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 Post subject: Lissy Gets Rid of Her Student Loans
PostPosted: Thu Jan 16, 2014 3:40 pm 

Joined: Tue Oct 29, 2013 2:14 pm
Posts: 121
...and then maybe goes back to school?

Information
Name: Lis
Age: 23 (nearly 24)
Graduated College: May 2012 w/ $20,000 student loan
Employed: Assistant at a financial firm (with room for growth)

Income
Salary: $45k (plus bonus opportunity)
Take Home Per Month: $2,640 (after taxes, health care, and 401k contribution)

Expenses
Rent: $1,200 (1 bedroom apartment alone... I know, it kills me, but I'm actually getting a great deal)
Student Loans: $325 (min payment)
Car Insurance: Expecting $2,500ish for the year. My current plan expires in March and I'm shopping around. In the past year I've gotten into a no-fault accident and got a "failure to obey a traffic device" ticket. Whoops.

Let's talk about Sallie Mae...
I started off with a $20,000. It's now down to $16,310 (though an extra $350 payment is on its way and should hit tomorrow). Knowing what I know now, I'm kicking myself for not starting to pay them off sooner (I had the six month grace period where I didn't pay anything, even though I was employed a month after I graduated, and then continuing to only make the minimum payments for a while).

But I know better now, and there's nothing I can do to change the past, only adjust for the future. Currently, my minimum monthly payment is $325, but I plan on pretending that it's $500 (meaning that $250 per paycheck will always be set aside for student loans and I will not touch that). If I stick to my budget that I set up for myself on mint.com, I should be able to pay $600-$650 per month.

Fortunately, this Sallie Mae loan is really my only debt.

Savings and Assets

I drive a 2011 Dodge, bought new in 2012. It's fully paid off. A loan from my grandmother was an early graduation present, and instead of putting every extra penny I had while living with my parents towards my student loan, I used it to pay her back. I pay for my own insurance, which is currently paid off until March of this year.

I have nearly $4.4k in my 401k, contributing 5% (employer matches 75% of what I contribute up to 8%, so they're doing 3.75%). I only started contributing in May of last year, and I recently (as of two weeks ago) bumped up my contribution from 3%. As of now, this is my only form of retirement savings, but I will research more into IRAs, Roth IRAs, etc. once Sallie Mae is gone.

I have $3.8k in a high interest savings account (0.90% - woohoo!). This includes the $2500ish for my car insurance in March, as well as $1,000 in emergency savings). I have another $1.9k in a lower interest savings account tied with my usual bank. This account is where I hold my monthly bills (rent, student loans), another $500 in emergency savings (it's more accessible than my other savings account), as well as my budgeted money for the month. I only keep about $100 in my checking account at any given time.

I have three credit cards that get used on a regular basis, but the balance gets paid in full every month (I allot my money carefully). My AMEX gets used for the vast majority of my purchases (decent rewards, no fees). I have a Visa through Bank of America (my old bank) that I'll use if I need credit and AMEX isn't accepted, but I typically pay this off the next day (I only use this about once or twice a month). I have a Target credit card that I also use fairly often since I have a Target right near me and they offer good savings and deals with the card. Again, all of these get paid in full every month, and I'm proud to say never once have I missed a payment (on anything) or carried over a balance.


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 Post subject: Re: Lissy Gets Rid of Her Student Loans
PostPosted: Thu Jan 16, 2014 3:49 pm 

Joined: Tue Oct 29, 2013 2:14 pm
Posts: 121
Goals

I want to get out of owing 5 figures on my loans. Based on my renewed interest on using ever single extra penny towards the loan, I'm fairly certain I can accomplish this by the end of 2014. To be perfectly honest, I have no idea how Sallie Mae works interest into the equation (i.e.: what amount goes towards my principal and what goes towards interest). The amount is never the same twice applied towards principal, and when I call and ask about it, I get talked around in circles. It makes my head hurt.

