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Money Management

debt_free_journey_update_36342_paid_off
Student Loans

Debt Free Journey Update: $36,342 Paid Off

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I graduated from graduate school in August 2015 with about $200k in student loans from undergrad and grad school.  My private loans went into repayment on November 2nd, 2015 and my private loans in March 2016. My debt free journey has been going on for exactly one year. I truly can’t believe it’s already been a year and I think it’s super important to reflect on my first year of repayment to see ways I can improve my current plan.

Amount Paid Off Including Interest This Year: $36,342.51

Total Principal Paid Off to Date: $37,264.73

Current Payoff Date: December 31, 2022

Debt Free Journey: How I Paid $36,342 towards my Student Loans in One Year

  1. Sacrifices. As a twenty something who recently graduated from grad school, the first thing I always wanted to do was rent my first apartment and start my teaching career. However, I knew that wasn’t the best choice for my current financial situation. Instead I found a teaching job 20 minutes from my parents house and moved back in with them. This was the biggest way I have been able to pay off so much in one year.
  2. Budgeting. This year I have really cracked down on my budget and tried to be very strict with it. This has helped me immensely to pay down my debt this past year.
  3. Side Income. This was huge for me this year. Throughout the year I managed to add 4 different streams of side income through 2 different after school programs, private tutoring, and babysitting. At this point, I am able to almost afford all of my monthly expenses, except my student loans, with my side income. This has been amazing for my student loans because my salary can almost all go to my loans each month.
  4. Debt Avalanche. Since I have such high interest rates, I have chosen the avalanche method. This allows me to focus on my highest interest, largest accounts first and then apply that payment to my next account. This continues until all accounts are paid off. This has been working out wonderfully for me. I paid off one account this year and was able to apply that payment to my next account making that payment even larger. This has helped my loans get paid off even faster.

Debt Free Journey: My Plan to Make Even Larger Payments

  1. Budgeting. I plan to look at my budget even more and find more ways I can save even more each month. I’m trying really hard to search through my house and use what I didn’t know I had before going out and buying it. For example, whenever I run out of my favorite shampoo or conditioner, my first thought is I need to buy that kind again. Now, I’m looking through my house and bathroom closets to see if we have any kind of shampoo or conditioner that I can use instead of buying new.
  2. Side Income. I don’t think I’m going to add any new streams of income, but I plan to do more within the streams I have. Right now, I only work 2 days at the after school program, but I’m planning to pick up any extra shifts I can and find more students to tutor and kids to babysit.

I’m very proud of myself for being able to make my money work for me and pay off so much of my student loans in my first year of repayment. My current goal is to finish paying off these loans by my 31st birthday, which would be April 29th, 2023, which means my current progress gets me paid off early! I’m so excited to improve my strategy and plan to pay off even more in the next year to pay off my debt even earlier! How much were you able to pay off in one year of repayment? What was your strategy?

Debt_Payoff_on_a_10_Month_Salary
Student Loans

Debt Payoff on a 10 Month Salary

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Debt payoff can be tricky, especially when you’re on a pay schedule that doesn’t provide you with a paycheck every month. However, with some planning and budgeting, it can be easy to get around this problem. I’m a teacher and am on a 10 month salary, meaning I don’t get a paycheck during the summer months. But I was still able to make extra payments on my student loans in the month of July, with no paycheck from school. Continue reading to find out what I did to lower my debt by over $4k in the month of July.

Plan for the Months Ahead

It’s so important to plan and budget in order to make your debt payoff plan work for you. My monthly minimum payment is roughly $1,500 for my student loans, so I knew I needed to set aside $3,000 for my loan payments in July and August. This way I knew I had enough budgeted for at least my student loan payments in case I wasn’t able to find a job over the summer. So, $3,000 spread across 10 months is $300/month, it really wasn’t bad at all.

