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Debt Free Update: $133,718 Student Loans Paid Off!

Debt Free Update_ $133,718 student loans Paid Off!This post may contain affiliate links. Check out my Disclosure Policy for more information.

I’m super proud of this number. Honestly, it still surprises me when I see it and think about only having $67k in student loans now. And yes, I use the word only before that because this feels like pennies in comparison to where I was.

It truly amazes me how much more in control I am of my life now that I have paid off a significant amount of my debt.

My student loans defined me when I first graduated. They dictated my life. They decided my fate, not me. I had no choice but to do the things I did after college.

When your minimum payments are $2,000/month and you’re a first year teacher, you have no choice but to do what gets that paid every month and still allows you to eat.

It’s why I moved back to my parent’s house. I needed the low cost of living expenses in a high cost of living area. My salary was way higher than it would have been in other parts of the country as a teacher. I took advantage of it.

Between the higher salary and working so many side hustles, it’s the only way I got to where I am now. Well, that and really intentional spending and money management, of course.

What I’m doing now to pay off my student loans

Right now, I’m focusing on paying off my private student loans. I refinanced them in September 2018 from a 7% interest rate down to 4.97%. This has saved me so much money in interest and I highly recommend refinancing with Earnest, if it’s right for you! Read my post all about deciding to refinance here.

Refinancing isn’t for everyone, but when used to lower your interest rate, it can really help you pay off your debt fast. I personally refinanced $45k and am now down to just under $15k. If you’re interested in refinancing, you can use my referral link to get $200 when you refinance!

With having so much debt, you really need to do what works for you on this journey. It’s hard, but you can do it and you can change your life for the better. I’ve experienced major life changes for the better and I still have $67k left!

What I plan to do

I often imagine how much more my life will improve once I have no debt. The opportunities that I will open up to myself are endless at that point.

It can be done and it will be done. Even during the summer, when I don’t get my salary from my old school.

I’m teaching summer school and VIPKID during the summer to bring in some income. I also have my summer sinking fund to pull from and my leftover money from June.

Yes, my debt payments will decrease this summer. I don’t plan to make any extra debt payments in July. Whatever I have left at the end of August will be sent to debt.

I am a planner by nature, I can’t help it. I’d rather be over prepared than under. So, that’s why I’m not risking it and waiting until I am paid from my new school to send any extra money to my student loans.

This is definitely hard for me. I stay motivated by seeing my debt total go down. It will still decrease because my minimum payment on my private loans is $865 and it doesn’t accrue anywhere close to that amount every month.

But, I won’t be making any crazy progress this summer. Again, it’s okay because I know I will get back on track in the fall. I just need to weather this storm.

Handling six figure non mortgage debt on a single income is a different kind of journey. If that’s you, send me an email! I want to connect with more people who have been or want to be on a similar journey to mine.

How much debt did you start with?

Debt

Paying Off My Student Loans Is Saving Me $12k A Year

How I'm Saving $12k a Year by Paying off My Student Loans

This post may contain affiliate links. Check out my Disclosure Policy for more information.

Everyone considers student loans to be a good debt. And for some people, it absolutely is a great way to get the career you love. But, for others, it may not be the best move.

I know for myself, I didn’t even know what student loans were when I was signing the checks for 5 figures of student loans. Naively, I didn’t even know how they worked and I definitely didn’t know what interest was.

Personally, I was in the fortunate position of never having any other debt than student loans. Unfortunately, this meant that I truly had no idea how debt worked.

I signed myself up for $201k in student loan debt and had absolutely no idea that it meant I’d pay SO much more in interest. And I had no idea that it would completely dictate my life post grad. But, that’s a whole other topic.

Student loans are crazy because they allow young adults to take out mortgage sized debt with high interest rates and little to no education. I was taking out loans for 5 figures, totaling $201k, some with 8% interest, and no education on financial literacy.

This was my fault completely, I take ownership of it. But, I think this is a serious issue. One that needs to be changed ASAP for the future young people in our country.

And now that we’re in this situation, what can we do for all of us drowning in debt. I’m not saying loan forgiveness is the answer, like it has been thrown around lately in the news. It absolutely is not the answer.

We took out the debt, we should absolutely be required to pay it back. But, we can do something to change our situations right now.

I graduated grad school in August 2015 with $201k in student loans, mostly from undergrad. Never once did I expect some program to bail me out. I’ve absolutely worked my butt off to pay off $133k in student loans since graduation.