Purpose of this journal

I want to update this at least monthly, hopefully twice a month around every pay day. The forums so far have given me so much advice and have helped me so much, and I think if I get to writing down my experiences and thoughts often enough, it'll really help me towards my goals.

I'm also considering starting a small (small small, micro-small) business of selling homemade fudge (is Lissy's Homemade Fudge too cheesy of a name?). Keeping a diary of my fears and successes I think will also be really beneficial.

Feel free to offer any advice or feedback! It would be very much appreciated!


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 Post subject: Re: Lissy Gets Rid of Her Student Loans
PostPosted: Thu Jan 16, 2014 4:10 pm 

Joined: Fri May 04, 2007 8:14 pm
Posts: 1757
What's the interest rate on your student loan? It might make more financial sense to devote the extra money to increasing your 401(k) contribution to get the maximum match. 75% is nothing to sneeze at.

I'm also a little concerned about your emergency savings. Right now, it won't even cover a single month's rent, never mind any other monthly expenses. It's alright if you have other support to fall back on (like family members) but if this is not the case, you are at considerable risk.

Welcome to the forums. I love seeing people just starting out and hope you'll be around for a long time.


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 Post subject: Re: Lissy Gets Rid of Her Student Loans
PostPosted: Thu Jan 16, 2014 4:42 pm 

Joined: Tue Oct 29, 2013 2:14 pm
Posts: 121
VinTek wrote:
What's the interest rate on your student loan? It might make more financial sense to devote the extra money to increasing your 401(k) contribution to get the maximum match. 75% is nothing to sneeze at.


The interest rate is 6.75%, and that includes the discount I get for enrolling in automatic debit (originally the loan was at 7%). I rechecked my contract, and it's up to 7.5%, not 8%, so the max that most people contribute is 10%. Do you think it makes more economical sense to increase my contribution? Like I mentioned, I'm planning on exploring more options once my loan is done, and that definitely includes upping my contribution.

Quote:
I'm also a little concerned about your emergency savings. Right now, it won't even cover a single month's rent, never mind any other monthly expenses. It's alright if you have other support to fall back on (like family members) but if this is not the case, you are at considerable risk.


Right now I consider my emergency savings to be $1,500... $1k in my high interest savings account (typically takes 3 business days to transfer to my checking account), and $500 in my savings account that's attached to my bank.

I didn't mention this in my initial posting (I should have), but I also transfer $150 from each paycheck to my high interest savings account ($300 a month). With no particular savings goal in mind right now, those funds will be available as well if an emergency comes up.

My job is fairly secure (more secure than others in my firm, I'd imagine), but in case anything does happen, I do have family to support me. My mom wants me to move back in once my lease expires (July) until my student loans are paid off. I do believe I moved out too early, but I'm not one to looking to the past. I'm extremely fortunate to have wonderful parents that want me to move back; hopefully I'll never have to utilize that generosity.


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 Post subject: Re: Lissy Gets Rid of Her Student Loans
PostPosted: Thu Jan 16, 2014 6:26 pm 

Joined: Fri May 04, 2007 8:14 pm
Posts: 1757
Lis wrote:
VinTek wrote:
What's the interest rate on your student loan? It might make more financial sense to devote the extra money to increasing your 401(k) contribution to get the maximum match. 75% is nothing to sneeze at.


The interest rate is 6.75%, and that includes the discount I get for enrolling in automatic debit (originally the loan was at 7%). I rechecked my contract, and it's up to 7.5%, not 8%, so the max that most people contribute is 10%. Do you think it makes more economical sense to increase my contribution? Like I mentioned, I'm planning on exploring more options once my loan is done, and that definitely includes upping my contribution.

From a mathematical standpoint, getting 75% in exchange for paying 6.75% is a pretty good deal, especially when you're getting the 75% free of taxes (at least until you withdraw the money) and get a tax deduction on the interest you're paying.

However, there's a lot to be said for the peace of mind of being debt free. So you basically have to decide what is right for yourself. I know what I'd do in your shoes but that doesn't mean that it's the right thing for you.

