I’d love to assassinate my student debts. Or really just obliterate them.
And that is what I have been doing in the last few years. I now have two debts of about 20k euro’s (25k dollars) making a total of 40k euros left ($50k). Plan was that this should be about 15k less this year. But last year I knowingly quit my job and was unemployed for three months, went on holiday during that time. (To keep my sanity, I do not know how people get by being unemployed, I went crazy after a month already, I love to work.) Both the unemployment and holiday cost money (in total about 5k euro for the three months) but this was calculated, budgeted and decided to be for the best in the long run. I was very unhappy in my previous job and now have a nicer one that pays better as well.
Unfortunately when I came back from holiday there was a unpleasant letter from the tax administration about my 2008 taxes. Apparently I had to pay back 5000 euri. (1 euro, 2 euri as its lovingly called here) That really hit me hard, as it went right back into my student loan (which is an open line of credit). Bringing me back to a total of 0 reduction of debt last year. Now I’m fighting with the tax administration to get the reduction that was cancelled for 2007 (which applied to 2008) back for 2011 (since 2008 is now final). The good thing is as I paid more taxes in 2011 (52%) I can get a lot more reduction (= money back) than the 5k I had to pay last year by their mistake. The key word being IF. If they get everything sorted out in time. If so, that’d should be about 9k euri in tax returns which goes nicely towards my student loans.
Whether or not I get the taxbreak I’ll need to pay back more. Half or my loan is with the government. Needs to be paid back in 15 years (13 left) and has very lenient conditions, meaning if I’m unemployed, I can stop paying back temporarily, I can have the amount altered, and if I would get disabled it might be cancelled out completely. Also, it’s not inheritable, so if something would happen to me it won’t inconvenience my family. So, this loan is currently last on my list, even though the interest is slightly higher.
The first (and only other) loan was a bank loan but since recently is a loan I have with my boyfriend for 25k dollars. I pay him a higher interest than he would get otherwise, and I pay a lower interest than I would pay otherwise. So it’s a win-win. We’ve agreed on an amount of nothing per month, so I can build up an emergency fund as well. At the same time it’s a clear intention to pay back in a reasonable time. To ensure there’s no bad feelings about this I keep open my line of credit that I can use at any time to pay him back if there’s any problems. I wrote up a nice contract which we got reviewed by a friend. It helps that we’re both very practical about money. We signed a prenuptial to take care of this type of stuff. I don’t want him to pay for my study. It is an investment choice I made, and I only reap the benefits of it. So it makes no sense for him to need to pay for it.
---Hmm, it feel strangely liberating to just type it all out, making the story a bit longer than I intended
Basically I have no short term problems with my debt, I can easily make the minimum payments required. But I hate the psychological burden it brings. I want to feel free to spend some money on a holiday. Even though I know I’ve saved for it, it feels like I shouldn’t have nice things while still having this debt.
Steps taken to increase payments:
Setup automatic payments. All fixed costs, savings and debt payments are withdrawn from my account the day I get paid. Also, a fixed amount for variable costs like food and such (which is quite a fixed number). Which makes sure I have a bit of pocket money left, but don’t have much money on hand to spend.
Handed in my company car. (Which is a very common things here to have.) Instead of driving the new company car with gas paid for by the company I drive my very old car with loads of dents. This means I don’t pay income tax over 25% of the value of a new car every year. And instead I get a large increase in wages. This results in a net difference of +/- 300 euri a month after taxes, maintenance and gas.
Need to earn extras. I do not allow myself to buy nice things just cause I want them. I need to earn them, first by actually working, but next by working out. This severely limits the amount of stuff I can just by and is good for my health. Luckily I am disciplined enough to do so. So, 12 times working out = +/- 4 weeks would be a nice shower gel.
Got a subscription on the magazine I buy every month and decided I wouldn’t do without.
And I cancelled my library card since I’m always late handing in books. The fees from that make it better to reread most books and buy some second hand ones.
My goal for this year is to pay off 10.00 euros of debt (ie $15k) and getting my emergency fund sorted out. With my current salary, and living conditions that should be realisitc. This is actually what I’ve been paying for the last year, excluding the emergency fund, which will come from the extra money from the company car.
162 euros per month minimum payment government loan (total 1944 euro )
670 euros per month other loan (total 8056)
300 euros per month emergency fund (3600)
Total per month: 1132 euro or $1700