Once I finish paying these off, I will be saving myself $12k every year, just in interest. I would have originally been paying $12k every year for 20 years, if I didn’t commit myself to paying off my debt.

Do you know how much that is over 20 years? $240k. Of course, some of them would drop off at the end and maybe I’d have refinanced my loans to get a better rate. But, that’s a TON of extra money just getting thrown away, on top of the principle of $201k.

I’m not even including my principle payments in this number. That number would be much bigger. I’m most concerned about the money I’m just throwing away to interest every year. It’s doing nothing for me.

So, how much money are you throwing away to interest every year? I encourage you to find out by looking at your statements and seeing how much goes to interest every payment you make. Or, you can use your tax statement you get every year.

Another way to see your students loans and how much money you’ll put to them is by using undebt.it. It will allow you to see how much money you’ll put to your debt on a normal payment plan, and then what more payments will do to it.

Our society preaches that student loans are good debt. Yes, they can be valuable to better your career, if done correctly, but you need to be careful about student loans.

My question to you is, are you planning to pay off your student loans early? If not, what’s stopping you?

I’ve been in your exact shoes and I’m happy to say that my life is so much better already and I haven’t even finished paying off my student loans.

I still have $67k to pay back, but I can finally breathe now and not feel like I’m totally drowning in debt. You can feel relief, you just need to do the work like I did.

I want to know what’s stopping you from paying off your student loans, send me an email or comment below.

Debt

Debt Free Update: $124,378 Paid Off!

Debt Free Update_ $124,378 Paid Off!

This post may contain affiliate links. Check out my Disclosure Policy for more information.

I feel crazy typing this, but now that I’ve been on this journey for roughly 3 and a half years, I feel so close to being debt free, even though I have $76,718 left. Maybe that isn’t crazy, but I know I’m no where close to being done, it just seems so much more manageable.

I remember when I hit my financial breaking point and absolutely freaking out about just affording my minimum payment on my teaching salary. Now I’m at the point where it’s no longer a stress in my life.

Of course, I still have about $1,100 as a minimum payment every month, but that’s a lot less than the $2,000 it was when I started. My monthly minimum payment would be $1,000 now, if I didn’t refinance.

Yes, I took about a $100 increase in minimum payment, sounds crazy right? But, this allowed me to get an interest rate of 4.97% instead of 7.05%, totally worth it in the long run.

Refinancing isn’t for anyone, but for me and my student loans, it was something I had been working to do for years. I am so happy to have a lower interest rate because so much more of my payment goes to the principal now. If you are considering refinancing your student loans, check out my post that outlines some questions to ask yourself before doing it!

Debt Free Update: Private Loans

I hate all of my student loans, but especially my private loans. I especially hated them when I had my old provider. I will say, I don’t hate them as much since I refinanced them with Earnest back in September 2018. They are awesome to deal with, listen to feedback and actually make the changes, and I am finally seeing actually movement in my pay off of them.

In September 2018, I refinanced $45k of my student loans, which was all of my private student loans. Now, I have $23,981 in private loans, I’ve paid off $21k in 7 months, just in my private student loans! This never would have been possible, if I didn’t refinance my loans, because I was paying so much in interest every month. If you are considering refinancing your student loans, you can use my referral link to get you $200 when you refinance!

Things are very up in the air for the second half of the year for me, my plan is to pay my private loans off by the end of the year. This goal will change depending on how things pan out after June.

Debt Free Update: Federal Loans

My federal loans are still on income driven repayment. I just renewed it and my payment is going up $50 to $300. This is actually a good thing because my loans accrue about that much in interest every month.

While focusing on my private loans, I have been paying the minimums on my federal loans, but making an extra payment every month to make sure the interest is paid off every month. The reason I do this is because I don’t want the unpaid interest to be added to the principal, making the loan increase. This will require me to pay even more in interest and even more in the long run.

This is why it is so important to understand these programs and stop making blind student loan payments. Your payment may be as small as $0 every month, which means your principal is going to increase on your loans. So, yes your loan is in good standing, but you are increasing your principal every single month!

My loan amount doesn’t really change much on my federal loans for now, I’m basically just paying off my interest every month. Right now my federal loans are $52,736. These are broken down in many smaller loans. Once I pay off my private loan, I plan to pay off my federal loans by avalanching the smaller loans based on their interest rate.

