Lanthiriel's 2013 Fitness Journal

New! Use this space to post your goals, accomplishments, and setbacks on your path to get rich slowly. Others can read about your situation, and provide critiques and motivation. Look here to find somebody who has experienced a situation similar to yours!

Moderators: lvergon, Fiscal Fitness Moderator

lanthiriel
Posts: 104
Joined: Tue Jan 22, 2013 6:09 pm
Contact:

Lanthiriel's 2013 Fitness Journal

Postby lanthiriel » Tue Jan 22, 2013 6:39 pm

I'm new to GRS, but I'm loving the daily articles and community support! This seems like a great place to get advice and get input on how to save for my goals in 2013.

This is going to be a weird year for me because my husband is on track to finally graduate from college. Hopefully this means a job isn't far behind. In his field he should, even estimating conservatively, triple his income from his current part-time retail job. The big questions for us, then, are: 1) when will he get a job? 2) will we have to move? 3)if we do move, will I be able to transfer or need to get a new job?

Given that our financial situation is a bit murky, I'm setting up a few tiers of goals. The only debt we have is student loan debt, but it's pretty significant. I only have about $9.5k left of a formerly $20k loan, but the husband has $57k in federal student loans. The good news is, I did just finish funding a 3-month emergency fund (yay!) and we are both automatically funding retirement at reasonable rates for our ages (me: 15%, him: 11%).

Here are my goals:

#1 MUST HIT in 2013 GOAL: Pay off my student loan
$9466

#2 Potentially attainable 2013 goal: Pay off husband's old consolidation loan
$4994

Another tough thing about our situation is that I'm not sure if I'm going to need to buy a new car this year. It sustained some rear end damage at the end of last year that causes it to not look so nice and leak a bit into the trunk (don't worry, I've stripped out anything that could mold and the leak if very slight). I'm committed to continuing to drive this car (without fixing the damage, which would cost about half of what the car is worth) as long as we stay in our current location (I take transit to work, so it's really just a grocery getter). However, if we move, I am going to sell the car and at that point it would be unclear whether we could be a single car family depending upon proximity to jobs, etc. At this point, I just can't plan for this piece at all and it makes me really nervous.

Any advice on my situation would be appreciated! Good luck to all with your 2013 savings goals!

lanthiriel
Posts: 104
Joined: Tue Jan 22, 2013 6:09 pm
Contact:

Re: Lanthiriel's 2013 Fitness Journal

Postby lanthiriel » Fri Jan 25, 2013 11:53 am

Alright, apparently it's details that get responses. Here we go:

Debt
Me (student loans): $9500
Husband (hereto known as J) (student loans): $57,000

Gross Income
Me: $3675/mo
J: average $1800/mo

Pre-tax deductions
Retirement: Me - 15%, J - 8% with 3% match
Transit: $100
HSA Contributions: $150

Take Home
$3400 (average)

Current Budget
Rent: $820
My student loan: $165
His student loan: $210 (bumps to $600+ in April after grace period expires)
Electric: $120
Cell phones: $80 (Yes, he has a smartphone. I have one too, but work pays for it.)
Internet: $30
Netflix: $8
Grocery budget (including pet food, etc.): $300
Eating out: $60
Gas: $100
Misc (gifts, vet, car repair, etc.): $300

Currently going into savings: $1100

My question is, what should I be doing with our savings? As stated earlier, I have a 3-month emergency fund in place. We are potentially moving this year depending on if/where J gets a job. I could also potentially need a new (read: decent used) car after we do.

Should I be working to pay down all of that hideous student loan debt? Individual loans that contribute to those numbers are as low as $2k, so I could be snowballing to knock out small chunks of our monthly payments. Or given how uncertain our situation is, should I just be hoarding cash in our savings account until we know what's going on?

Would appreciate any help you can give!

alohabear
Posts: 623
Joined: Tue Jun 12, 2012 4:34 pm
Contact:

Re: Lanthiriel's 2013 Fitness Journal

Postby alohabear » Fri Jan 25, 2013 11:59 am

What's the interest rate on your student loans? If it's astronomical, then I'd focus on paying down at least the high-interest ones. If it's low or reasonably low, considering you have a bit of uncertainty in your near future (possible move, potential car purchase), extra cash can't hurt. If you end up not moving (or if your husband's future employer pays for relocation), then you'll have the extra cash then to put towards your loans or bump up your e-fund.

lanthiriel
Posts: 104
Joined: Tue Jan 22, 2013 6:09 pm
Contact:

Re: Lanthiriel's 2013 Fitness Journal

Postby lanthiriel » Fri Jan 25, 2013 12:16 pm

Mine's all at 6.3% and his averages out at about 6%.

That's another question--I can't seem to find any way to refinance his student loans at a lower rate. They are all Stafford federal loans. Is it just not possible to consolidate federal loans these days to a lower interest rate? I have friends who were able to consolidate federal loans with a private lender around 5 years ago to around 2.75%, but I can't seem to find that now.

