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 Post subject: ArtGal's student loan payoff journey
PostPosted: Sat Nov 02, 2013 1:35 pm 

Joined: Sat Nov 02, 2013 12:30 pm
Posts: 99
Hi everyone! I've been lurking for a few weeks, but just discovered the journal section and said to myself, 'Yep, this is for me. Time to think up a forum name!' I hope to update this journal often, branch out to other sections of the boards, and make some friends here. Please feel free to comment, otherwise I'll be sitting here talking to myself and won't make any friends! :lol: While paying off student loans is a big one for me, I'll also ramble about various other financial goals and our progress towards them.

Intro:
I am 30 and DH is 34, married for five years. No kids yet, though we both recently caught the baby fever, so we're thinking about trying soon. (Yeah, yeah, I know kids might derail our plans - we will adjust as needed).

I handle all of our finances, suggest goals, and plan how to reach them - after we have discussed and agreed on the goal. The primary reason why I handle our finances is that I LIKE it. I like making spreadsheets, budgets, and tracking progress towards goals. Especially the spreadsheets - I do love a good spreadsheet! :D

DH and I were raised in families that have different financial backgrounds, so we have different perceptions of 'normal personal finance' and our habits are influenced by our parents. My dad is a 'finance dork' (I say that lovingly, and I have a touch of it myself). He started at the bottom of the corporate ladder, went to night school when I was a kid, and worked his way up to VP now. I am SO proud of my dad and really admire him, so I've always taken his lessons to heart. He taught me to always live below my means, to never carry a balance on a credit card, that you don't need most of the stuff that people waste money on, the importance of savings, and numerous other financial lessons. While my dad makes a generous salary now and my parents are financially comfortable, I know that they achieved that by making smart financial decisions.

On the other hand, DH's parents have a serious spending problem. They are wonderful people, but they are generous far beyond what they can afford, they plan poorly, splurge without a plan to pay off the debt, and view credit cards as an extension of their income rather than a tool to earn rewards and protect your purchases. DH and I met in college, so I have known his parents for 10 years or so, and in that time, I have seen them refinance their house three times in order to pay off credit card debt, only to max out their credit cards again in six months.

Before we got married, we had a serious talk about finances. DH knows that his parents are a bad example when it comes to finances and knows that he learned some financial weaknesses from them. We discussed our families and financial knowledge and decided that we want to follow my parents' example. I am in charge of managing finances, but we discuss everything and DH is very cooperative (though he grumbles about budgets sometimes...but I think we all do!) He has come a long way with his financial habits and I am very proud of him, though he sometimes needs reminders or needs his hand held when it comes to financial decisions. I'm sure I will talk about these challenges in future posts.

Next up: Our financial story so far


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 Post subject: Re: ArtGal's student loan payoff journey
PostPosted: Sat Nov 02, 2013 1:47 pm 

Joined: Sat Nov 02, 2013 12:30 pm
Posts: 99
Our financial story so far: Part One, AKA The Student Loan Debt
Through a mixture of scholarships, parental contributions, my own earnings through part-time work, and going to a state school, I graduated college without any student loan debt. No credit card debt, either, since I learned good habits - though I had credit cards and used them to establish a credit history. Since I have three younger siblings, however, my parents told me that I was on my own for grad school. I'll elaborate further on my decisions in a subsequent post, but to make a long story short, I borrowed about 65K in student loans, which are a mixture of private and federal loans. Looking at the interest rates that some people pay on private student loans, I did really well - the vast majority of my loans are well under 5%, though I have one small loan at 7.38%. My loans went into repayment in late 2007 and I have never missed a payment or deferred, and have always paid a little more than the minimum.

