Student Loan Update #6 | Journey to Saving

Student Loan Update #6 (and a confession)

Student Loan Update #6 | Journey to SavingI am way overdue on updating you all on our student loan situation! It’s actually been over a year since I posted about them in any detail. I can’t believe that!

It’s for good reason (mostly), as I haven’t made any substantial progress. I always find it much more fun to look at the updates of those that can put thousands of dollars toward their debt. That’s just not us.

If you’ve seen my monthly budgets, then you’ll know we’ve been chugging along, paying the budgeted amount, and maybe a little more.

Why the lack of focus on our loans?

I mentioned in my affordable dream wedding post that we have a few different priorities right now. Well, back then, a wedding wasn’t one of them! To some extent, it still isn’t, but more on that in a later post.

Both of our cars are getting up there in mileage and years (2001 & 2002), and R has declared that if anything else goes wrong with his car, he is not fixing it. He doesn’t want to put more money into it.

Ultimately, it’s his car and his decision, though I’ve said if the repair is minor (less than $100), he should consider going through with it. Sadly, he’s just had a bad history/experience with this car, and he’s looking forward to getting rid of it.

I’m not at that point with my car, and I’m hoping very much to get a few more years out of it, but there’s no telling what will happen. R’s car is over 100k miles, and mine is creeping up there at 93k. I’m worried that something major will break, costing me thousands, and at that point, I’m not sure it’s worth it.

We both agree that we would feel a lot better if we at least had one super reliable car between the two of us. I’ve also mentioned that we’re not against becoming a one-car household, simply because if I can work from home, there’s no reason we can’t work around that.

In short, this is very much something we’ve been thinking about, and I want to keep some money aside in case we do need to make a new purchase next year.

Student Loan Update #6

Student Loan Update #6 | Journey to SavingI pay our loans around the end of the month, and this time, I decided to do a little poking around. I haven’t in a while, as things have been on auto-pilot. What I really wanted to do was see how much interest was killing us.

As you can see, between us, we have 4 loans at 6.8%. Ouch!

As our payments just went through, I actually noticed R’s balance is sitting at $16,900 now! I always love getting down to the next thousand. It’s a little motivating.

Anyway, I think we all need a refresher from the last time I updated, as many of you weren’t even reading yet!

The two loans at the bottom in purple are actually one loan, it’s just that one is unsubsidized and one is subsidized. I can only pay toward it as a whole, which sucks. R can pay each of his individually as they’re in “groups.”

L1 was part of the same setup, but I paid off the unsubsidized loan portion a few months ago. That loan was also at 6.8%, which is why I chose to go after that set first.

However, I’m rethinking my strategy, and want to target L2&L3. It now has a much higher balance, and I’m paying much more in interest. To give you an idea – I usually pay $80 toward L1, and around $9 goes toward interest. That $136 I pay toward L2&L3? Around $47 in interest.

Because I paid so much extra toward L1 when I was originally going after it, I’m paid ahead by a few years. I was thinking of ignoring it, and paying the full $220 toward L2&L3.

Confession time

Now, I realize that letting the interest accrue is not ideal (and I’ll probably pay something toward it to cover it). This whole situation really isn’t ideal.

To tell you the truth, I haven’t been posting updates on my student loans because I’ve been paying the minimum, and I sort of feel ashamed about it.

When I made the decision to try freelancing, I went into “ultimate saving mode.” Every dollar spent counted more than usual, as I wasn’t bringing in much to start. We’ve mostly been living off of R’s income and our savings.

Again, not ideal, but I made this decision and I knew what would come with it, so I don’t want to complain. I realize we are very fortunate that we had the foresight to save so much, and that I don’t have to worry about income for a bit.

Thankfully, things are finally starting to look up, and I am hoping by next year, we can ramp up payments. November and December look like they’re going to be a little too expensive to start right away.

However… being that I saved so diligently anticipating our move, and being that we haven’t had to dip into our savings as much as I thought, I am very much considering plopping at least $2,000 down toward the loans.

Originally, I was going to use this toward my loans, as the bulk of our savings came from my bank account. But I gave up that entitlement when we got a joint account.

Now that R and I are engaged, I feel like we need to be in this together. We had briefly discussed that we would probably continue to pay our loans separately even when we got engaged, but since we’ve merged bank accounts, that doesn’t feel right to me.

Plus, wiping out one of those pesky 6.8% loans R has would be nice. We have just over $28k in student loans together, and that number is unnerving. It was a lot easier to stomach my $11k balance alone, but I think those days are gone.

What do you think we should do? How do you approach student loan debt in your relationship? 

Are Student Loans Affecting Your Plans?