Lis wrote:
VinTek wrote:
I'm also a little concerned about your emergency savings. Right now, it won't even cover a single month's rent, never mind any other monthly expenses. It's alright if you have other support to fall back on (like family members) but if this is not the case, you are at considerable risk.


Right now I consider my emergency savings to be $1,500... $1k in my high interest savings account (typically takes 3 business days to transfer to my checking account), and $500 in my savings account that's attached to my bank.

I didn't mention this in my initial posting (I should have), but I also transfer $150 from each paycheck to my high interest savings account ($300 a month). With no particular savings goal in mind right now, those funds will be available as well if an emergency comes up.

My job is fairly secure (more secure than others in my firm, I'd imagine), but in case anything does happen, I do have family to support me. My mom wants me to move back in once my lease expires (July) until my student loans are paid off. I do believe I moved out too early, but I'm not one to looking to the past. I'm extremely fortunate to have wonderful parents that want me to move back; hopefully I'll never have to utilize that generosity.

Again, that's something where you have to decide what's right for yourself. The extra income from paying a reduced rent or not paying rent at all would be a boon to your effort to wipe out your debt. And there's no shame in going home for awhile since it's at your mother's invitation. However, there's a lot to be said for independence, and I applaud your determination to make your own way in the world. Do what feels right to you, as this kind of thing is what puts the "personal" in personal finance.


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 Post subject: Re: Lissy Gets Rid of Her Student Loans
PostPosted: Tue Jan 21, 2014 8:50 am 
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Joined: Thu May 17, 2012 10:05 am
Posts: 960
VinTek wrote:
Welcome to the forums. I love seeing people just starting out and hope you'll be around for a long time.


Diddo! Welcome to the forums Lis.

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~ Eagle


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 Post subject: Re: Lissy Gets Rid of Her Student Loans
PostPosted: Tue Jan 21, 2014 9:21 am 
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Joined: Thu May 17, 2012 10:05 am
Posts: 960
Lis wrote:
Feel free to offer any advice or feedback! It would be very much appreciated!


Re: Expenses

Roommate/Moving Home? Would it be worth to have a roommate and split the cost of rent while you are paying off your debt? Moving home while you pay off your debt would be a good idea. What would be your Mom’s expectations/conditions? I lived with an aunt and uncle for 1.5 years and my parents for another 6 months before “moving out” after college.

Budget? What is the breakdown of your budget? You make $2,640 after taxes and only list $1725 ($1.2k rent, $325 SL, and $200 in car insurance) in expenses. Groceries, Eating out, Entertainment, Gas, Car Repairs/Maintenance, etc. would be helpful to see if there are any other areas you could trim down during this time of debt reduction. Consider using https://www.mint.com/ for tracking your expenses.

Car Insurance I believe $2500 is for car insurance for the year is a bit expensive… That’s $1,200 every 6 months or $200 a month. Do you take advantage of the discount (usually 2-5%) for paying the bill every 6 months instead of monthly? Have you considered shopping around for car insurance? When was the last time you got a car insurance quote? We had State Farm and paid almost double what we pay now through Progressive. We try to get a quote from insurance companies every year just to make sure our plan is competitive.


Welcome again! :clap:

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~ Eagle


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 Post subject: Re: Lissy Gets Rid of Her Student Loans
PostPosted: Wed Jan 22, 2014 3:25 pm 

Joined: Tue Oct 29, 2013 2:14 pm
Posts: 121
Quote:
Roommate/Moving Home? Would it be worth to have a roommate and split the cost of rent while you are paying off your debt? Moving home while you pay off your debt would be a good idea. What would be your Mom’s expectations/conditions? I lived with an aunt and uncle for 1.5 years and my parents for another 6 months before “moving out” after college.


I lived with my parents for a bit over a year after graduating college. While it would certainly be a money saver (rent, groceries, etc.), I would really prefer to be out on my own. I think I'd rather look back on my 20's knowing that I lived with a bit of freedom... they stopped with a curfew once I went to college, but I still got the whole "we'll be waiting for you until you get back...." I do have a wonderful relationship with my parents, but I'm worried moving back in would strain it due to all of our stubbornness.

