:::: MENU ::::

Browsing posts in: Student Loans

Ashley’s New Plan of Action

by

In case you’re a new reader – welcome! Thanks for stopping by!

To catch you up….

I first started blogging here in March (Intro post here).

At that time, my #1 goal = eradicate credit card debt IMMEDIATELY!

And, not to toot my own horn, but I’ve done a pretty good job (and thanks to YOU for all the invaluable advice along the way! I’ve learned so much already!)

So as a follow-up to this conversation and trying to decide the next course of action for my debt-reduction plan, I wanted to give you a quick follow-up, along with my new goals:

Order of Debt Repayment (now that WF is paid in full, woot woot!):

  1. Bank of America credit card (goal date = paid by July 2014)
  2. Sallie Mae 8.5% student loan (goal date = paid by September 2014)
  3. Sallie Mae 8.25% student loan (goal date = paid by November 2014)
  4. License fees (goal date = paid by January 2015)
  5. Carmax (goal date = paid by January 2016)
  6. Remaining student loans (no goal date yet because I want to reassess in January 2015)
  7. Medical bills (no goal date yet, see above)

I was originally going to pay the higher interest student debts first, but I can’t do it. I’ve GOT to pay off the credit card debt for my own personal satisfaction and sense of accomplishment.

Next, I will try to get rid of the two high-interest student loans. Getting rid of debts #1-3 will free up $218 in minimum monthly payments (which will be invaluable when my deferment ends on the student loans in February). I’m still a little undecided regarding #4 and #5. I feel like I’d get more personal satisfaction from paying more toward the Carmax loan, but the license has a balance of about $5,500 versus $23,000 for the car, so its a huge difference. We could feasibly pay off the license fees before my student loan deferment ends (in February), but in contrast, there’s NO CHANCE I’ll have the car paid off before deferment ends. Again – I’m trying to free up those minimum monthly payments so they can be applied to the student loans and other remaining debt.

Notice my new “goal dates” for paying off these debts. I have to say as a disclaimer that these are really optimistic dates. Keeping those dates will have us paying about $3,500 toward debt each month (as opposed to the $1500/month we have budgeted). This means we HAVE to keep pulling these big income months like we have the past couple months. This may be possible….I mentioned how “I’m getting a raise” (by teaching additional classes….which started this week so its already “in effect”). Additionally, my husband has hired a new crew of workers so his income will also receive a bump from the work this new crew is able to complete. But at the risk of sounding like a hypocrite (given this morning’s post)…I don’t want to count our chickens before the eggs hatch. I think it will take a few months of my new income + my husband’s new income for us to really know what what we’ll be bringing home each month (in terms of pay). I hope it stays steady with what its been the past couple months, but there’s no guarantee. Only time will tell.

So, yup. Just an update on my new plan of action and goal dates for debt-eradication. I really appreciate all the suggestions and feedback! For example, I had NO IDEA that student loans can’t be consolidated for a lower APR. No point in consolidating then! So those will all be staying separate. I do still plan on trying to refinance the car loan, but I want to wait until my recent huge Wells Fargo payment gets updated with the credit reporting agencies (as I believe it should help give my credit score a little bump).

Hope you all have a great Memorial Day weekend!

 

 


And Now It’s Time for a Breakdown (Part 1)

by

Name that tune.

Now that we’ve done the formal introductions, it’s time to get you acquainted with our debt situation.  We’ve been working on our mountain of debt for 3 years so far, and our goal is to make our last payment on my 35th birthday in July, 2017.

At this point in the journey, we’ve paid off all of our cars, some credit cards, and our undergraduate loans.  Still to go, we have 2 credit cards that are a testament to our ongoing financial lack of discipline, and my remaining graduate school loans.  Here are  the debts we’ve paid off so far.

Emily Credit Line$180
Orchard Bank Card$250
Short-term Loan$500
Prudential Insurance$1,000
Citi Private Student Loan$3,070
Ford Focus$9,365
Emily Dept. of Ed.$7,000
Emily Sallie Mae$6,350
Citi Credit Card$2,400
Lexus RX300$5,000
Adam Sallie Mae$15,200
Total Paid – July 2013$50,315

Emily’s credit line was a revolving loan she took on with her bank after college. Thankfully we knocked that out right away, along with the dreaded Orchard Bank card.

Short-term loan: During my first year of graduate school, my loans for the entire semester were disbursed at the beginning, and it was my job to budget my living expenses until the next disbursement in January.  As I approached Christmas my first year, I realized I wasn’t going to make it! This was one of the most stressful times of my entire life. I was worried I might not be able to go home for Christmas, get anyone any gifts, or anything else.  For the first time in my adult life, my bank account approached $0. I’m grateful that my school offered a $500 bridge loan that got me through the holidays, but it was on our snowball list when I graduated.  I definitely knew at that point that I didn’t want to be in that position ever again, to the extent that I could control it.

Prudential Insurance:  Chalk this up to the stupid tax.  My parents bought me a whole life policy when I was a baby. They paid the premiums and the policy was worth about $5000 when I was in high school. I wrecked my car during high school and had to get some repairs, and my mom suggested I borrow against this policy.  She paid the interest on the debt every year (about $30) until I was 26. I finally said I wanted to get that weight off my shoulders and paid that stupid debt back, cashed out the remaining policy amount and paid off some of our other debts. I’m glad to be rid of it.

Citi Private Loan: The hits keep coming. My junior year of college, I had the opportunity to study at Oxford University for 4 weeks during the summer. Of course my family couldn’t pay for this, so Uncle Citibank came to the rescue. It was a great study abroad program, but every month making that payment for several years so I could do a cool extracurricular was just maddening.  Thankfully we got that one eliminated.

Cars: These stories are worth a post of their own. We currently have a 2009 Ford Focus with 60k miles and a 2002 Lexus RX300 with 174k miles. We hope these cars last us until we are out of debt so we can buy our future cars in cash.

Credit card:  stupid stuff that I thought couldn’t wait, like school expenses, interview suits, a plane ticket for the holidays here and there, and suddenly we have a big credit card balance.  We’ll talk more about this as we go.

Student Loans:  Both Emily and I attended small private liberal arts schools.  She had more help from her family than I did, but we both ended up with about $15k in loans.  This May, 9 years after I graduated, I finally paid off that bachelor’s degree.

That’s the story on what we’ve paid so far! Next time we’ll get into the tsunami wall of remaining debt we have to tackle!