On Monday, I shared with you all that R and I decided to open a joint checking account together, despite the fact that we’re neither married nor engaged. I completely realize that it’s not a choice everyone would make, but we have been technically sharing money and resources since the beginning, so it felt like it was the natural progression for our relationship.

Today, I am going to share with you why we haven’t gone down the marriage path yet, and the outline we have for getting there. If you’ve been dealing with student loans affecting your plans as well, I’m sure you’ll relate.

student loans affecting your plans

Student loans are affecting our plans

I don’t like to type that out. I really don’t like to admit it. I have read several articles from different viewpoints, ranging from those that claim student loans are holding millennials back, to other personal blogs, where authors state that they’re not going to be held back by these chains.

When I broached the topic of marriage with R, he had some uncertainty about being able to afford everything. After talking a bit more, we both reached the conclusion that we would ideally like to start our marriage on a clean slate.

Our hope of going into marriage debt free

Being debt free is important to us. Both of us grew up with our parents in debt our entire lives, and money issues were never fun to contend with. R’s minimum payment is around $100 more than mine, and he hates seeing how much he has to part with every month.

R was just breaking even most months. Not being able to save up money put a real damper on things. He was frustrated with the amount of expenses he kept incurring. The reality is, we can’t afford a wedding and pay extra. It’s much easier to focus on annihilating your debt than to worry about a bunch of other things, too.

Neither of us view marriage as a big deal, so while we aren’t in any particular rush, no one in our family is getting younger. I would really love it if those closest to me could celebrate with us.

Saving and debt could continue

Our expenses saw a pretty large decrease from moving, but R is shifting his focus to saving for a car. We did some number crunching, and ideally, R will be able to save around $500/month right now. If he does, he will have $3,500 by the end of the year. He is aiming to get a used car at some point next year, and would like $4,000 to put down on it. He’ll finance the rest.

Hm, but won’t he then have both a student loan payment and a car payment? That’s pushing us further away from our goals of being debt free. As much as I’m not completely happy about it, a reliable car is necessary, and we haven’t been able to find a good deal for ~$4k. He would really like a 2005ish with less than 100k miles on it. We’ll probably be looking anywhere from $6k-$8k.

After that, he’ll shift his focus back to making extra payments on the student loans (we’re assuming the interest rate will be higher), hopefully paying them off within three years.

What’s the plan?

Three years seems like such a long time! I have to remind myself that we’re not accounting for quarterly bonuses and tax returns, which are always good for making large dents. That’s also plenty of time to ensure raises

R is focusing on making more money as we’ve really done almost everything we can to cut our expenses down. R has been working overtime, but I don’t want to count on that, so we were conservative in our monthly savings estimate. If I can find more clients to write for, the possibilities are endless, and then we can also dodge buying a car as it would allow us to be a one-car household.

What about owning a home? Not in our plans regardless of our debt situation. We really want to explore more states and towns before settling down. Deciding on a place to live for five or more years seems a bit daunting!

Travel? Not off the table completely. I’m still debating on whether FinCon is in our plans yet. R and I have never taken an actual vacation that was longer than a weekend, and he does have a week to use. I do keep in mind that everything we purchase sets us further back, so it’s a bit hard to splurge. If anything, we’ll stay with my parents for a week-long beach vacation.

My vague plan for a wedding includes spending $5,000 and having around 30 guests, which isn’t something we have to kill ourselves saving for. If we feel like we shouldn’t wait, other sacrifices will have to made. We might not be able to start married life off being debt free, but at least we know we’re on our way there. After our student loans and possible car, we have no plans for debt!

So while student loans are affecting our plans, we are mostly okay with it. As we all know, life isn’t about rushing through everything, it’s about taking things one step at a time and appreciating the journey (after all, this is my “journey to saving”!). My cousins didn’t get married until they were around 26/27, and that’s still a few years away for us. I also told R I wouldn’t mind a longer engagement =).

I think I get a little jealous when I see my friends from college getting engaged, and heck, even seeing some of you out there that are my age that are already married with a house. Everyone takes a different path in life, though, and this is mine.

Are student loans affecting your plans, or have you ignored them and gone forward with marriage, home ownership and travel? Tell us why!

financial history

My Financial History

I thought it would be a fun idea to give you guys a little background into what my financial history looks like. It’s interesting to read the transformation other bloggers have undergone – their stories of getting out of debt, becoming savers instead of spenders, and the lessons they learned along the way.

Sadly, I don’t have many tales to tell, mostly because I’m still young and in my first “phase” of my journey: paying off my student loans. However, I did throw in some background from my early years.