Debt Free Plan

I have been going very hard at my goal to pay off this debt as fast as possible. I’ve increased my income, moved back home with my parents, and cut my spending down. Currently, my debt free date is May 2021, which is incredible! It’s amazing what consistent choices over and over can do.

I’m not sure where my debt free journey will go by the end of the year. I have plans to move out, maybe get a new job, I’m okay to slow down my journey a bit to move out of my parents house. I have paid off so much debt, way more than I ever thought would be possible at 26 years old, that I’m okay with it all.

Right now, if I continue with my current plan, I will have just turned 29 when becoming debt free. My goal has always been to have my student loans paid off by my 30th birthday. Right now, I have a nice buffer of time on my side and I feel really good about where I am at with my finances. How is your debt free journey going?

Debt

7 Secrets You Will Not Want To Know About Student Loans

7 Secrets You Will Not Want To Know About Student Loans

This post may contain affiliate links. Check out my Disclosure Policy for more information.

Every since I wrote my post about blind student loan payments, I have been getting a ton of questions about student loans. It is crazy to me that student loan providers are allowed to do the things that they do. It’s absolutely terrible, which is why I think student loans are probably one of the worst debts.

There are so many things people don’t know about student loans, but they let 18 year olds sign their lives away to them. It’s insane! And I was one of them that unknowingly did it! But, I want that to change, I want every person that gets a student loan to know the reality of them.

They can be a tool to use to better your future, but they need to be taken out with education about what these debts really are. Student loans are unlike any other kind of loan, which can ruin people’s financial future.

Related posts:

4 Steps to Decide If Refinancing Your Student Loans Is For You

How Student Loans Impacted My Credit

A Honest Review: Round Up To Zero

How to Pay Off Debt on a Low Income

1. Minimum payments on student loans don’t need to cover all of the interest.

This is what separates student loans from most other loans. Most loans, you are at least covering the interest that accrues throughout the month. Student loans are completely different. You can be making your minimum payment, but not paying off your interest every month. This will cause your loan to grow and grow and you will never pay it off.

This is why you need to stop making blind student loan payments and check to see if you are paying off at least your interest every month. If you aren’t, you need to make a change in order to ever pay off your student loans.

2. Your student loan interest deduction on your taxes is making you lose money.

We all get wrapped up in tax deductions and sometimes it does financially make sense to make certain money moves that allow you another deduction. But, being able to deduct your student loan interest every year is not helping your financial picture.

I have heard so many people tell me they aren’t rushing to pay their student loans off because they get a tax deduction. You get to claim $2,500 every year, but add up how much you lose every single month to your student loans. Think about how much you’d be saving in a year if you just paid them off. I know for myself, I’d be saving about $40k, way more than the $2,500 I get to deduct.

3. Your family will still be responsible for your student loans if something happens to you.

There are some programs in place for federal loans and some private loans as well, but most student loans are not forgiven in the event that the borrower passes. The crazy part about this is that with most other debt, there is a tangible item attached to the debt. For example, if you have a car loan, your family can sell the car to help with the debt associated with it, similar to a house and a mortgage. With student loans, your education will not help pay for that cost if you pass.

This is important to keep in mind, especially if your parents or other family member cosigned your student loans.

4. Your wages can be garnished, if you’re delinquent on your student loans.

This is a vicious cycle. You can’t afford your monthly payment on your student loans, your wages are then garnished. If a recent graduate has an entry level job and can’t afford their monthly payment, it will be hard to get ahead when their wages are garnished. This is super important to keep in mind if you’re struggling to make your payments each month.

If you are delinquent, they can also garnish any social security benefits, disability benefits, or federal refund checks.

5. In some states, you can lose your driver’s license for not paying your student loans.

This is different in every state, but it’s something to keep in mind. This is yet another vicious cycle. If you lose your driver’s license, it then may be hard for you to get to work, if you live in an area that doesn’t have public transport.

6. In some states, you can have your professional license suspended for not paying your student loans.

This would prevent you from working in the field that you took the student loan out for. Which would prevent you from making a payment on your student loans potentially. This would prevent you from turning things around and getting back on track to paying your student loans.

7. You can be sued for not paying your student loans.

In the event that you are not paying your student loans, you can be sued by the company. This happens much more frequently with private student loans because they don’t have programs in place to help borrowers afford their monthly payment. However, they also don’t have programs that can grow your student loans, like I mentioned in number 1.