Find Side Hustles

Side hustles are the best thing ever. It’s always exciting to make extra money to put towards your debt. I know, that sounds crazy, but I seriously get a rush of excitement every time I make an extra payment and lower my daily interest I’m paying. I’m pretty sure these loans have made me a little crazy ha! But, I do after school tutoring at school during the school year and tutor local kids over the summer. I have also found a wonderful family to babysit for this summer.

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Debt Payoff

I ended up not even needing that extra money I saved throughout the school year, as you can see from my July loan payment. I easily made my minimum payment of $1,500 and was able to payoff much more than that. It’s amazing what you can do with a little planning ahead 🙂 What have you done for your debt payoff on an unpredictable pay schedule?

How_I_Got_a_Free_Gym_Membership
Money Management

How I Got a Free Gym Membership

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It might sound crazy that a girl trying to save money and pay down a ton of student loan debt pays for a gym membership. I promise you, that wasn’t part of the original plan I had. When I was planning for my debt payoff while still in graduate school, I planned a strict budget. One that definitely didn’t have a gym membership on it and didn’t have me buying all organic food, but that’s for another time. I told myself I’d work out at home and run outside when I didn’t have the luxury of a free university gym membership anymore. But then reality hit.

No Gym Membership at Home

I moved home and started to stick to my strict budget that I had made that worked well when I was in grad school. The major difference was that I no longer had a gym membership and I was no longer paying electric, rent, and utility bills each month. This was a huge savings for me. However, the no gym membership really hit me. I strive to be as healthy as possible, not only for my health, but also for my wallet. I have found that by paying a little more for preventive care (well visits, working out, organic food, etc.) I have saved a ton of money in the long run. Since changing my lifestyle to a healthier one, I very rarely get sick and very rarely need to take medicines. This all saves me a ton of money overall. I found myself not being able to motivate myself to work out at home, which is when I started researching.

Finding the Right Gym Membership

All the gyms by me cost about $50/month plus all of those lovely fees they add on, no thank you! I couldn’t justify spending that kind of money to work out. I didn’t want to go too far away because I knew I would never use it if it was. So I began looking by where I work, and I actually found a reasonably priced gym for $20/month. Before I signed up I asked some friends and read some reviews and found that they run promotions all the time for discounts when signing up. So, I waited. And waited. Finally, they had a promotion for $0 starting fee, I was sold. I went in and joined that day.

Unexpected Free Gym Membership Perks

Shortly after I joined the gym I began working. I was very overwhelmed by the beginning of my first year of teaching, but determined to get to the gym every day I could. I’m proud to say in those first few months I did go to the gym most afternoons. Then one day a teacher at school told me about our insurance giving reimbursements of $20 for gym memberships, if we went 12 times a month. It’s part of their preventive care. I signed up that night and my workouts started being tracked. This pretty much makes my gym membership free now, except for the annual fee the gym charges me.

If you’re someone that wants to join a gym, but can’t justify paying for it, do some research and see what you can find out there. It seems that a lot of insurance companies that I have looked into offer this in their plan, there are usually rules, like my 12 visits, but they’re giving you money to work out! It makes me excited just typing it! I need the gym to keep me motivated and healthy, it provides me with a great stress relief too. How do you make sure you keep active?

Saving-Money-In-College
Money Management

Saving Money in College

I was pretty carefree with my money my freshman year of college. I didn’t think about my student loans, didn’t get a job, and just kept pulling money from my savings account. Not the smartest moves on my part, but you live and you learn, right? 6 years later, 2 degrees, and about $200k in student loans, I definitely wish I did a few things differently back then. Don’t make the same mistakes I did, think about your financial future before you even step on campus.