I think it would be pretty neat if other bloggers shared their financial histories, especially those that are older and wiser than I =). Feel free to give a little synopsis of your financial history in the comments!

financial history

Pre-working years

I’m talking about age 9. We had just moved into a new house when my dad got the bad news: he was being laid off. I was too young to fully comprehend what this would mean for my family. My parents spoke in hushed tones, attempting to shield me from what would become our reality. I caught wind of being evicted, and I was instantly afraid of what was going to happen.

Luckily, my dad got a part-time job overnight so that he could still search for jobs, and it wasn’t too long before he was employed again. My grandma was also a saving grace during this time, as if we so much as casually mentioned anything we wanted or needed, she would show up with it the next day.

Money troubles drifted away, but you can bet I learned the value of a dollar during this early stage of my life. Kids are impressionable, and I remember all the times my parents had to say no because of money constraints. It wasn’t a happy time, and I never wanted to see us return there.

Seventeen

seventeen I got my first part-time job at age 17, once I obtained my permit. It was at a toy store a mere five minutes from my house, which was great. I was only hired on as seasonal help, but my manager liked me so much she invited me to stay. I got slightly addicted to making money and enthusiastically agreed. I actually worked the night of my prom as I figured it was better to be making money than spending it on silly things such as a limo and dress (I wasn’t a fan of school dances).

I was thrilled to be earning money, enough to finally afford to buy my parent’s proper gifts for Christmas. I went all out, getting my dad an Xbox (which has been passed down to me, since he decided he likes PC games more), and getting my mom whatever she said she needed, including a bunch of candles. I felt more excited for Christmas than ever, because I could finally contribute to the nicely wrapped packages under the tree.

Eighteen

I graduated high school and continued on with my education by attending community college. This enabled me to work more hours at my toy store job, as my schedule was flexible. I actually looked forward to going to work after class, it was a great time! I kept saving, as I had minimal expenses. I was very fortunate in that my parent’s covered my car insurance, and as a graduation present, they had gifted me a cell phone. I just had to pay for gas.

eighteenI would occasionally go out with friends and coworkers, but always kept the bill small. I happened to meet my ex during this time, who was four years older, and developed a bit of job envy. He had a full-time career going for himself, and he didn’t have to deal with college, but he was living paycheck to paycheck. I had seen my parents do the same, and I just didn’t get it.

Considering he was still earning a lot more than me (but probably saving less), he paid for a majority of our dates, or we split things.

Eighteen was also when I applied for my first credit card. It had a laughable limit of $500, but I was responsible with it.

The toy store closed down in early 2009, and part-time jobs from here were tumultuous. I got another job within a week paying $9/hr as a file clerk, but was then promoted to front desk for $10/hr. I left there six months later due to surgery.

Nineteen to Twenty-one

nineteenAfter I recovered, I went looking for yet another job. I felt lazy being at home aside from attending class. I worked in a grocery store as a cashier for a bit; I think it paid around $8.25/hr. However, they had an uncanny ability to schedule me for times I said I was unavailable (in class), and it became too much of a hassle. I was looking to increase my course load anyway, and decided it would be best to concentrate on that.

At this point, I believe I had around $3,500 saved up, so I didn’t feel absolutely horrible for not having a job. I don’t think I realized how much student loan debt I would graduate with, though!

Twenty-two +

I graduated from college in December 2011 with my bachelor’s, and got to looking for my first full-time job in January. I was worried, as R had been looking for a job for six months (he graduated a semester before me) and had found nothing. Somehow, I managed to go on three interviews and get three offers. Only one was an actual full-time job, though, so I took that. $12/hr seemed pretty amazing to me.

I only stayed there six months – the job I applied for didn’t actually exist, and I wasn’t enjoying the duties I had been assigned (inside sales). Unfortunately, the job I had lined up didn’t work out, either, because no one had time to train me.

twentiesI faced a small period of unemployment, by choice. I was really bummed that nothing had worked out thus far. I hadn’t expected it to be all butterflies and roses, and at least I knew what I didn’t want in a company! The only thing I can say is that I had saved enough money from my first job to make this possible. Even though I still lived with my parents, not having any income was scary. Of course, this happened to coincide perfectly with my grace period expiring for my student loans, so I had those to pay as well.

Thankfully I found a great job after a month, and within three months I was promoted. That promotion came with a raise that allowed me to put extra toward my student loans. It also enabled me to continue saving. The downside was that it came with a lot of stress, which I’ve already spoken about here, so I made the difficult decision to leave last fall.

Current

Since then, I’ve taken a pay cut, but my stress levels have decreased dramatically. Just the other day, R remarked how it’s nice that I no longer come home ranting about how bad work was. I agree! Sometimes, the money isn’t worth it, but I am glad I was able to put away so much during the time I was there. Having that savings buffer allowed me to explore other options. Money gives you choices, and that’s a very valuable thing.

What does your financial history consist of? Are there moments of regret, or periods you’re proud of?