I encourage all of you to get educated about your student loans. Ask questions, do research, know what your student loans mean. If you haven’t taken any out yet, but are thinking about it, understand the reality of them and consider alternate plans. If you’re struggling to make your payments, get on a budget and get on a better financial path, so you don’t have to deal with any of what I mentioned above. How have you helped yourself to learn more about student loans?

 

Debt

Why Tax Deductions Shouldn’t Change Your Debt Free Journey

Why Tax Deductions Shouldn't Change Your Debt Free Journey

This post may contain affiliate links. Check out my Disclosure Policy for more information.

This time of year everyone is figuring out their taxes, filing their tax returns, making sure they get all of their tax deductions, and waiting on their tax refunds. It comes with this time of year. There is a huge personal preference to get a large refund or a small refund. I outlined why I plan to make myself get a smaller refund, but I understand why some people like a larger refund.

Currently, I get a larger refund because when I originally did my paperwork at work, I had no idea what I was doing. If I’m being totally honest, I’ve just been too lazy to change it! I plan to change it when I get a new job though.

A lot of times people get wrapped up in the tax deductions and it can be overwhelming. Lately I’ve been getting asked a lot about my debt free journey, especially by friends and family. Most of the comments I’m getting are surrounding my student loan tax deduction and not getting it when I pay off my student loans.

I try really hard not to eye roll at this, but it can be very difficult. Yes, I’ll lose my tax deduction when they are paid off, but I’ll get to keep all of that money. My friend shared this article with me that does a wonderful job explaining the math behind this, if you’re into that kinda thing like me!

Why Tax Deductions Don’t Matter

Okay, that’s being a bit dramatic. But, it isn’t exactly wrong. Yes, tax deductions are nice, but they shouldn’t dictate how you manage your finances. You should never do something solely because you’ll get a tax deduction for it, or it will lower your taxable income.

If your money move that you are making adds something else to your financial picture, then absolutely go for it! But, I wouldn’t make a move solely because you get a tax deduction. For example, I’ve literally heard people say they don’t want a higher income because it will push them into a higher tax bracket. That’s insane!!!! Taxes and tax deductions should not dictate your money moves, keep them in mind, but don’t let it sway you this much.

Let’s go back to my student loan interest tax deduction and losing that tax deduction once I’m debt free. The tax deduction would lower my taxable income by $2,500, but I’ll then be able to pocket and invest the $40k a year I’m currently paying towards my loans. Even if I just put it in a high yield savings account, that money would give me a nice return each year.

What you should do instead.

Pay off those pesky student loans! Put that money back into your budget because student loans are evil! I outlined why they are and how blind student loan payments will cause you to pay so much more on them, here. I encourage you to sit down, track your expenses, get that zero based budget going. Send all of your extra money to debt, after you have your emergency fund, and get those things out of your life for good!

If you need help with this, comment below, I love helping people get their budget set up and be sure to get my Google sheets template to help you get started with your own budget.

Don’t fall into the tax deduction trap.

It can be easy to listen to others when they are talking about finances. Don’t be afraid to be a little weird! If I listened to the vast majority of people, I’d still be drowning in $201k of student loans, instead of only $85k (HA!). But in all seriousness, the long term benefit of not having student loans definitely outweighs the small tax deduction I’d get every year, or not if my income increases. So, let’s get moving on freeing ourselves of student loans! I’d love to hear your experiences, have people told you not to pay off your student loans for the tax deduction?

 

Debt

When to Slow Down Debt Payments

When to Slow Down Debt Payments

When you’re paying off debt it can be difficult to slow down the process. I know for myself, I am so focused on paying off my debt that I sometimes need to be brought back to reality. It’s important to remember that a debt free journey is part of a bigger plan.

For myself, my bigger plan is to be able to live a life I love without having to think about money. But that also means that sometimes I need to not focus so heavily on my debt free journey and think about the reality of life. When you’re so focused on paying off your debt and the life you will live after your debt is gone, this can be difficult.

Sometimes, it’s important to slow down or stop extra debt payments all together. It depends on your life and what your goals are, but sometimes it needs to happen for what makes sense in the long term.

1. Unexpected life events would require you stopping extra debt payments.

This can be a long list and really depends on what your income is. But, any unexpected events, like job loss, or medical issues, could mean slowing down or stopping extra debt payments all together. If you’re single, this would definitely require you to stop making extra debt payments. But, if you have another income to rely on, it’s possible that this wouldn’t be the case.

