA CC-7.24%-Paid off in June 2014$2220
License Fees-2.5%-Paid off in April 2015$5808
Navient - Federal Student Loan$39088.25%$116June$4687
ACS Student Loans$214117.24%$77May$21035
Navient - Dept of Education student loans$666676.55%$307June$63254
PenFed Car Loan$146422.49%$100June$24040
Balance Transfer student loan (Former Navient 1-01)$53370% (through April 2016)$100June$5937
Medical Bills$60860%$25June$9000
Totals$118,051 (Last month = 117,815)$725Starting Debt = $145,472

I can’t beat myself up about it too much. Next month will be better. Onward.

Seriously though – anyone else on IBR have this issue where unpaid interest was not forgiven this month? Is it a new policy to only forgive interest once per quarter? Why have I never experienced this before?


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