July 2020: The Starting Point

Let’s get this out the way:

I type in Times New Roman 16pt font because I get dizzy reading small print. My professors can’t force me to use 12pt font size now. I’m sticking it to the man.  

There.

So now I have reached the part of the blog in which I actually discuss the subject at hand --- my stupid student loan debt.

I have a passion for self-sabotaging.

I want to interject that I have a five-figure debt with a combined six- figure income. I understand this blog is not going to be relevant to many. My circumstance is different, and my journey may not be relatable. I understand that, and I do not want to lead anyone to believing I am paying off $64,000 of debt with a $10,000 income within 2 months.

So...

Starting this process seemed a lot less daunting than it has turned out to be. Charting and graphing the numbers made me feel a bit more in control of the issue, and having the guts to even look at the student loan data base was a huge feat. The final product was a terrifying spreadsheet of numbers that screamed, “Wow! You owe a lot of money!”. It is not discouraging, but it is not something I can take lightly. At all.

The issue with my debt is that I’ve been in school since 2009.

This is a picture of a mess. This is my life.
Photo by Ricardo Viana on Unsplash

That’s 11 years. 

11 years of stupidly pulling out student loans I didn’t need half the time. Thanks to unsubsidized loans, I have a little under $3000 tied up in interest. I am grateful that it is not more. I take responsibility for my loans now, but student loans are predatory, and the college financial aid offices are to blame for a lot of this. Not all, but a lot for sure.

But I digress.

How Much Debt Do I Have?

As of today, I have $64,184 in student loan debt, including the outstanding interest accrued with my unsubsidized loans. Some of these loans date back to my community college enrollment in 2010, and my most recent stemmed from completing my masters this year. Fedloan Servicing is anticipating my payments, but one of my loans was dispersed through American Education Services. I was under the impression that all my loans were federal loans. Well guess what? 

Surprise! I have a single private loan! 

My Federal Family Education Loan (FFEL) was dispersed in 2010. This program ended in 2010, but luckily, they were subsidized through the government (I only owe $19.11 in interest).

The best part?

This little bugger was NOT in forbearance due to the pandemic. Three days passed by my first due date before I had even noticed I needed to make a payment. This missed information was caused by: 

Using an old email address: I switched over to Gmail way after I signed off for my first student loan. Please check on your AOL and YAHOO accounts. They are not OK.

Irresponsibility: I should have looked into this better. This is my fault.  

Lack of understanding: I was honestly oblivious to the idea that I had a private loan. American Education Services just sounds so…federal-ish and non-private-y.

So How Do I Feel About This?

I felt like this was something that I could power through, but I now see this is going to be a nightmare.

When I first started this process I felt a little better about going into it, but looking at these numbers and the interest that has accumulated on my debt over the past few years that I've been in school, I'm a little more worried. I'm not discouraged , but I believe that I'm going to have to take this more seriously than I anticipated.

I’m going to sound stupid, but I’ll be honest.

I'm scared of budgeting.

I know, it sounds childish, but I've never been in a predicament where I have seriously stuck to a budget that I've created. I've always let money come to me and go just as quickly without any accountability. Breaking the habits of spending carelessly will be one of the most driving factors in how quickly I can dismantle this mess I’ve made. Creating a budget will most likely be something I also discuss in future blogs, and how I stick to my plans. I am looking forward to sitting down with my money and making it count.

I remember watching a documentary about John D. Rockefeller. Even as a teen, the man really accounted for every penny.

I can barely account for $100 (or $3.70 in 1910, back when Rockefeller was King Oil Man).

On a side note, I feel like I would be doing a disservice to soon-to-be graduates if I chose to avoid discussing some of the predatory ways that student loans can wreak havoc in their future. You know…all the things I wish someone would have told me when I signed my first promissory note.

My “Method”

I am undecided on how I will tackle this debt so far. In the near future I am hoping to solidify a plan of action.

I. Am. Being. Transparent.

I will say this: I have some ideas of effective ways to figure this mess out.    

1. I have decided on a repayment plan. Once the loans are taken out of forbearance, which has been implemented by the CARES Act, I will assign a repayment plan to my Fedloan…loans. I have decided to use the Extended Graduate Repayment Method. 

WHY? WHY WOULD YOU TAKE 25 YEARS TO PAY THESE LOANS?

There is a method to my madness. By taking the lowest possible payment plan, I am able to delegate the majority of my money to the loans of my preference. Paying $126 for the initial repayment period frees up hundreds of dollars to use towards loans with higher interest rates. None of my loans will be in default, even with these ridiculously small payments.

2. I am torn between the avalanche and snowball method.

•  The snowball method is useful for those seeking immediate satisfaction in the debt-killing process. It involves paying debt from the lowest amount to the highest, even if the interest rate is out of control on the highest debt. This method is heavily correlated with Dave Ramsey plans.

• The avalanche method is used by those who have their emotions under control (no attack on people using the snowball method!). Those using this method are willing to forgo seeing the amount of separate debt accounts fall off, instead attacking loans with the highest interest rates first. It saves more money in the long run. 

I can use the psychological boost, but I know its not the “logical” way. I am thinking of some form of a hybrid method that will give me the best of both worlds. To be continued…

Crazy Debt Chart Tracker Lady

I have created two separate Excel spreadsheets to obsess over every time I pay the bare minimum on my loans.

$5 paid towards this $15,000 loan? I’m tracking that baby! On the sheet you go!

I really like creating these sheets. It actually puts everything into perspective for me, and I really like the Excel line graph that tracks my progress. I enjoy the readable format. I plan to update these spreadsheets on the 1st of every month.

So here are my starting charts:

This chart shows me how many loans I have and who I owe the debt to. I've created columns to show:

•      The initial amount of the loan
•     The current principle on the loan
•     The outstanding interest
•     The interest rate.

I have included hyperlinks to the two sites I use to pay my loans. Genius, I know.

I have also created three columns calculating (approximately!) the minimal payment needed to pay off these loans in either two, ten or twenty-five years.

And now to present my favorite spreadsheet!

Which evolves into...

My handy-dandy line graph! (*Blues Clues nostalgia triggered!*)

This chart tracks exactly how much money I owe on each loan by month and year. This information is thrown into this nice line graph.  

What Are My Goals For Next Month?

In August, I need to have a solid plan under my belt. I'm hoping to start my job within the next few weeks in order to establish a more accurate budget with my husband.

As of now, because of this pandemic, we have been hoarding money.

In the past, we were in situations where we could not afford a $300 emergency because we were (are) idiots with money. It has gotten much better, but we still are lacking so much discipline.

We are homeowners, and when things go wrong, we are responsible for taking care of them. We owe $109,000 on our mortgage (we bought the house 4 years ago because it was much cheaper than renting in our hometown).  We are so fortunate to have minimal issues calling for repairs, and since we’ve been hoarding our money, there has been no problem we could not afford to fix immediately with cash. Our savings account is around $8,000. We plan to keep it that way during my loan repayment period.  

We are paying down the last bit of our credit card debt, which topped out at almost $30,000 last year. As of today, we owe approximately $500.

I'm hoping for next month to be more organized and goal oriented.

I am so over duping myself out of a good life.