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Posts tagged with: IBR

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!!!


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