Quote:
Budget? What is the breakdown of your budget? You make $2,640 after taxes and only list $1725 ($1.2k rent, $325 SL, and $200 in car insurance) in expenses. Groceries, Eating out, Entertainment, Gas, Car Repairs/Maintenance, etc. would be helpful to see if there are any other areas you could trim down during this time of debt reduction. Consider using https://www.mint.com/ for tracking your expenses.


I'm on mint.com religiously, though the budgeting tool has been giving me some attitude lately. Out of curiosity, is anyone else having problems with categories you've made disappearing then reappearing? I'm doing my best to follow a zero-sum budget, and it's definitely been really helpful in showing me where my money's going. When I first started, I had no idea that I spent $80 eating out in one month!! For a recent grad like me, that's a heck of a lot of money. Almost everything is budgeted, and I'm usually under budget in most categories (except eating out... again. Damn.).

Quote:
Car Insurance I believe $2500 is for car insurance for the year is a bit expensive… That’s $1,200 every 6 months or $200 a month. Do you take advantage of the discount (usually 2-5%) for paying the bill every 6 months instead of monthly? Have you considered shopping around for car insurance? When was the last time you got a car insurance quote? We had State Farm and paid almost double what we pay now through Progressive. We try to get a quote from insurance companies every year just to make sure our plan is competitive.


You're telling me!! Last year my premium was $1980 or so for the year through Liberty Mutual. Like I mentioned, in the past year I got into one no-fault accident and one failure-to-obey-a-traffic-device ticket, and I'm under 25, and my current provider still attached my good-student discount for last year, even though I wasn't a student anymore. Liberty Mutual will get their price to me by mid-Feb. Right now, Progressive is the front runner at $1248/6mos (includes a slight discount for paying the balance in full at the start of the contract), plus they have that nifty little device thingy that you plug into your car and will hopefully discount me a bit more after 6mos (I stopped speeding after a certain failure-to-obey traffic ticket).

State Farm quoted me at $2700 or $2800 for the year... I forget, I saw the price, laughed, and closed the browser. I'm hoping LM will get back to me with a good deal, and I'm fully ready to call them and haggle them down hopefully. I'm not thrilled with their customer service (they dropped my coverage a weekend I decided to go away to the middle of no where because I "failed to give them the paperwork regarding the previous owner" when I bought the car and insurance FOUR MONTHS earlier. Except the car was bought new and I gave them the bill of sales. In any case, I had problem after problem with them since then).

Sorry for the long winded rant. I'm still shopping around, and my coverage lasts until mid-March, so I still have a bit of time left.


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 Post subject: Re: Lissy Gets Rid of Her Student Loans
PostPosted: Wed Jan 22, 2014 3:40 pm 

Joined: Tue Oct 29, 2013 2:14 pm
Posts: 121
Lis wrote:
Quote:
Roommate/Moving Home? Would it be worth to have a roommate and split the cost of rent while you are paying off your debt? Moving home while you pay off your debt would be a good idea. What would be your Mom’s expectations/conditions? I lived with an aunt and uncle for 1.5 years and my parents for another 6 months before “moving out” after college.


I lived with my parents for a bit over a year after graduating college. While it would certainly be a money saver (rent, groceries, etc.), I would really prefer to be out on my own. I think I'd rather look back on my 20's knowing that I lived with a bit of freedom... they stopped with a curfew once I went to college, but I still got the whole "we'll be waiting for you until you get back...." I do have a wonderful relationship with my parents, but I'm worried moving back in would strain it due to all of our stubbornness.


