GRS Home  Forum Home
Bank Rates Center
   Savings Account Rates
   Money Market Rates
   Highest CD Rates
Insurance Rates Center
  Auto           Health
   Life              Home
Mortgage Rates Center
  Mortgage Rates
  Mortgage Quotes

Last visit was:
A place for Get Rich Slowly readers to ask questions
and exchange ideas
It is currently Wed Apr 23, 2014 7:02 pm




Post new topic Reply to topic  [ 19 posts ]  Go to page 1, 2  Next
Author Message
 Post subject: Apples Student Loans Payoff
PostPosted: Mon Feb 03, 2014 6:49 pm 

Joined: Wed Jan 15, 2014 6:53 am
Posts: 20
I'm Apples! I live on a fruit farm (bet you can't guess what we grow... :D ). I moved in with my fiance the end of 2013, and we've been pooling our money since then. The boy has $61,400 in student loans (2 loans w/ the same interest rate). I have $30,000 in savings to put towards them. Also, I've created a budget spreadsheet to track our spending and all leftover funds each month will be applied towards the loan payments.

The point of this journal is for me to have a place to track and mention our progress on these goals, in hopes it reduces my desire to talk w/ other people about it. It's not the most polite of conversation topics, but I love talking and thinking about it.

Another goal is to keep our beginning net worth of about $46,000 relatively even through the year. We have $6,000 set aside for a honeymoon and $9,000 budgeted for house and wedding expenses that will come up. We are saving 7% of our net income for retirement (and an additional 5-7% through employers including the match).

There are 2 student loans:

GL at $44,014 and 5.75% interest Minimum payment of $275/month
CH at $17,218 and 5.75% interest Minimum payment of $130/month

We have budgeted $500/month towards the 2 loans for the moment. In addition, we are pulling $1500/month out of savings monthly, for a total of $2000/month. That is $18,000 from savings for the year. It leaves a cushion for unexpected expenses related to the house or wedding this first year. After the wedding, the balance of $12,000 in savings (don't worry-we have an emergency fund of the same size left!) will go in a lump sum. We are also paying the boy's mom back at a rate of $400/month for the first part of this year. When that is done, it will be added to the student loan payments for $900/month from income and $1500 from savings.

We plan to tackle the smaller one first because the interest rates are the same and it will be more of a mental "win". Our monthly net income is about $4900 (the boy has variable hourly pay, which is low in winter). Based on $4900 of take-home income, 51% of the budget is for necessities, 22% is for wants, and 27% goes towards savings. In months with additional income, some of it will go towards increased food and fuel expenses (5 weekends-5 grocery trips), but the majority will go towards debt payments.

I hope that long-winded account of our situation makes sense, and can't wait to share our progress each month.


Top
Offline Profile E-mail   
 Post subject: Re: Apples Student Loans Payoff
PostPosted: Tue Feb 04, 2014 10:16 am 

Joined: Sun Jan 06, 2013 10:30 pm
Posts: 63
Good luck and keep us posted hope to hear more about your progress.

_________________
http://www.theexpatinvestor.com/


Top
Offline Profile E-mail   
 Post subject: Re: Apples Student Loans Payoff
PostPosted: Tue Feb 04, 2014 11:06 am 
User avatar

Joined: Thu May 17, 2012 10:05 am
Posts: 884
Apples wrote:
I'm Apples! I live on a fruit farm (bet you can't guess what we grow... :D )...

We plan to tackle the smaller one first because the interest rates are the same and it will be more of a mental "win". Our monthly net income is about $4900 (the boy has variable hourly pay, which is low in winter). Based on $4900 of take-home income, 51% of the budget is for necessities, 22% is for wants, and 27% goes towards savings. In months with additional income, some of it will go towards increased food and fuel expenses (5 weekends-5 grocery trips), but the majority will go towards debt payments.


Hi Apples! :hai:

Welcome! Seems like you have a good plan and good head on your shoulders. Congrats on getting married! :clap:

May I ask what is the breakdown of the 22% "wants" category of your budget? That is $1078… Considering the amount of debt you guys are starting out with might want to re-consider some of those things...

Might be easier to understand if you listed the savings accounts you have:
Example..
Emergency fund: 30k
Savings towards debt: 30k
House/Wedding expense: 9k
Honeymoon: 6k

Looking forward to reading your success story!

