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 Post subject: The Mobs' Debt Plan
PostPosted: Mon Oct 07, 2013 2:52 pm 

Joined: Thu Oct 03, 2013 9:19 am
Posts: 43
DH and I both went to law school, so we started this journey with about $305,000 in student loans. We have no other debts, although we live in an area of the country with high cost of living. Our retirement accounts are valued at about $80,000, but we've limited our contributions to what's required by our employers and a little extra for tax-related reasons until the debts are paid off. We're renting a modest home until we're out of this mess and drive paid off cars. We have a small emergency fund of $2500 to cover car repairs and unexpected expenses. We're projecting that we'll make $200-250K this year, depending on DH's business, and as of September, we've paid $65,500 towards the loan. Our goal is to put about $90,000 towards the loans by the end of this year and bring our balance down to about $215,000. Our overall target is to apply any future pay raises or increased business revenue to the loans and pay off everything before the end of 2015. Fingers crossed.

While it seems like based on our income we should be able to put a lot more towards the loans, between tithing, charitable giving, taxes, and family obligations, quite a bit comes off the top. We also don't qualify for student loan interest tax deductions, nor can we use Roth IRAs. Other than going on vacation once a year, we live pretty frugally. We menu plan, pack our lunches, eat out once or twice a month, shop sales, and drive older cars. DH keeps our income up by working a full-time job and running his business on the side, while I do all the bargain hunting, shopping, and cooking.

I thought I'd start a journal here just to keep myself motivated because despite our progress, the amounts just seem so ridiculously large that I get frustrated or overwhelmed. Living like a student in your 30s gets boring after a while, although the fear of suspending retirement savings any longer is a great motivator. We're looking forward to living debt-free and buying a modest home that we can pay off quickly when this is all over. Our goal is to be completely debt-free including the house before age 40 and having me stay at home with our kids, whenever the Lord sees fit to bless us!


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 Post subject: Re: The Mobs' Debt Plan
PostPosted: Wed Oct 09, 2013 4:35 pm 

Joined: Thu Oct 03, 2013 9:19 am
Posts: 43
Okay, here are the dirty numbers.

Outstanding balance as of today:

My law school loans $93,013.45 (on a 10-year standard repayment)
DH's law school loans $146,461.11 (on a 30-year repayment)

Grand total as of 10/09/13: $239,474.56
Monthly minimum payment for both loans: $2627

*Insert vomiting emoticon here*

DH's repayment is on a 30-year payment schedule just for for peace of mind. The standard 10 year repayment on his loans would be something like $2600 a month. We pay way above that amount towards his loans every month, but we wanted to keep his minimum payment low in case something happened. We're doing a reverse snowball in that we're tackling his loans first because they have a higher interest rate and because based on our estimates, we'll pay off everything 6 months faster that way and save ourselves around $20,000.

Our progress for this year as of September was at $65,500 paid towards the loans. This was huge because we cracked the 230's, which mentally makes the game easier. I really like breaking into a lower 10,000 figure.

The October payment is due tomorrow, and we've budgeted for our standard $2627 payment and an extra $6000 for DH's loans. I'm hoping to throw an additional $2200 towards DH's loans after his next paycheck and VA payment next week.

That will bring us to $76,127 paid off by the end of October and into the $220s!


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 Post subject: Re: The Mobs' Debt Plan
PostPosted: Thu Oct 10, 2013 5:37 am 

Joined: Fri Jul 29, 2011 8:38 am
Posts: 187
Wow! You have a huge amount of debt, but you're making amazing progress. We'll be cheering you on as you keep going!


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 Post subject: Re: The Mobs' Debt Plan
PostPosted: Thu Oct 10, 2013 12:01 pm 

Joined: Thu Oct 03, 2013 9:19 am
Posts: 43
Thank you! I decided to start this journal because DH and I can't really talk about this with our friends or family. We have one friend who's been through a similar situation, but for the most part we keep it under wraps. We have a huge amount of debt, but we also make a pretty decent living, so we don't want to start boo-hooing about it. That said, sometimes you just want to vent and and get some encouragement, so I guess this is where the anonymity of the web helps out.

Its frustrating. Most of our law school peers just put their loans on income-based repayment or are resigned to pay over 30 years, so we're trying not to talk to them about it. The few people we have shared with think we're nuts because we're pushing back our retirement savings. I think the only reason we're okay with that is because we have a combination of government pensions, disability payments, and traditional retirement savings. I think if we only had IRAs or 401Ks, it might be different. We don't talk to our families about our situation because DH's family would keel over (very frugal middle-class Midwesterners) and because my family is pretty pro-inflated lifestyle. They don't really get why we wouldn't live the "lawyer lifestyle" after working so hard for our degrees.