DH went to school part time while working and earned his Associate's degree at 24 without any student loans. He had about 5K in credit card debt, due to a poor financial decision (refinanced a car loan at a lower amount and put the rest on a credit card) and general overspending. After finishing at the community college, he decided that it was time to get serious about finishing his education. He (probably wisely) decided that he would be most successful if he picked a school far away from various distractions and focused on school. In terms of his education, this plan was successful and he did SO WELL in school (very proud of him!), but he borrowed A LOT. I'm not sure of the original balances on his loans off the top of my head, but it was comparable to what I borrowed or a bit more, also a mixture of private and federal loans. He also did pretty well with interest rates - all under 6%. He still had about the same amount of credit card debt, though he paid at least the minimum every month.

Next up: Part Two, AKA The Broke Times


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 Post subject: Re: ArtGal's student loan payoff journey
PostPosted: Sat Nov 02, 2013 1:54 pm 

Joined: Sat Nov 02, 2013 12:30 pm
Posts: 99
Part Two, AKA The Broke Times
We finished school within a year of one another and decided it was time to think about getting married. Fast forward through a year of trying to find 'grown-up jobs', and by the time we got married, we each had a job that had growth potential. I had managed to save some money while my student loans were in their grace period, but when they went into repayment, my budget was tight. DH had deferred his loans for a year, as it took him longer to find a job than he expected. When we got married and combined our finances, we could pay everything, but the budget was VERY tight. He still had the balances on his credit cards, since we didn't have any budget wiggle room to pay them off. No credit card debt on my end, and we paid cash for everything.

We stuck with it and about two years into our marriage, I got a promotion. There still wasn't much wiggle room in our budget, but we were able to ease up a little. I'm not talking about taking fancy vacations - I'm talking about the occasional splurge on a bottle of Two Buck Chuck, LOL! We paid what we could on the credit cards and made a small dent in the balances. Then about six months later, DH was laid off.

Next up: Part Three, AKA The REALLY Broke Times


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 Post subject: Re: ArtGal's student loan payoff journey
PostPosted: Sat Nov 02, 2013 2:11 pm 

Joined: Sat Nov 02, 2013 12:30 pm
Posts: 99
Part Three, AKA The REALLY Broke Times
Long story short, it took 15 months for him to find a new job. We had to request deferments or forbearances on all of DH's student loans and we were back to paying the minimum on the credit cards. (Incidentally, I was unable to defer my student loans during this time. I bet I could have deferred my federal loans, but it was a no-go on the private ones, which are WAY higher.)

During The REALLY Broke Times, my job moved from a location that was accessible by public transportation to one that is not, so we had to buy a car. We chose to lease a new vehicle rather than buying an older car because an unexpected repair bill would have devastated our budget at the time, and knowing our monthly expenses was really important. (I'm sure some folks will disagree, but I still think it was the right decision for us at the time).

Between my salary and his unemployment benefits, we could pay our bills and living expenses, but the budget was very tight and any unexpected expense would throw it off. Over the course of the 15 months, those unexpected expenses ate up our small savings and we had to put a few things on he the credit cards, which drove the balance back up to where it was to start. And we borrowed a little from my parents.

Next up: Part Four, AKA Sweet Relief


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 Post subject: Re: ArtGal's student loan payoff journey
PostPosted: Sat Nov 02, 2013 2:21 pm 

Joined: Tue Oct 01, 2013 11:54 am
Posts: 56
Welcome! :D

I'll be reading. Good luck with your debt!


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 Post subject: Re: ArtGal's student loan payoff journey
PostPosted: Sat Nov 02, 2013 2:27 pm 

Joined: Sat Nov 02, 2013 12:30 pm
Posts: 99
Part Four, AKA Sweet Relief
I got a promotion late in 2011 and DH finally received a job offer in Feb 2012. We breathed a HUGE sigh of relief! The new job came with a noteworthy increase in salary over his previous one and we were SO THANKFUL!

Our immediate financial priority was buying a second car, as his new job was located in the opposite direction from mine and also not accessible by public transportation. We bought a practical used sedan with a good warranty - DH hated the car, but it was a smart decision.