Saving-Money-In-College

Saving Money Before College

  1. Carefully fill out the FAFSA form. Make sure you correctly fill out the FAFSA form, if you have any questions, I strongly recommend getting advice through your high school or college. Filling out this form wrong can result in you getting much less financial aid.
  2. Apply to scholarships. Apply to every scholarship you can find, and then apply to more. There is SO much unused scholarship money out there, it’s crazy! Look for local scholarships where the pool of people will be much smaller, but also apply to the larger national ones as well.
  3. Check in with the scholarship committees. This is one I never thought to do until I was in graduate school and it paid off incredibly. I went into the scholarship office every two weeks to check in until I finally got an answer. That poor woman knew me by first and last name, but it paid off because she had a face to a name and knew I really needed the scholarship.
  4. Ask for more financial aid. As soon as you get your financial aid package, call the financial aid office. Typically your financial aid package will arrive sometime in the summer before you head to school, call them immediately when it arrives. I learned this trick after my freshman year and was able to get more financial aid for my sophomore year. The schools send out financial aid packages and then a lot of students don’t come to the school. This makes more money available and they give it out on the first come basis.

Saving Money in College

  1. Price compare for textbooks. Look everywhere for your textbooks before immediately buying them at the bookstore. Yes, the bookstore is convenient and you will know that it’s the correct book, but it’s also usually a lot more money! I usually found the best deals on Amazon for buying and selling my textbooks all throughout undergrad and grad school.
  2. Sign up for student deals and discounts. There are so many deals and discounts out there only for college students, sign up for them! My all time favorite one was definitely Amazon Prime Student, which also made buying and selling my textbooks so much easier. I could easily procrastinate buying my textbooks and still get them in two days, FREE 🙂
  3. Work, Work, Work, Work, Work, Work. I just had to reference the Rhianna lyrics here, get out there and WORK! There were so many job opportunities presented to me, especially if you have work study as part of your financial aid package. Most universities will even pay you to be a note taker for the classes you are already taking notes for. You’re basically being paid to be a good student! It really is a win win for you.

These were some of the things I learned throughout my college experience and learning how to manage my money. It’s hard managing your money in college and trying to plan for your financial future with potentially so much debt. I wish I had known these things when I was a senior in high school so I could plan better for my future after college and have saved a lot more. Like I said, you live and you learn, right? What tips and tricks did you learn about saving money throughout your college journey?

How I Used My Tax Refund Check
Money Management, Student Loans

How I Used My Tax Refund Check

How I Used My Tax Refund Check

Filing your taxes can be such a pain, but hopefully a nice tax refund check is waiting for you at the end of it all. For me, it definitely was. I knew exactly how I was going to use my refund check because I know what my goals are. I want to pay my almost $200k in student loans by the time I turn 31, hopefully 30! This made it pretty easy to decide where my checks were going.

Refund Check: Savings

The first thing I did was restock my savings account. I treated myself in March to an AMAZING trip to Punta Cana with my boyfriend, it was definitely needed and totally worth it. We shopped around and spent a lot of time searching for the best trip for our budget and it really paid off. Of course it did still cost money, so I put that money back into my savings. Since I’m lucky enough to still live with my parents, I’m building my savings as much as I can while still sticking to my intense payoff plan.

Refund Check: Student Loans

Obviously, a large majority of my refund check went to my student loans. I am incredibly excited to share that I paid off my first student loan!! After lots of hard work paying my loans down during grad school, and moving back home to pay off more, I paid off $42k in about a year and a half. It definitely has been hard, but I wouldn’t trade my education for anything. It felt absolutely amazing to send in that payoff payment and say goodbye to my first student loan, you wont be missed!

Based on my goals right now, the best thing for me to do was really focus on my student loans with my refund checks. This definitely isn’t for everyone, but you need to know your financial goals in order to figure out what is best for you. How did you use your refund check this year?

Why_Im_Not_Hiding_From_My_Student_Loans
Student Loans

Why I’m Not Hiding From My Student Loans

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When I was in grad school and finally came to terms with the fact that I was going to be roughly $200k in debt when I graduated, I began researching. I spent hours finding tips and tricks to get out of debt and to do it fast. One of the biggest things I took from my research was that I shouldn’t be embarrassed by my debt. So many people hide from their debt, ignoring it exists. I didn’t want to do that. I began telling my friends and family about my debt, when it came up in conversation. They couldn’t believe it. They didn’t understand how I could have possibly racked up that much student loan debt. But, it’s possible. For some reason our society thinks we shouldn’t talk about debts because it’s normal to have debt. So often I hear people brush of debt like everyone has it and it’s the only way to live. Oh, but student loans are “good debt”, no debt is good debt! I don’t want that life, forever needing to give my hard earned money over to the company I borrowed it from years earlier. I want to keep my money!! Which is why I decided not to hide from my student loans.