LeRainDrop
Posts: 353
Joined: Tue Jun 30, 2009 9:44 pm
Location: Atlanta, Georgia
Contact:

Re: Lanthiriel's 2013 Fitness Journal

Postby LeRainDrop » Fri Jan 25, 2013 1:22 pm

I think consolidating loans just takes the weighted average of the current loans' interest rates (and then may also tack on a partial percentage).

If I were you, given the uncertainty with a potential move and/or need for a new-used car, I would emphasize savings. First step would be to get up to six months of expenses saved. That will take you at least some time to get there. Then reevaluate whether the move and car are becoming more or less likely than what you think now. Readjust your focus then. For now, don't get fancy with investing your savings or anything like that -- just keep it in a simple savings account, as you may need the money in what is considered relatively short term.

peachy
Posts: 1148
Joined: Mon Feb 04, 2008 7:35 am
Location: Maryland
Contact:

Re: Lanthiriel's 2013 Fitness Journal

Postby peachy » Fri Jan 25, 2013 2:32 pm

Does your company match anything towards your 401k? I would consider dropping your 401k down to the match just until you can put a bigger dent in those student loans before the grace period ends. That would give you a little more leeway once they reset and you can breathe a little easier even with the debt.

You don't say how much you have in retirement, but if you have SOME retirement money it's better than nothing, and you can give yourself a break and hope for gains until you can bump it back up to 15%. If they don't match (that sucks!), but maybe even then drop it just a smidge to get those loans down.

The rest looks good to me!

lanthiriel
Posts: 104
Joined: Tue Jan 22, 2013 6:09 pm
Contact:

Re: Lanthiriel's 2013 Fitness Journal

Postby lanthiriel » Fri Jan 25, 2013 4:09 pm

Peachy, my company's kind of funny in that 15% automatically goes into a SEP-IRA. I have no say over this. Of course, I am able to pull it out once it's there, but that's a pain and costs me some money in penalties.

FYI, I'm 25 and have a little over $12k in retirement right now. My husband is 29 and only has $10k (long story...).

Thanks for all the votes toward keeping my cash in a liquid saving account. I think that's good advice. It's just hard to look at that money sitting there and not think, "I could pay off 10% of my debt with that!"

CecilyC
Posts: 450
Joined: Fri Jul 10, 2009 6:57 am
Contact:

Re: Lanthiriel's 2013 Fitness Journal

Postby CecilyC » Mon Jan 28, 2013 1:23 pm

lanthiriel wrote:Peachy, my company's kind of funny in that 15% automatically goes into a SEP-IRA. I have no say over this. Of course, I am able to pull it out once it's there, but that's a pain and costs me some money in penalties.

FYI, I'm 25 and have a little over $12k in retirement right now. My husband is 29 and only has $10k (long story...).

Thanks for all the votes toward keeping my cash in a liquid saving account. I think that's good advice. It's just hard to look at that money sitting there and not think, "I could pay off 10% of my debt with that!"


Next time you hear that voice, imagine how you would feel if you paid off the debt with the savings, only one day before somebody smashed your car beyond usability!

lanthiriel
Posts: 104
Joined: Tue Jan 22, 2013 6:09 pm
Contact:

Re: Lanthiriel's 2013 Fitness Journal

Postby lanthiriel » Sat Feb 02, 2013 12:03 pm

Ugh, talk about financial set backs. We did our first run of our taxes in TurboTax and it looks like we're going to owe $1050 in federal and $200 in state taxes. We made a bit more this year and had significantly less in school expenses, but I didn't realize how big of an impact those things would have on our taxes.

The good news is that we have the money, but this definitely makes me see the importance of having a solid emergency fund. I guess I need to reevaluate what we're withholding.

Mario
Posts: 95
Joined: Fri Jan 18, 2013 7:21 am
Location: New York
Contact:

Re: Lanthiriel's 2013 Fitness Journal

Postby Mario » Sun Feb 03, 2013 10:33 am

Hi there- Sounds like you're in pretty decent shape that could potentially get better very soon. Congrats :)

You asked about what you should do with your savings. Because there's a good chance that you may need to dip into those savings within the next year and how bad interest rates are across the board, I don't think there's a great argument to keep it in anything more exciting than a money market account at this point.
http://debtblag.com

Track my fiscal fitness with $0.5 million in debt: http://getrichslowly.org/forum/viewtopic.php?f=11&t=61052 Latest update: As of April 16, I've paid off $21,400 in credit card debt this year (after starting with $35k)

Mario
Posts: 95
Joined: Fri Jan 18, 2013 7:21 am
Location: New York
Contact:

Re: Lanthiriel's 2013 Fitness Journal

Postby Mario » Sun Feb 03, 2013 10:43 am

lanthiriel wrote:Peachy, my company's kind of funny in that 15% automatically goes into a SEP-IRA. I have no say over this. Of course, I am able to pull it out once it's there, but that's a pain and costs me some money in penalties.

FYI, I'm 25 and have a little over $12k in retirement right now. My husband is 29 and only has $10k (long story...).