Next financial priority was to pay back my parents, which we did. After that, we got DH's student loans out of deferment because we were REALLY worried about the amount of interest that was adding up.

Next, we REALLY needed to move, as we were still living in the apartment that I had rented my first year of grad school, and while it was a good deal at first, after seven years of rent increases, we knew we could get more for our money if we shopped around. We ended up paying more for our new place, but we got a lot more for our money and we LOVE it - we would buy our current apartment in a heartbeat if it was for sale!

For the rest of the year, we saved some money and spent some money. Could we have been more frugal? Yes - but we made the right choice for us. Living so tight and the stress of unemployment had put stress on our marriage, and nurturing that is more important than loan balances or savings. We took a vacation for the first time (never took a honeymoon) and bought some furniture for our new place. Though these were both 'wants', we shopped for good deals and did not overspend.

Next up: The Year of Financial Goals


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 Post subject: Re: ArtGal's student loan payoff journey
PostPosted: Sat Nov 02, 2013 2:30 pm 

Joined: Sat Nov 02, 2013 12:30 pm
Posts: 99
klarose wrote:
Welcome! :D

I'll be reading. Good luck with your debt!


Thanks for the welcome and thanks for reading! I love the idea of a financial fitness journal! :-D


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 Post subject: Re: ArtGal's student loan payoff journey
PostPosted: Sat Nov 02, 2013 2:52 pm 

Joined: Sat Nov 02, 2013 12:30 pm
Posts: 99
2013, AKA The Year of Financial Goals
At the beginning of this year, I named 2013 as the Year of Financial Goals and set a task or goal for each month. I'll talk about the details of that in a subsequent post (because it's FUN!). In summation, though, we paid off the credit card debt that has been following DH for more than 10 years and we have built an emergency fund. I am happy with our progress this year towards the emergency fund, but I'm not fully comfortable with it yet. We also have a separate savings account separate from the emergency fund for short-term goals.

Moving forward with this journal, my short-term goals are:

1) 10K in the emergency fund for now (currently at 6K and we save $200/week towards the emergency fund right now)

2) 3K saved for vacation next June (probably a high estimate. It's a family trip - parents are paying for the rental and we have points for at least one airline ticket)

3) Pay off my first student loan - the one with the 7% interest that I mentioned above ($3770 left on it, goal is to pay it off by next June. I start this month, snowballing the amount that we had been paying on the credit cards)


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 Post subject: Re: ArtGal's student loan payoff journey
PostPosted: Sat Nov 02, 2013 4:47 pm 

Joined: Sat Nov 02, 2013 12:30 pm
Posts: 99
Longterm Goals:

1) Pay off ALL of our student loan debt

Right now, the combined balance of our student loans is 107K. The total balance on my loans is around 40K and DH's is around 67K. I am relatively pleased with the progress we've made on mine - except for one at 11K, the balance of each individual loan is less than 8K, so we'll be able to see our progress pretty quickly as we pay them off. DH has 6K split between four federal loans, so those will go pretty fast, too. His two private loans, each just under 30K, will take longer and basically the second half of the five-year plan is paying down those two loans.

I have a massive spreadsheet (it truly is a thing of beauty) that shows how we're going to snowball the student loan debt to pay it off in five years. Basically, we're taking the payments that we used to make on the credit cards and snowballing that into the first student loan, etc, etc until we're done. And the beauty of the spreadsheet is that we can easily adjust it if we want to increase payments or if life happens and we need to pay the minimum payments for a while.

I think the plan will be sustainable for five years, even with kids on the horizon. It is not so aggressive that it demands constant sacrifice - basically, we keep paying what we're paying now, just direct it differently - and we live comfortably on our current budget. If we decide to get more aggressive, we can do so.

2) Save for house downpayment

Once we hit 10K in the emergency fund, I'm going to start another account for a house downpayment and direct our monthly savings there instead. I'd ultimately like more than 10K in the emergency fund, but I also want to buy a house at some point (not to mention that we could use the tax break!)