I know many people who are simply ignoring that their student loans exist. I’m serious, they are letting their credit score absolutely tank and not worrying about it. They figure in seven years it will be wiped away and then I can start over. But, then you need to rebuild your credit and doing that after destroying your credit is incredibly difficult. It will take years and extreme diligence to bring it back up. Not to mention that having a bad credit score makes it incredibly difficult or impossible to rent an apartment, get a car, so many things that a 20 something would typically be doing. For right now, I live at home, but eventually I plan to move out. When that happens, I want to have the freedom of renting a place, if that’s what I choose to do. I don’t want my student loan debt to hold me back, even more than they already are.

I understand when you graduate from college you’re most likely in your 20s and think that it is an absurd amount of money. I get it. I was there, sitting in my college apartment staring at my computer screen in complete shock at the massive amount of debt I owed. How did I possibly rack up such a high number?! But you need to accept your debt, and make a plan to tackle it as soon as possible. Get angry, and get motivated and be sure to make a realistic plan for yourself. So, what’s your student loan plan, are you going to pay them off or ignore their existence?

My Techniques to Increase my Monthly Student Loan Payment
Student Loans

My Techniques to Increase my Monthly Student Loan Payment

My Techniques to Increase my Monthly Student Loan Payment

Finding out my monthly student loan payment was eye opening. I was completely shocked. $1,400/month for JUST my private loans, not even my federal loans. How was I going to afford this?! Especially when my federal loans were out of the grace period, which hasn’t even happened yet. The first step was to create a plan to tackle this absurd amount of student loans. Once I knew I could afford my required payment, I had to find ways to make my additional payment as large as possible. My teaching job just wasn’t going to cut it for me and my goals for paying off this student loan debt.

Multiple Streams of Income

One of my biggest strategies for paying off my student loan debt is to make more money through multiple streams of income. This will then allow me to make a larger student loan payment each month. My goal is to create as much passive income streams as possible, I’m not there yet, but I hope to be soon. For now, my income streams are my teaching job, after school tutoring at school, private tutoring, babysitting, and (hopefully) this blog. I strongly recommend you find ways to make more money if you are buried in student loan debt, like me.

There are so many ways to make extra money, but it needs to be worth your time, especially if you are working a full time job. For me, I wasn’t sure I had the time to do all these side hustles, but the amount of extra money I make really motivates me. I find the time to do these extra jobs because the money is worth it. I wouldn’t do just any job after my normal work day, the money needs to be worth the time I’m putting in.

Monthly Breakdown

One of the worst parts about side hustles is that the money usually isn’t consistent or guaranteed, which is also one of the best parts about it. This income changes month to month, meaning it can less or more each month. This makes it hard to budget for it. Personally, I don’t include this income in my budget, I pretend I don’t even make this money until the end of the month when I figure out my additional loan payment. All of my side hustle money goes straight to my student loans at the end of the month.

Here’s the breakdown of my side hustles currently:

-After School Tutoring: This is done through my school. I stay after 2 days a week for 45 minutes and work with a small group of students who are reading below grade level. Even though this is through my job, this is additional to my salary, so I count it as a different stream of income. This is roughly $200/month extra.

-Private Tutoring: I hope to get a few more students to tutor privately to really boost this source of income. Currently, this is about $400/month extra.

This is how I currently use side hustles to increase my monthly student loan payment. I hope to continue growing the amount of money I earn in side hustles and diversify how I earn the money. My goal is to find more ways to earn money doing things I love to do. What are your side hustles and how did you begin them?