Some days when I look at my peeling hoopty, I do get a certain sense of "I deserve a new car" but then I think about how it would set us back longer and I just drive the darn thing another day. Sigh.


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 Post subject: Re: The Mobs' Debt Plan
PostPosted: Thu Oct 10, 2013 1:48 pm 

Joined: Tue Jun 12, 2012 4:34 pm
Posts: 470
Mrsmob, I definitely understand about not being able to share your financial journey with friends and family. Both Mr. Bear's family and mine are spendthrifts who have a large amount of debt and think their issues are caused by a paycheck problem (they don't make enough) instead of a spending problem. Unfortunately, as a government employee my salary is not confidential, so both sides of the family think we're rolling in it, while Mr. Bear and I work very hard to live frugally, pay off debt and save for retirement in a high cost-of-living area. So, we essentially don't talk with our families about our financial journey, and instead I come here and track our successes and challenges in my fiscal fitness journal. The community here is high on encouragement and low on judgment, so it's a great place to share. I hope you find the same support and encouragement here on your journey!


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 Post subject: Re: The Mobs' Debt Plan
PostPosted: Mon Oct 14, 2013 3:49 pm 

Joined: Thu Oct 03, 2013 9:19 am
Posts: 43
Well, we just had to spend $1750 on holiday travel this weekend. :puke: Its going to cost us $1100 to see DH's family at Christmas and $650 to see my family over Thanksgiving. We were only going to see one set of family over the holidays, but peace talks broke down with the parents and we ended up having to go to see both sides of the family. My parents would come see us, but since my brother works retail, he would be all alone for the holidays, which seemed sad. DH's family, on the other hand, would never come see us - its too expensive, far, inconvenient. But obviously, its different when WE'RE traveling to see them. :swear:

The only silver lining to this is that its usually $1000 PER PERSON to fly to see my inlaws, but we spent a little under $1100 total. Most of it was because we're flying out the night of Christmas, which I didn't think would be a big deal since all the Christmas festivities are over by lunch in DH's family, but we've already gotten flak about it TWICE in the past week. Seriously??

I'm so over this.


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 Post subject: Re: The Mobs' Debt Plan
PostPosted: Mon Oct 14, 2013 4:05 pm 

Joined: Mon Feb 07, 2011 6:33 pm
Posts: 1128
Location: Illinois
mrsmob wrote:
DH's family, on the other hand, would never come see us - its too expensive, far, inconvenient. But obviously, its different when WE'RE traveling to see them. :swear:

Of course not, it isn't their money or their inconvenience when its you going to see them. My in-laws are very similar. Thankfully, they live close enough to drive, but they always expect us to pick up the tab, claiming they don't have any money.... they don't seem to realize that I do their taxes = I know how much they make (and have a good idea about how much they have invested based on 1099's). They're doing just fine.


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 Post subject: Re: The Mobs' Debt Plan
PostPosted: Wed Oct 16, 2013 1:49 pm 

Joined: Thu Oct 03, 2013 9:19 am
Posts: 43
October mid-month update.

We paid our standard $2627 payment on the 10th, plus an additional $5000 towards DH's loan on the 13th, for a total of $7627 towards the loans this month.

So our totals stand as follows:

$141,549.88 for DH's loans.
$91,876.33 for my loans.

Grand total as of October 15, 2013: $233,426.21

We just threw an additional $1000 to DH's loan and have earmarked another $1000 to go at the end of the month when DH's VA payment comes in, but neither of those payments have cleared, so I will update again later. I don't think we'll hit the 220s this month like I had hoped, but we had all that holiday travel to pay for (see previous post). We're going to be a little tight for money considering we have to get through the next 2 weeks, but DH's paycheck usually clears a few days earlier via direct deposit, so hopefully it will only be like 10 or 11 days.


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 Post subject: Re: The Mobs' Debt Plan
PostPosted: Mon Oct 21, 2013 11:29 am 

Joined: Thu Oct 03, 2013 9:19 am
Posts: 43
3rd week of October update.

We paid an extra $1000 towards DH's loan sometime last week, which finally posted. So as of 10/21/2012, our loan totals stand as follows:

$140,692.88 for DH's loans.
$91,961.57 for my loans (damn you compound interest!)