Oh, on the topic of roommates, once my lease is up I may move in with a friend or friends. One friend's lease is up in April (mine's July), so we're figuring out if anything can be done for the three month gap. Another friend might consider moving from the city (I live just north of NYC) if her office moves from downtown, which apparently they're talking about doing over the summer (hopefully perfect timing). Checking the prices, it's certainly cheaper to split a two bedroom, but surprisingly not by much in the town we're hoping to move to. I'm talking $1200 for my one bedroom v. $900-$1000 for my half of a two bedroom. That might sound great, but I'm currently not paying anything in utilities (heat, electricity, even cable and wifi), and I doubt I can find a deal like that. If I move in with a roommate, it would also be a longer commute for me. Not by much, but enough that I would need to fill my tank up at least once more a month than I already do.

Nothing is definite yet, I still have about half a year to think about it. Moving a bit south would be beneficial to a more social lifestyle. A really big fear of mine is looking back at my 20's and having regrets about not experiencing life. I sort of have those regrets already from college, though I still wouldn't have changed anything. A goal for me is to find the balance between being money-smart and being life-smart, because in my short life so far, I've found that they're not always the same. I am a mostly frugal person with relatively low expenses, so if I splurge once in a blue moon (like I did on a $24 lunch over the weekend - ouch!), it's ok as long as I got good memories out of it. Again, it's finding the balance, and these forums and site have definitely helped me so far with that.


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 Post subject: Re: Lissy Gets Rid of Her Student Loans
PostPosted: Wed Jan 22, 2014 9:00 pm 
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Joined: Thu May 17, 2012 10:05 am
Posts: 960
Re: Car Insurance – Progressive also has a feature called Snapshot that you can get a discount for installing a device that measures the number and type of breaks you use, etc. Supposedly it is up to a 30% discount. We got a 13% discount on ours !(about $50 initially in the first 30 days and a permanent discount of$60 off every 6 months or $120 a year if memory serves correctly)

See: http://www.progressive.com/auto/snapshot-how-it-works/

Quote:

Plug in.
The Snapshot device plugs easily into your car's diagnostic port (usually below the steering column) and automatically keeps track of your good driving.

Drive like you usually do for 30 days and go online to see your projected savings, as well as:
• how often you slam on the brakes;
• how many miles you drive;
• and how often you drive between midnight and 4 a.m.

Get a personalized rate.
Any Snapshot discount you earn kicks in immediately. So, you can start saving right away! Then, you'll stay plugged in for five more months to set your ongoing renewal discount.

_________________
~ Eagle


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 Post subject: Re: Lissy Gets Rid of Her Student Loans
PostPosted: Wed Jan 22, 2014 9:18 pm 
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Joined: Thu May 17, 2012 10:05 am
Posts: 960
Lis wrote:
Sorry for the long winded rant.


I didn't think it was long winded. I prefer to call it detail oriented. :lol:

Re: Roommate – Have you considered getting a roommate and sharing your current apartment at $1200 a month? I know that wouldn’t be ideal but that would only be $600 a month in rent. I guess it goes back to that balance between money-smart and life-smart thing… Also a warning from experience keep in mind not always do good (or best?) friends make the best roommates. Lol. ;)

I kind of like the saying though… “Live like no one else {today} so that later you can live like no one else {in the future}.” Just have to determine how much you hate debt and what you’re willing to do to get rid of it I guess.


Re: Moving Home – Yeah I understand about the whole curfew and waiting up late thing. My parents did that when I was in college too. No curfew but one of them would stay up late till I got home. For us it was a matter of trust and communication. We basically said I would call them (or text) if I was going to be out passed 1am. After living with them for 6 months after being on my own for a while it was tough. But I got free food and utilities for 6 months. I even had cable! (I’ve not had cable/satellite since then… Lol!) And the $300 a month I paid them in rent each month they kept in the bank and surprised me with $1800 when I moved out. I put that towards paying off my car and school expenses.

Something to consider as an option and even negotiate with your parents? "I'll live at home for 6 months or a year "paying rent" and then you guys give me the money back to help towards my student loan..." type thing...