_________________
~ Eagle


Top
Offline Profile E-mail   
 Post subject: Re: Apples Student Loans Payoff
PostPosted: Tue Feb 04, 2014 3:08 pm 

Joined: Tue Oct 29, 2013 2:14 pm
Posts: 54
Hi Apples, welcome to the funny farm! (Get it? 'Cause you're on a farm, and we're all crazy here... nevermind :rofl: )

I just want to see if I understand correctly, from your income, you'll be pulling $500 from your income to go towards student loans, and $1500 from savings each month? If you have a set amount in savings that you'll be using towards student loans, why don't you do one massive payment with all the additional money you've set aside? It's almost guaranteed that the interest your paying on the loan far outweighs the interest you're receiving from a savings account. (Unless you have a savings account that pulls in 8%. In that case, please share!)

In any case, welcome aboard and good luck on your journey!


Top
Offline Profile E-mail   
 Post subject: Re: Apples Student Loans Payoff
PostPosted: Tue Feb 04, 2014 3:23 pm 

Joined: Wed Jan 15, 2014 6:53 am
Posts: 20
Lis-I know that a lump sum would be the best bet, but while we're committed, we're not actually married until June and my fiance is only comfortable with so much money coming from me before then-this plan was more of a "marital" compromise. And yes, we are all a little crazy! haha


Top
Offline Profile E-mail   
 Post subject: Re: Apples Student Loans Payoff
PostPosted: Tue Feb 04, 2014 3:46 pm 

Joined: Wed Jan 15, 2014 6:53 am
Posts: 20
Eagle-I don't have my budget sitting directly in front of me, but I can rattle off most of the wants. They include:

    the choice pacakage for DirecTV $95.00(this is the one non-negotiable thing for my fiance)
    home phone $40ish (my thing-it's for the farm, and I realize we can do w/o, but don't want crazy neighbors or random business ppl to have my cell number)
    the data plan part of our cell phones $80ish
    local newspaper subscription $9.50/month (pay once yearly)
    weekend fund (date night and general outings) $100
    personal spending $300 (150 per person; includes clothes, going to visit friends, workout things (monthly myyogaonline subscription for me), hobbies, alcohol)
    house budget-$75 we just moved into a house; ex. towel rods, paint, welcome mat, coasters, towels, will be mulch and plants, etc.
    dog $50 saving for a dog next year.
    gifts $50
    vacation/travel $150-3 500 mi trips to visit family/yr and small vacation
    and then a buffer of about $100 in misc. expenses that I count as wants-in january that included money towards a passport application

That should be pretty close to the percentage for wants. I want to cut DirecTV but that will never happen, the boy doesn't want a home phone-compromises haha. The most obvious thing to do would be cut personal spending, but b/c it includes work and regular clothes, and we both work outside and are in the beginning few years, we have bought a lot of clothing recently. Last month I bout $90 Carhartt bibs for the winter, we both regularly go through a pair of boots, etc. So what do you think Eagle?


Top
Offline Profile E-mail   
 Post subject: Re: Apples Student Loans Payoff
PostPosted: Tue Feb 04, 2014 7:57 pm 

Joined: Tue Jun 30, 2009 9:44 pm
Posts: 247
Location: Atlanta, Georgia
Apples wrote:
Last month I bout $90 Carhartt bibs for the winter, we both regularly go through a pair of boots, etc. So what do you think Eagle?

I'm not afraid to admit that I'm in my 30s and for the first time in my life, I just learned that "bibs" are not only for babies. I thought those were called overalls? Anyhow, I'm cheering for you, Apples!


Top
Offline Profile   
 Post subject: Re: Apples Student Loans Payoff
PostPosted: Wed Feb 05, 2014 6:02 am 

Joined: Wed Jan 15, 2014 6:53 am
Posts: 20
haha...they're usually overalls if it's just unlined denim. but the quilt-lined warm version are usually called bibs and you wear them over jeans and your work wear so you can be warm outside when it's below freezing but take them off and be comfortable if you're inside for lunch or a meeting.