Grand total as of October 21, 2013: $232,654.45
Amount paid towards loans so far this month: $8627

We're earmarking another $1000 at the end of the month to go towards the loan, which I'm really excited about because it will bring DH's loan amount to below $140K! Also, I really like the idea in the blog post from today (from the PhD students who saved a year's salary in their Roth IRAs) to zero out the checking account before payday and roll the money over to something. We have a zero-based budget, meaning all the money gets budgeted to zero on paper, but obviously there are months we have money left over. So I'm think we'll automatically zero out the account from now and throw a little bit extra to the loans instead of frittering the money away on something.


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 Post subject: Re: The Mobs' Debt Plan
PostPosted: Mon Oct 21, 2013 1:16 pm 

Joined: Tue Oct 01, 2013 11:54 am
Posts: 56
Your story is so impressive! Your doing a great job!


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 Post subject: Re: The Mobs' Debt Plan
PostPosted: Mon Oct 21, 2013 1:26 pm 

Joined: Fri Aug 22, 2008 11:10 am
Posts: 220
I just wanted to send some encouragement your way! Those are big numbers you are dealing with and I know it can get frustrating when you are living day to day.... making a decision on whether to pack my lunch or go out for $10 seems like it could never affect this huge mortgage payment... But in the long run, it adds up of course, and without these little decisions every day, we would not be where we are! Just because all the other cars in the parking lot are Lexus and BMW... I am happy with my old Honda because I don't want to be trapped in my job forever.

At first I thought by telling friends and family about our journey/progress, I would get a few of them on board to walk the frugal path with us. Hah! Then.. I thought at least we'd gain support, and maybe convince a few that if WE could do it, they could do it. Nope! At first, most people said "hah! good luck! Everyone has a car payment!" And now after all our successes, its not any better. I have gotten every different kind of reason why it has been easy for us to pay off all our debts, and how different their situation is than ours. We started with about $180k but with only $60k salary! People say its easy for us because we don't have kids, we have two incomes, we're young, we're healthy, etc. Discounting the fact that we work HARD, full-time and then some, and cut out the luxuries our friends have: netflix, cable, CSA, manicures, smartphones, etc.

But you are right... imagine having all your income to yourselves... no debt! These sacrifices will be worth it, no money stress, with a paid-for home and all cash vacations! Then you can decide when to retire and not leave it to the government to tell you!


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 Post subject: Re: The Mobs' Debt Plan
PostPosted: Mon Oct 21, 2013 2:01 pm 

Joined: Thu Oct 03, 2013 9:19 am
Posts: 43
Thanks y'all. Its super helpful to hear from likeminded people. Our parking lot is filled with Lexuses and I work with women who live in gated communities and wear very expensive clothes and purses. I admit its hard not to want those things some days. I mean, I have the same degree and job title - why can't I have a Lexus too? :x But we persevere with lunches from home, cooking from scratch, shopping sales, and wearing clothes from the clearance rack every day. We don't go to bars, we only go out to eat occasionally at inexpensive places, and we just try to be content with our run-down rental.

I also tried to share with friends about our frugal journey and we hear all the same things. That our expenses are lower, that our lifestyles aren't as active (everyone around here is big into ski season, Ironman, mountain biking, sailing, etc.), or that we don't have the same business/social obligations, etc. Some have just told us our life sounds really miserable! We also always get that whole "wait til you have kids" thing with regards to our finances. I have no doubt that kids cost money, but a lot of these "needs" my colleagues are paying for are "wants." Its a choice. Daycare, private school, sports, summer camp, iPhones, Kindles, music lessons, vacations - these are all choices! They aren't necessities!

In the end, this is all worth it to me because I want flexibility. I don't want to be tied to a job because of "stuff." I work in the public sector and we can get public service loan forgiveness if I sign up to work for the government for 10 years. I'm a few years in already, but at the end of the day, I just couldn't do it. I didn't want that debt hanging over my head for 10 years and the only way that program would work for us is if we changed my repayment schedule to the smallest monthly payment (which would accrue the most interest over time) and hope that Congress appropriates enough money to forgive my massive balance in 10 years. No thanks. Additionally, while we have money going to our pensions (mandatory deductions, matching, etc.) its just the minimum that our employers require and DH has always had private retirement investments outside his employer. While we've frozen those investments while we repay our loans, we'll be keeping that dual track of investments once we return to saving for retirement. I want to work as long as I want to work, quit when I want to quit, and not have debt, health insurance, or retirement programs holding me any place I don't want to be.