 

Plan to Pay Off Student Loans
Student Loans

My Plan to Pay Off Almost $200K in Student Loans

So, the day finally arrived that I had been anxiously waiting for, my first student loan bill arrived in the mail. I just finished my graduate studies in August and knew it was coming. My private loans did not have a grace period, so I assumed my first bill would most likely be due by November. Sure enough, my first payment is due November 2nd. Before I got the bill, I wasn’t sure how much my payments were going to be each month. I guessed that they would be around $1,500 a month because that’s what my sister pays with a similar amount of debt. Of course, I budgeted for the worst and went for $2,000, since I went to grad school. It turns out all the debt I paid off during grad school was worth it, my private student loan payment is $1,400, much less than I thought it would be. My federal student loan payment was originally $600 each month, but I switched to an income based repayment plan and got it lowered to $250. It was a tough decision to switch to a different payment plan, but I wanted to be able to put as much money to my private loans, since they have much larger interest rates.

Plan to Pay Off Student Loans

Where to Begin: Get Angry

Like I have mentioned in previous posts about my amount of debt, when I first really acknowledged the amount of debt I had, I felt like I would never be able to pay that off. I mean, $200K is a massive amount of debt. I don’t want to be paying this off still when my children are starting college, which is what will happen if I stick to the 30 year repayment plan. Honestly, that’s what really lit the fire under my butt, knowing I wanted to buy a house, have kids, send them to college, things that will be much more difficult if I have this massive amount of debt looming over my head. Plus, who wants to be paying off their student loans at age 50, definitely not this girl. Get angry at your student loans, put things into perspective and get crazy mad at that large sum of money that is preventing you from doing more things and saving more money. And just think about how nice it will be once it is all paid off 🙂

Create a Plan to Payoff the Debt

Once you have reasons to motivate yourself to payoff your debt, create a plan. Some people need to use the snowball method because they need motivation in the beginning to get going. Others think more long term and prefer a method that allows them to save the most amount of money, or the avalanche method. Personally, since I have such a large amount of debt, I’m thinking long term and how I can save the most amount of money. So, I’m sticking with the avalanche method. This means that right now I am focusing on one of my debts that has a 8.05% interest rate and started at just above $40,000 (I’m proud to say that this debt is now at $12,000 after chipping away at it for the last year during grad school, WOOHOO!!!). After this debt is paid off I will move onto my next largest interest rate and so on. If two loans have the same interest rate, then I pick the loan that is largest amount. I strongly recommend using ReadyForZero, I basically swear by this website in my debt payoff. It does take some time to type in all the information each month, but it provides me with a graph of my progress and when I’ll be debt free. Also, it’s completely free and has an app that allows me to check my progress wherever. I find it extremely motivating to see my daily interest go down after I make all my payments each month and to see how much sooner my debt payoff date is.


Update June 2016: I officially paid off that first loan!!! This means that I have now moved onto my next focus loan, which also has a 8.05% interest rate, but it is much smaller, only $16,000. I plan to pay this one off in one year, June 2017.



How Much to Pay Each Month

It can be difficult to decide how much you can afford to pay towards your debt each month. I strongly recommend paying extra each month, any extra money you have, even if its $20, can make a difference in your debt payoff date. For me, I can afford my required payment in one paycheck, so I pay my bill on the 15th, when I’m paid. I never budget for my additional payment. This may sound odd to some people, and for a lot of people this might not work. However, I am currently in a very different situation than most. After I finished grad school, I moved back in with my parents in order to really tackle this debt, and they live 20 minutes from my job. This means that I don’t have many bills each month. Also, I work other jobs each month, like tutoring and babysitting, that make my income vary month to month. I do budget for gas each month, my bills, my 2 savings account, and my 403b account. You’ll notice that I do save each month, it’s not much, about $250 across the 3 accounts, but while I’m living with my parents I want to make sure I’m saving some money while I can. Since I pay my bill on the 15th each month, this allows me to make my additional payment at the end of the month when I am paid again. This is when I go through my budget for the month and see how much money I have left over that can go towards my debt. I hope to be able to pay an additional $1,000 each month.