Top
Offline Profile E-mail   
 Post subject: Re: Apples Student Loans Payoff
PostPosted: Wed Feb 05, 2014 7:52 am 

Joined: Mon Feb 04, 2008 7:35 am
Posts: 1140
Location: Maryland
Hi Apples! Love your name.
I just wanted to welcome you and tell you that my Carhartt bibs are the best purchase I have ever made. I'm not a farm worker, but I get so cold, it's ridiculous. When I have to shovel snow, I put on my Under Armour and then my bibs on top and I'm good to go. Sometimes I'm actually SWEATING when I'm out there, so I love it. They make me actually want to go outside in my least favorite season.

Good luck on your progress, and I'll be watching! Oh, and I just got married and my hubs required we get Directv too. You're not alone. :D


Top
Offline Profile   
 Post subject: Re: Apples Student Loans Payoff
PostPosted: Wed Feb 05, 2014 9:20 am 

Joined: Wed Jan 15, 2014 6:53 am
Posts: 20
Peachy, I think you have a pretty great name yourself!! :P the bibs were sooo worth the investment. and it sounds like our SO's can hang out and watch tv together haha. And I am SUCH a cold person all the time! The last few months I've bought thick wool socks, more long johns, and other warm clothes-which is why I'm so reluctant to reduce personal spending at least right now. Maybe later in the year though. I'm also not sure what we'll do when the discounts on tv stop and we actually have to pay full price. We will re-discuss at that point.


Top
Offline Profile E-mail   
 Post subject: Re: Apples Student Loans Payoff
PostPosted: Wed Feb 05, 2014 9:52 am 
User avatar

Joined: Thu May 17, 2012 10:05 am
Posts: 884
Apples wrote:
So what do you think Eagle?


Seems reasonable to me I guess. I understand on the compromise Direct TV/Home Phone thing... Lol. Makes sense re: clothes, personal spending, date night, vacation, etc.

The rest is really a life/debt balance. A dog for example will be an added expense but they're really fun. 8)

Direct TV $95.00
Home Phone $40.00
Data Plans $80.00
Newspaper $9.50
Date Night $100.00
Personal Spending Her $150.00
Personal Spending Him $150.00
House Budget $75.00
Savings for Dog $50.00
Gifts $50.00
Vacation/Travel $150.00
Misc $100.00
Total "Wants" expneses $1,049.50


So paying off the debt comes out of necessities at 51% or savings at 27% of budget?

_________________
~ Eagle


Top
Offline Profile E-mail   
 Post subject: Re: Apples Student Loans Payoff
PostPosted: Wed Feb 05, 2014 10:02 am 
User avatar

Joined: Thu May 17, 2012 10:05 am
Posts: 884
Consider the following too... Check out this thread of suggestions regarding cutting expenses.

A few questions:
*When was the last time you got a car/home insurance quote?

*How often do you eat out?

*Buy a deep freezer, buy groceries in bulk (meats, veggies, etc.), cook meals in bulk, and save money by meals only costing $5-7.

*Have you considered getting a credit card (which you determine to pay off monthly) for cashback bonuses on every day purchases (gas, groceries, etc.)? We accumulated about $500 last year with Discover for example on items we would normally buy every day...

*When was the last time you had a yard sale?

*How much data do you use monthly on your cell phones? Possible to get a lower $ data plan?

_________________
~ Eagle


Top
Offline Profile E-mail   
 Post subject: Re: Apples Student Loans Payoff
PostPosted: Wed Feb 05, 2014 12:43 pm 

Joined: Wed Jan 15, 2014 6:53 am
Posts: 20
The debt payments are counted in the 27% savings. Savings includes

    7% of our net income into Roth IRAs
    $50 towards our emergency fund
    19%ish towards debt payments, guaranteed

Other notes: We put approx. 4% of our combined gross income into company-matching 401(ks) that w/ matching is 8% of our income. And whenever we are under the budgeted amount for a need-like electricity or heating in summer ("want" expenses roll over), the extra money goes towards the student loans. In January we paid $54 extra bucks, and in 5-paycheck months it could be $1200.

The budget is based on lowest-earning possible month (when my fiance only works 30 hrs/ wk all month, typical in winter). So all spring, summer, and fall the additional funds from full-time work (typical for his line of work) will be funneled into loans. These are just the baseline amounts.