At least that's what I tell myself when I get into my beater car every morning. :drunk:


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 Post subject: Re: The Mobs' Debt Plan
PostPosted: Thu Oct 31, 2013 10:26 am 

Joined: Thu Oct 03, 2013 9:19 am
Posts: 43
I was waiting and waiting until the end of this month when we got paid again to throw $1000 extra at our loans but we just got an e-mail from our landlord about landscaping the backyard.

Back story: The yard was a mess when we moved in 18 months ago because the previous tenants let it become a weed jungle. They literally lived here for years and never did a thing to the yard. The landlord knows the yard was gross when we got here but lease it says its our responsibility to maintain, so we've "maintained" the yard over the last 18 months by spending money on a weed wacker and many gallons of Round-Up, macheting the weeds, fighting off wildlife, getting hurt trying to haul out brush, and ruining our clothes trying to keep the jungle at bay. (Did I mention we live where its 110+ degree weather in the summer, pollen/dust central in the spring and fall, and freezing rain in the winter?) All our efforts haven't made the yard better - its just kept the growth from overtaking the house completely.

We didn't want to pay someone to come clear out the backyard because we didn't feel like it was our responsibility, but we were sick of trying to manage it ourselves. Every hour DH spends in the yard is $200 he can be billing a client for, so its cost us a lot to try and handle this on our own. We've been trying to convince the landlord for almost the entire time we've been here to fix yard so that we stop looking like the COPS house on the block. But the only way to rehab that giant backyard for good is to completely rip it out, put in all new sprinklers and drainage systems, and start from scratch. After hemming and hawing about it all this time, our landlord's suddenly come back to us with an offer to have the backyard professionally landscaped from top to bottom, to the tune of almost $10,000, including a new cement patio. The caveat is that she's asking us to chip in $1000 towards the cost of new sod and then to pay $40 a month to have the gardener professionally maintain the yard.

In the grand scheme of things, she's paying the lion's share of the renovation and its something we've asked her to do for a long time. We have no problem paying someone else $40 to deal with the yard after everything's finished but $1000 to put grass in someone else's yard seems crazy. That said, it would have cost several hundred dollars to pay someone just to haul everything out of the backyard and leave us with dirt, so I don't know. The other thing is that I know we've paid way under market rate for our rental because the yard is atrocious. Updating the yard would make the property worth at least $200-300 more a month in rent, so in essence, we've already saved about $3600-5100. By paying $1000 towards the sod now, we'd be making it hard for her to raise our rent next year. (She's a really nice lady and frugal lady. I don't think she would turn around and jack up our rent when we've worked with her to make the house nicer).

SO all this is to say, we may be out the extra $1000 for this stupid sod. DH and I are going back and forth about it. Right now, I'm thinking about offering a compromise where we pay an extra $100 a month towards the rent for the remainder of the lease (so 7 months) and at least save a little more money and dull the sting over time. Thoughts?


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 Post subject: Re: The Mobs' Debt Plan
PostPosted: Sat Nov 02, 2013 10:46 pm 

Joined: Thu Oct 03, 2013 9:19 am
Posts: 43
Okay, we've settled the issue with the landlord RE: the backyard.

We've agreed to add $100 a month to our rent for the remaining 8 months of the lease (so $800 total) and start paying $40 a month for a gardener beginning in February, when the grass will need to start being mowed, on the condition that everything is completed before the end of the year. This will still be $200 less than what the landlord asked us to contribute and it will be spread out so we wont feel it so much. I think we will be able to trim little things off our budget to make up the difference to make it a net neutral based on the fact that we coincidentally just trimmed $100 off our October budget making a few minor adjustments.

On the loan repayment front, we had earmarked an extra $1000 to go to DH's student loans at the end of October, but we've just agreed to add that money to our next balloon payment, which should go out in about a week. Otherwise, we'd be spread a little bit too thin for our comfort until our next paycheck. (Most of our bills go out the first week of the month).

On the bright side, DH's business did better than usual in October, so we should have a little more money to throw at the loans this month. We have to work on our November budget, so once we have a better idea of things, I'll post our figures.


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 Post subject: Re: The Mobs' Debt Plan
PostPosted: Sun Nov 03, 2013 6:27 am 

Joined: Mon Feb 04, 2008 7:35 am
Posts: 1148
Location: Maryland
Awesome negotiation with the landlord!!
There are always ways to trim the budget and find a few dollars here and there. I'm working on that too. I planned my dinners this week (and lunches were leftovers), and was able to keep $20 in my wallet the whole time. I was super psyched about that. I usually end up buying lunch at least once a week, but nothing in the cafeteria was better than what was in my lunch bag. :)


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