Thanks for all the votes toward keeping my cash in a liquid saving account. I think that's good advice. It's just hard to look at that money sitting there and not think, "I could pay off 10% of my debt with that!"


Right, but your subsequent thought should immediately be to what you would have to do to squeeze out the necessary money should your car become unusable. Even in low-interest-rate times like these, quick money is usually pretty expensive

10% of your student loan debt is $7,000 less you're accruing interest on (vs keeping it in a money market account), which works out to roughly $30 a month in interest. Obviously, paying down debt is a good thing, and you certainly shouldn't treat the emergency fund as spending money, but that $30 is what you should be considering when the thought crosses your mind to drain it to pay off the student loans.
http://debtblag.com

Track my fiscal fitness with $0.5 million in debt: http://getrichslowly.org/forum/viewtopic.php?f=11&t=61052 Latest update: As of April 16, I've paid off $21,400 in credit card debt this year (after starting with $35k)

lanthiriel
Posts: 104
Joined: Tue Jan 22, 2013 6:09 pm
Contact:

Re: Lanthiriel's 2013 Fitness Journal

Postby lanthiriel » Mon Dec 30, 2013 7:25 pm

You know, I've continued to read GRS but somehow forgot about this "fitness journal" until I realized I hadn't done a good job of tracking my progress this year. I remembered that I spelled it all out somewhere and dug this up. Honestly, we've come a lot farther this year than it felt like we did.

We wound up moving to a city with a higher cost of living, but between more generous taxes and a raise were able to keep things relatively stable. My husband graduated, but still has not found a job in his field. He transferred his existing job and was able to move up a bit, though. I sold my car and found a place to live that's close enough to work that I didn't need to replace it. Rent is higher, but I'm able to walk to almost anything I need.

Here's what our finances look like now, almost a full year later.

Student Loan Debt
Me (student loans): None! Just paid off!
J (student loans): $53,700

Savings/retirement
Me: $520 ($21,000 total in IRA)
J: $250 ($16,000 total in 401k)
Cash emergency fund: $6,000

Take Home
$4500 (average)

Current Budget
Rent (utilities included): $1500
His student loan: $670
Cell phones: $80
Internet: $95
Netflix: $8
Grocery budget (including pet food, etc.): $400
Eating out: $60
Gas: $100
Misc (gifts, vet, car repair, etc.): $300

~$1300 left over every month

This year we paid of almost $13,000 in debt, which comes out to almost 20% of our net pay. We did see a few windfalls, but of course we had some large expenses as well.

Our goal for 2014 is to pay off $20,000 of that student loan debt. It'll be much easier for that to happen if he's able to get a job in his field of study. Fingers crossed!

alohabear
Posts: 623
Joined: Tue Jun 12, 2012 4:34 pm
Contact:

Re: Lanthiriel's 2013 Fitness Journal

Postby alohabear » Mon Dec 30, 2013 7:40 pm

Congrats on your awesome progress this year! I hope you're enjoying your new city.

peachy
Posts: 1148
Joined: Mon Feb 04, 2008 7:35 am
Location: Maryland
Contact:

Re: Lanthiriel's 2013 Fitness Journal

Postby peachy » Tue Dec 31, 2013 8:14 am

Even though you dropped off from updating, I think you made great progress even with the move.

Hope you have a safe and happy New Year!

lanthiriel
Posts: 104
Joined: Tue Jan 22, 2013 6:09 pm
Contact:

Re: Lanthiriel's 2013 Fitness Journal

Postby lanthiriel » Fri Jan 03, 2014 8:03 pm

I'm going to try to do a better job this year of using this fitness journal to keep me motivated. Here goes!

Below is our detailed list of student loans from lowest to highest. I know that a lot of people recommend paying off the higher interest loans first, but we're going to use the traditional snowball method. Honestly, I need the rush that comes from getting the "Your loan is paid in full" emails to keep me going.

Loan #1: $1,755 at 5.38%
Loan #2: $2,483 at 5.38%
Loan #3: $2,489 at 4.25%
Loan #4: $4,960 at 6.30%
Loan #5: $5,196 at 5.35%
Loan #6: $5,203 at 5.75%
Loan #7: $6,001 at 6.30%
Loan #8: $6,359 at 6.55%
Loan #9: $8,544 at 6.55%
Loan #10: $10,325 at 6.55%

I've decided to set just one goal at a time: pick a date to pay off the loan at the top of the list and save toward that. I think that rather than setting a timeline for when I'll pay off each loan, I'll be able to keep my head in the game if I can think "it's only $1,755" instead of "OMG, $53,675 to go." Though I am holding on to the idea of being able to ring in 2016 debt free. We'll see...

So for now the goal is to pay off Loan #1 by February 16, 2014. We already have a bunch of stupid things in our way: a plane ticket for my husband to go home for his grandfather's memorial and some vet bills for my dog's ongoing skin infection. But I'm also looking into side gig options and have a potential windfall headed our way, so I'm staying positive!


Return to “Fiscal Fitness Journals”

Who is online

Users browsing this forum: No registered users