Hi there! To many of you reading this, you may be thinking, "What on earth did this kid do to get himself so deep in debt?!". Indeed, what *did* I do to put myself into this situation? I will be the first to admit that it was because of my own poor decisions, lack of self-control and lack of personal finance skills. Lately I have realized what a terrible mess I'm in and I have been devouring every bit of knowledge I can glean from personal finance websites and books, much like this one. It is time. It is finally time for me to realize my mistakes and learn from them. I wish I didn't have to start my life with this much debt but I guess I had to to realize the seriousness of debt.
A little background on me: I'm a college senior graduating from a very well known private art college with a degree in Computer Animation. In addition to the 4 years of loans that I needed to get to go here, I have 3 years of federal loans from my previous college. It was a period of time where I wasn't sure what I wanted to do with my life(something I'm still really trying to figure out). But the bad thing about it was, I didn't need those loans. I had enough federal grant money to put me through those 3 years without paying a cent. But I took the loans anyway because I thought it was free money. At the very least it was money that felt like it was free. I had spent that money on things like textbooks, a new computer and summer classes, but I had also spent that money on other things that I didn't need. I spent it on toys, a new digital SLR camera, games, and a slew of other things that I can't remember.
It's frightening for me to graduate during a time of recession. My school's career services department is assuring us that job opportunities are abundant. It's hard to believe that when major companies in my field are shutting their doors or leaving positions unfilled. I just need to weather this storm and hopefully in the end I will have paid off my debts and will be able to pursue my life goals.
After reading this blog and many others like it, I have realized that I need to take control of my finances. Even though I don't have a job yet, I figure I should set some goals for myself.
Here are my loans currently:
$34,500 (includes Staffords, and Perkins loans) - will be consolidated at the end of the grace period to take full advantage of the time until I need to start paying it back. Will have around a 5.6% interest rate when consolidated.
$6,000 at 7.92% fixed
$18,000 at 6.25% variable
$37,500 at 5% variable
$923 at 0% interest
The good thing is, I have no credit card debt! Yay for that!
Here's my plan for paying back the loans. I had read all about Dave Ramsey's snowball and I think it'll work for me. Funny enough, if I go with either Dave Ramsey's plan or the highest interest first plan, I'd still be paying them off in the same order! Works for me!
. I'm planning to extend the federal loan consolidation to at least 20 years so I can lower the monthly payment while I attack the private loans. My first goal however is to pay down all the interest accrued up to this current point so it won't be capitalized at the end of the grace period(which will amount to about $9k by the time I graduate).
Until I graduate though, the only thing I can do is manage my money as well as I can and hopefully sell a few of my things to help pay down my loans. (Goodbye Wii...I barely knew ye). I just hope that in the coming months, I can get a job and start living my life.
Cheers, and here's to the future. Thanks for reading