Saturday, November 29, 2014

What I'm doing

My plan to pay my loans is pretty aggressive. I really hate being saddled with debt, so although some internet sources would suggest that investing is better (I might earn more investing than I'll lose in interest), I am fully committing to paying my loans as quickly as possible before I focus on anything else. The only exception to that is contributing to my employer's 403(b) plan at 3% of my pre-tax salary. I'm not eligible for a match yet, but I like that I've started a very very modest retirement account, and in July when I become eligible for a match I won't have to increase my contribution at all.

In order to be so aggressive with my payments, I've done a few key things over the last few months, and I'll do a few more to both cut expenses and earn additional income:

  • I picked up a second job. On the weekends, I work between 5 and 13 hours at the same part time job I had in college. This means I'm earning a bit, and it also keeps me from spending much on the weekends; a win-win. The job is low stress, at an organization I'm happy to give my time to, and comes with a pretty great perk - free theatre tickets at various points throughout the year!
  • I maximize cash back deals as much as possible, without spending money I wouldn't otherwise. This means that groceries always go on the card that gets me 6%, and when I can get 10% rewards at Starbucks, I reload my card to last me several months. I also pay in full every month, so this is basically free money.
  • I pack my lunch every day. I also pack snacks, and for the days when I know I'll need it (workout days, or when I'm going out after work) I'll pack a second breakfast and/or dinner. It means a lot of Tupperware to clean, but it's also hundreds of dollars a month I'm saving, not to mention the health benefits.
  • Almost every bit of extra money goes to loans. I try to save $50-100 per month for upcoming travel expenses, as I have several small trips planned for the summer and I want to be able to pay for airfare without cutting back on my loan payments. Other than that, any extra money leftover or any gifts, rewards, or unexpected cash goes to loans.

Right now, my boyfriend (and roommate) isn't earning much, so I'm covering the bulk of our living expenses. Next year (academic year), that will hopefully change, and he will take on most of our financial obligations for a year. We haven't figured out exactly what that split will look like, but I anticipate that he'll at least be covering half the rent. That alone will make a huge difference in what I'm paying toward loans, but for now I can't count on anything more than that. My goal of paying my loans before I'm 27 is with that in mind, but I'm stubborn enough that, should something in our relationship or individual job statuses change, I will do everything in my power to stick to my goal.

I'll write more about my budget at a later date, but, spoiler alert, I try to keep my expenses as low as possible.

Thursday, November 20, 2014

An introduction

Hi, I'm Becca, and I have about $30k in student loans.

I graduated from a private liberal arts college about two and a half years ago, and since then, I have been slowly tackling my loans. I'm lucky in that I have been employed since graduation, and for the past year and a half, have been able to pay more than the minimum on my federal loans. Still, I want to do more.

My goal is to pay off all of my remaining debt in the next 2.5 years - before I turn 27.

I was fortunate in my college career to receive help from my parents, along with some major scholarships, so I graduated far less in debt than I might have otherwise. I was also very aware of what I was taking on with each of my loans - I knew that I would have to pay them back, and I believed that my education would be worth it. I still believe that! Regardless, when I graduated, my loan situation looked something like this:

  • Subsidized Stafford loans (consolidated): $13,505.31 at 5.625% interest accrued daily
  • Unsubsidized Stafford loans (consolidated): $13,060.36 at 5.625% interest accrued daily
  • Loan from family: $12,193.02 at 4% interest accrued monthly
  • TOTAL DEBT: $38,758.69

Now, my loans look more like this:
  • Subsidized Stafford loans (consolidated): $10,729.36
  • Unsubsidized Stafford loans (consolidated): $10,375.67
  • Loan from family: $9830.56
  • TOTAL DEBT: $30,935.59
I have paid a total of $9431.53 toward my loans, and the total owed has decreased by $7832.10.

In the past few months, I have gotten much more serious about paying as much and as quickly as possible. I've gone from making an extra payment of $100 per month to making an extra payment of $530 per month on my federal loans. In total, I pay close to $870 per month toward my loans, and I would like to increase that number.

In the next few days, I'll write more about my plan, what I've done so far, and what's been working, but for now, it feels good to put this out there: by May of 2017, I hope to be debt-free.