Re: Budget – Mint = awesome! It was glitching at the begging of the year for us. Everything was showing up as $77.77 expense in ever purchase/category. Yeah eating out can get expensive fast. What we do is use our Discover card cash back rewards (which we pay off every month as well… kudos to you for that habit) and buy gift cards to go out to eat. Your biggest expense is rent. I’m not sure if there’s anything else you can trim from your budget. Is there anything you can trim on your budget? Consider this thread . What kind of rewards do you get with your AMEX again?


Hang in there you are on the right track... debt reduction! :clap:

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~ Eagle


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 Post subject: Re: Lissy Gets Rid of Her Student Loans
PostPosted: Thu Jan 23, 2014 6:36 am 

Joined: Tue Oct 29, 2013 2:14 pm
Posts: 121
Eagle wrote:
Re: Car Insurance – Progressive also has a feature called Snapshot that you can get a discount for installing a device that measures the number and type of breaks you use, etc. Supposedly it is up to a 30% discount. We got a 13% discount on ours !(about $50 initially in the first 30 days and a permanent discount of$60 off every 6 months or $120 a year if memory serves correctly)

See: http://www.progressive.com/auto/snapshot-how-it-works/

Quote:

Plug in.
The Snapshot device plugs easily into your car's diagnostic port (usually below the steering column) and automatically keeps track of your good driving.

Drive like you usually do for 30 days and go online to see your projected savings, as well as:
• how often you slam on the brakes;
• how many miles you drive;
• and how often you drive between midnight and 4 a.m.

Get a personalized rate.
Any Snapshot discount you earn kicks in immediately. So, you can start saving right away! Then, you'll stay plugged in for five more months to set your ongoing renewal discount.


Snapshot! That's the plug-in thingy I was talking about. Couldn't think of the name :)

Up to 30%?? Holy smokes! Even if I only got 13% (or any percent), that's still a chunk of change. Do you pay monthly? If I remember correctly, Progressive was one of the ones that gave a small discount (5% I believe) if you paid for the whole plan up front (a 6mo plan). Like I mentioned, Progressive is definitely in the lead right now.


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 Post subject: Re: Lissy Gets Rid of Her Student Loans
PostPosted: Thu Jan 23, 2014 12:06 pm 
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Posts: 960
Lis wrote:
Snapshot! That's the plug-in thingy I was talking about. Couldn't think of the name :)

Up to 30%?? Holy smokes! Even if I only got 13% (or any percent), that's still a chunk of change. Do you pay monthly? If I remember correctly, Progressive was one of the ones that gave a small discount (5% I believe) if you paid for the whole plan up front (a 6mo plan). Like I mentioned, Progressive is definitely in the lead right now.


Yup we get the 5% discount for paying every six months. On top of the that we got the Snapshot discount. I highly recommend it. :rock:

This 6 months insurance is going to cost $585 for two vehicles with the 5% discount. :wasntme:

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 Post subject: Re: Lissy Gets Rid of Her Student Loans
PostPosted: Thu Jan 23, 2014 12:32 pm 

Joined: Tue Oct 29, 2013 2:14 pm
Posts: 121
Quote:
This 6 months insurance is going to cost $585 for two vehicles with the 5% discount. :wasntme:


I'll be paying more than double for one car :worried: That's what I get for getting a red sportsy car. I'll be 25 by the time my insurance runs out next year, and that will drop the price significantly. I'll try to find a defensive driving course sometime soon too. I have 0 points on my license, so that should drop the price down a bit too.


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 Post subject: Re: Lissy Gets Rid of Her Student Loans
PostPosted: Mon Jan 27, 2014 2:31 pm 

Joined: Tue Oct 29, 2013 2:14 pm
Posts: 121
Whoops, so my 401k contribution increase hasn't kicked in yet. Still contributing 3% and the bump is in progress. This coming paycheck probably won't reflect it, but hopefully my mid-Feb. paycheck will! It will decrease my take home pay a bit, probably still a bit above what my take home pay was before I got my raise at the end of last year. I think for the time being I'll keep it at 5% and revisit the concept of increasing it again mid year.


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