The emergency fund is "full" at 3 months of living expenses ($12,000ish) but this is a small extra way to ensure there's always enough in case something happens. For example-yesterday a garbage truck pulled down the wire for electricity that runs across the road and to our house; we had no electric, the meter box needed to be rewired, and we will foot the bill then get reimbursed (which there's not a great chance we will be). Usually, next month all of the extra money towards student loans would go into refilling the E-fund. W/ a little extra in there, and already automatically putting money in each month, it won't be as great of a hit to the already-"scheduled" student loan payments. I'm the kind of nerd who has spreadsheets w/ expected payoff dates on them based on different scenarios :P


Top
Offline Profile E-mail   
 Post subject: Re: Apples Student Loans Payoff
PostPosted: Wed Feb 05, 2014 12:53 pm 

Joined: Wed Jan 15, 2014 6:53 am
Posts: 20
Eagle-good suggestions, if I was just a little more established here haha. We just moved into a house from apartments and family's house in late November-our furniture is almost all from yard sales or hand-me-downs haha. There are certainly bare corners at the moment. We just readjusted the data plan (and in this part of the countryside we get the best, as in significantly better, coverage w/ Verizon). Just bought renters insurance, so 2 or 3 weeks ago? :p That date night budget is how much we eat out or do any sort of activity that costs money together. It takes 25-30 mins to just get to a restaurant; generally eating out is ALWAYS planned. The freezer is a good idea, once we save up for it in the house budget ;) And personally, I use a credit card for most things and pay it off each month, but am waiting to get married to get a rewards one b/c I don't want to add to the list of places where I need to change my name. My fiance was barely making ends meet before we moved in together and pooled our money, so he does not trust himself w/ a credit card at this point. I think a year of having a budget and saving money for a year or two will give him a lot more confidence in that department.


Top
Offline Profile E-mail   
 Post subject: Re: Apples Student Loans Payoff
PostPosted: Thu Feb 06, 2014 10:32 pm 

Joined: Fri Jan 24, 2014 12:11 am
Posts: 6
Hey Apple you are a sensible person and Congrats to you got marry :clap: You make some brilliant plans to make your expanses but I want to share something to you
1.on gas? What is the usual amount that you spend on groceries, or how many times per week do you eat out or get take out instead of home cooking? Think of other essential things that you need, not want. You should spend as normal, but take a receipt or note down every time you get your wallet or purse out. At the end of the day, tally this up, either on paper, your computer or your phone. Make sure you note exactly what you spent it on and don't use a generic term such as food or transport.

2.number side-by-side. Once you have tallied up about a month's worth of expenses, divide up your expenses into the categories of necessities, sanity savers and luxuries.

3.Work out both weekly and yearly buffers that you can afford. Your weekly cash buffer will mean that if you go slightly over your weekly cash spend limit, it will not affect your hip pocket and will not end up going on the dreaded credit card. By incorporating an annual buffer into your budget, unexpected medical, car or house maintenance costs will also not affect your bottom line. If you get to the end of the year and have not needed to use your buffer for these types of expenses, then great! You will have extra money that you can funnel into your savings or retirement investment plans.

4.Calculate how much your short term, medium term and long term goals are going to cost. Do you need to replace any household items this year? Do you need a new pair of boots this year? Do you want to buy a car? Plan for this in advance and you won't need to draw on your long term savings. Another important point to note is that you should aim to only buy these items after you have saved for them. Ask yourself, do you really need it right now?

5.Draw up a new budget, incorporating your buffers and goals. Then, try to stick to just spending on the necessities. Cut out the luxury items and save the sanity savers for those times you are are really pulling your hair out from trying to stick to your new budget. Eventually you will need the sanity savers less and less, and the fact that you have already budgeted for them, means they can go into extra savings when you don't need them.

6.Place this budget chart somewhere that the whole family can view and keep track of. If a teen has a job, they can start charting their own money budget. If they go to the movies, they can record it.


Top
Offline Profile E-mail   
Display posts from previous:  Sort by  
Post new topic Reply to topic  [ 19 posts ]  Moderators: kombat, bpgui, JerichoHill, Fiscal Fitness Moderator Go to page 1, 2  Next


Who is online

Users browsing this forum: No registered users and 1 guest


You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot post attachments in this forum

Search for:
Jump to:  
Powered by phpBB © 2000, 2002, 2005, 2007 phpBB Group
Theme created StylerBB.net & kodeki