We live in a high cost of living area and will probably be looking at houses in the 400K ballpark. (There really isn't much available lower than that unless we wanted to move WAY out from the city and have very long commutes...and we don't like that trade off. Time together and with our future kiddos is much more important!) I'd like to buy in 2-3 years, but we'll see. I don't think we'll be able to save a 20% downpayment while paying off the student loans, but we'll either put down what we can or reevaluate the timing.

3) Start maxing out our 401K's

We've always contributed enough to get the company max, but as we pay off the student loans, we'd like to increase our contributions. I think I'm in good shape for retirement savings, especially since my employer provides a separate retirement annuity. (I don't like to count on that, though, because I'm still young and who knows where my career will take me - but my plan is to stay where I am) DH contributes a few percentage points above what is required to get the match, as he needs to catch up from the 15 months he didn't work. Since we're comfortable with our current budget, future pay increases will either be directed towards student loans or retirement savings.


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 Post subject: Re: ArtGal's student loan payoff journey
PostPosted: Sun Nov 03, 2013 6:22 am 

Joined: Sat Nov 02, 2013 12:30 pm
Posts: 99
2013 Overview
Yesterday I posted my introduction, financial foundation, the student loan debt, and some of the roadblocks that DH and I have encountered so far on this journey. I also mentioned that 2013 was my Year of Financial Goals - so today I'm going to talk about the goals that we (Ok, it was mostly me - but with DH's approval) set for us over the course of the year and the progress that we've made towards them.

Overall, I'm happy with the progress that we've made this year - but I wish it was more. We encountered some setbacks this year that derailed some of our goals - namely, the sequester. Did I mention that I'm a government employee? Aside from the recent government shutdown, which we received backpay for, my colleagues and I were furloughed earlier this year due to the sequester. While the furlough didn't last as long as we originally anticipated, we still lost 20% of our pay for six weeks. And while 20% might seem minor, my furlough paychecks were rather depressing. :cry:

The furlough derailed our savings goals for a time - more than the six weeks it lasted, as it took a little while to recover from as well. We also switched banks this year, a process that took a month to complete, and I gave up on trying to save that month because the banking transition was confusing enough without trying to deal with automatic transfers. We used some money from our emergency fund on travel, as two family members were seriously ill this year (doing much better now) and my godfather passed away (he was 94 and lived a great life). We also ended up loaning money to another family member who had a rather desperate situation (it would be nice if he paid us back, but we're not holding our breath). So despite the setbacks this year, I think we've done Ok...and we still have Nov and Dec!

Next Up: Jan of The Year of Financial Goals


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 Post subject: Re: ArtGal's student loan payoff journey
PostPosted: Sun Nov 03, 2013 6:24 am 

Joined: Mon Feb 04, 2008 7:35 am
Posts: 1148
Location: Maryland
Just wanted to say hi, and that I'm reading. I'm almost done!
Welcome!


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 Post subject: Re: ArtGal's student loan payoff journey
PostPosted: Sun Nov 03, 2013 6:58 am 

Joined: Sat Nov 02, 2013 12:30 pm
Posts: 99
January 2013: AKA Better Budget Time!
So, the way I envisioned The Year of Financial Goals, each month had a 'big' task (usually a savings goal or a debt repayment goal) and a 'small' task (usually something related to organizing our finances).

I should mention that I follow national politics pretty closely and I could be labeled a 'federal budget dork.' I'm always up to date on budget politics, I read the laws, and I usually have a pretty clear idea of how the latest drama will affect me as a government employee. So after the past few years, I thought it was pretty likely that the sequester would go into effect in March (after it was pushed back from Jan) and with the severe budget cuts that the sequester dictated, I expected a furlough. By law, an administrative furlough of federal employees triggers a more complex situation if it lasts longer than 22 days, so I expected a 22-day furlough. As an administrative furlough requires 30 days notice and a response period, the earliest it could begin would be late April or early May - which meant that if we were going to have to take 22 furlough days before the end of the fiscal year (end of Sept), it was going to be one day a week, or a 20% pay cut. We had already been saving because I had been anticipating the sequester, but January's 'big goal' was to save 1K, which we did.