Update June 2016: Since writing this post my monthly payment plan has completely changed, I found ways to make it much more aggressive. I made it a goal for myself to pay off all my student loans before I turn 31, that’s in 7 years. So, I went to my ReadyForZero account and changed my debt payoff date to determine what I would need to pay each month to pay it off by then. Turns out an extra $1,000 allows me to be debt free by my 31st birthday. I’m currently paying at least $2,600 each month with my teacher salary, living at my parent’s house (thanks Mom and Dad!), working extra jobs, and lowering my savings withdrawn each month. Instead of $250 I only put $125 into savings each month so that I can focus on my student loans.

This system might not work for you, but it’s what is working for me and my current situation. If I wasn’t living at my parent’s house, I don’t think this system would work for me since I probably would not be able to afford paying my entire bill in my one paycheck. What’s your debt payoff plan? What strategies have worked for you?

My Quick and Easy Way to Budget
Money Management

My Quick and Easy Way to Budget

My Quick and Easy Way to Budget

When I first decided to start budgeting about a year ago, I felt very overwhelmed. I searched through Pinterest and the Internet, and it seemed like such a daunting task. I knew I needed to start budgeting in order to take control of my student loan debt. What I quickly realized was that budgeting needs to be personal. One way might work for one person, and it might completely fail for someone else. You need to find the method that works for you, and stick to it. This is the method that I have found to work for me. It’s important to note that I have my salary that I can count on every two weeks to be the same, but I also have other sources of income that are not consistent (babysitting, tutoring, etc).

The Tools I use to Budget

Mint– I love this app. It makes my life so much easier when it comes to budgeting. When I first started budgeting, I took a month of expenses and figured out where my money was going. This was eye opening for me. I was spending so much money going out to eat it was absurd. It’s so hard to realize those little purchases out to eat here and there really add up. Once I started using Mint, I could very easily see where my money was going, and how much my purchases were adding up. I made my budget in Mint, and I can easily see how much I have spent in each category and how much I have left in a specific category.

Debit/Credit Card– I’m not a cash person, especially once I started using Mint. This definitely won’t work for everyone. With my looming student loans, I am very disciplined in paying off my credit card bill each month in full. This allows me to get the cash back from my purchases, and not pay the interest. If you’re someone that can’t pay off your credit card bill or will spend carelessly on it, don’t open one. It’s not worth it.

Income Spreadsheet– I found a wonderful Excel spreadsheet on Pinterest to track my income each month. This is handy for my extra income I make through my side jobs. The spreadsheet allows me to track each stream of income separately and then automatically adds up the different sources together for each month.

Student Loan Binder– I use my student loan binder to track how much money I am putting towards my student loans each month. Each month my extra payment is different, so it is important to keep track of how much went to my loans every month.

How I Budget Each Month

Since I am living at home rent free, I don’t have very many bills each month. I basically just have my student loans, and credit card bill. The first thing I do is budget for my required student loan payment, my credit card payment, and $100 to my savings and investment accounts. The amount you put aside for savings is really up to you. Ultimately I would love to put more than just $100 into each of my accounts, but right now I need to focus on my student loans. You should know that during grad school I made a huge effort to build up my savings before dropping to just that small amount. Then, I have all my expenses each month, groceries, gas, etc.

Once I have all my bills paid and it’s the end of the month, I figure out what my additional loan payment will be. Since I have extra streams of income, I don’t exactly budget for my additional loan payment. I put whatever extra income is leftover at the end of the month towards my student loan principle. Since I budget every other part of my income, I always have extra money at the end of the month to put towards my loans.

The biggest thing I learned when I began budgeting was that you need to put your money to work. Your money shouldn’t just sit in your checking account it needs a job. If you budget every penny of your income, you’ll be surprised how much money you truly have and how you can change your spending habits. How do you budget each month?