My 'small goal' for Jan was to find a budgeting app or software that I liked. Prior to this, we had a budget that I kept track of on - you guessed it, SPREADSHEETS! While I love spreadsheets, I don't always have time to keep them updated on a daily basis. I knew that our spending was in the right ballpark and sometimes I tracked it all for a few weeks or a month, but I just couldn't keep up with manually entering every transaction - so it was time to find a budging solution that worked better for busy people. I initially shied away from Mint because I was worried about the security aspect of having all of your accounts linked - but after trying a couple other budgeting tools and having to manually enter transactions, I realized that this wasn't any better than my spreadsheets and Mint was EXACTLY what I was looking for.

I love Mint. The only thing I don't like about it is that sometimes your accounts have trouble updating and you have to re-enter your account info - that is pretty annoying. But in general, Mint works really well for us and I love being able to see all our accounts on one page without me having to log in to multiple online accounts, get the balances, and update them on a spreadsheet. I like the features that are available and wish there were more. I can't articulate what else I want, but I wish there were more features to play with! :D

So all in all, we were successful in both our large and small goal for Jan!

Next up: Feb, AKA We Owe WHAT in Taxes?


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 Post subject: Re: ArtGal's student loan payoff journey
PostPosted: Sun Nov 03, 2013 7:01 am 

Joined: Sat Nov 02, 2013 12:30 pm
Posts: 99
peachy wrote:
Just wanted to say hi, and that I'm reading. I'm almost done!
Welcome!

Hi Peachy! Thanks for reading and thanks for the welcome! I hope to keep my journal going regularly. Having fun with it so far!


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 Post subject: Re: ArtGal's student loan payoff journey
PostPosted: Sun Nov 03, 2013 2:19 pm 

Joined: Sat Nov 02, 2013 12:30 pm
Posts: 99
Feb 2013, AKA We Owe WHAT in Taxes?
Well, the title pretty much says it all! We always do our own taxes, since we have a simple tax return. Prior to 2012, our last couple of tax returns were unusual because of unemployment benefits and just having one income - but we had our withholding worked out so that we broke even, which is ideal. Our taxes were different in 2012 because DH had started his new job at the beginning of the year and I had been promoted, so between these two factors, our income was much higher than it had been the previous two years, and significantly higher than it was before DH's layoff when we were both making lower salaries. We thought we had estimated our tax liability correctly, but apparently not - we did our taxes and owed 4K.

So the 'big goal' for Feb and March was to save as much as we could, so we didn't have to touch the emergency fund. Saving 4K in two months was a little ambitious, but we managed to save 3K and took the rest from the emergency fund. On a related note, the 'small goal' for the month was to fix our tax withholding - so we estimated our 2013 tax liability and adjusted our withholding accordingly.

Next Up: March 2013, AKA Time for a Savings Spreadsheet


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 Post subject: Re: ArtGal's student loan payoff journey
PostPosted: Sun Nov 03, 2013 2:35 pm 

Joined: Sat Nov 02, 2013 12:30 pm
Posts: 99
March 2013, AKA Time for a Savings Spreadsheet!
Carrying over from Feb, our 'big goal' for March was to save as much as possible to pay our taxes. I knew we'd probably have to use some money from the emergency fund as well, and our emergency fund was pretty small at that point - so it was time to make a savings plan, which means SPREADSHEETS!

Nah, just kidding. I made spreadsheets, but ended up with a simple plan that didn't need one. We decided to save $200/week through automatic transfers. It worked beautifully and we didn't miss the money. After a couple of months, we increased it to $250/week.

Next up: April 2013, AKA Debt Repayment Spreadsheet Month!


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