My suggestion for any unexpected life events, is to stop extra debt payments and hoard any extra money. The reason this is important is because there is so much unknown in these events, for example, the recent government shutdown. Anyone who experienced the shutdown knows that the end is unknown. This means that you don’t know when you will be paid.

This is why it is important to stack any money you have coming in, even if you have a bit extra at any given time to throw at debt. That extra money will be there once you get through this unexpected event. Once things have settled down, then you can assess your finances and make an extra debt payment.

2. Any unknowns in the future could slow down your debt payments.

If you’re unsure about things in the future, you may want to consider slowing down or stopping your debt payments. This could be something like your job security being unknown, you may want to stop making payments or at least slow down.

This could also be something that you’re planning to do. For example, I am right now unsure of where I’ll be working and am planning to move this year. So, I am not stopping my extra debt payments, but I am slowing it down to put more money into my emergency fund to plan for it. This way I will have extra money to cover the unknowns of the second half of this year. Once things get settled for me, I can assess my finances and make an extra debt payment.

It is more important to plan for these unknowns when you know they are coming, then to simply hope things go according to plan. Hopefully the money you save up won’t be needed, but in the event that it is needed, it will be nice to have.

3. Needing to cash flow necessary expenses.

Life happens and sometimes you need to purchase things that wasn’t planned for, think car or house problems. It is better to slow down or stop debt payments to cash flow the purchase, then to go into more debt to purchase something. It’s pretty counter productive to being sending extra money to debt, but going into debt at the same time.

One way to avoid this is to cash flow the expense, meaning you send all extra money until you have the cash saved up for the purchase. If it is an expense that won’t be needed for a while, you can also start a sinking fund for it.

Everyone is different and decides what is considered a necessary expense, but it’s important not to go into debt for these things, if it can be avoided.

Keep in mind your long term goals when planning your debt free journey

Everyone wants to get out of debt quickly, but life happens and sometimes our plans don’t work out. It’s important to remember what you have planned for the long term, then to make extra debt payments. Sometimes, it makes much more sense to slow down or stop extra debt payments to get through a specific situation life has thrown at you. Just remind yourself of your long term goals in these situations. Have you had to stop or slow down extra debt payments?

Debt

$34k of Debt Paid off in 2018

$34k of Debt Paid off in 2018

This post may contain affiliate links. Check out my Disclosure Policy for more information.

I may be the only one that feels this way, but 2018 flew by. I feel like I was just ringing in 2018 and here we are in 2019 already. Where did the time go?? 2018 was a crazy year with lots of changes in my finances.

I went into the year with intense focus to pay off my debt as fast as possible. I made huge sacrifices and worked lots of side jobs to try to get my debt free date to be closer and closer. That was my plan for 2019, until June when my car once again had issues that needed to be fixed.

I switched gears and started cash flowing for a new to me car because my car had so many issues in warranty that I was nervous to keep it out of warranty. All of those costs would have fallen on me once it was out of warranty. So, I spent a few months cash flowing to that fund and paid minimums on my debt.

Then I realized that instead of getting a new to me car, I would just keep this as a car sinking fund and keep my car for as long as I could. This has so far worked out really well for me. I have a large sinking fund that I have already used a few times to fix my car.

I ended the year back in hyper focus to pay off my debt. In November, I hit my 3 year date of being on my debt free journey and managed to pay off $105k on my teaching salary. I added side jobs and have been working diligently to increase my income to pay off my debt as fast as possible. My debt holds me back from so much and I can’t wait until it no longer prevents me from doing things. I also finally wrote my ebook in 2018 that outlines how to master your finances as a twenty something, I share all my tips and tricks in it!

The things I did to pay off so much debt in 2018

If you’ve been following my journey, then you know that I have had the same salary from my teaching job since 2016. It’s hard to be on a debt free journey and not have your main source of income even come close to matching the rate of inflation. Fortunately, I didn’t let this stop me. I decided to work a before and after school program to supplement my income.

Yes, this takes away from my own time and extends my school day, but it’s worth it when it’s adding a significant amount to my income. This does take away time from my side hustles and free time, but I know that this is all temporary.

Also, I have been slowly decluttering my space and selling the things that are worth it. It’s not much, but it has added up to about $300 total. Of course, I continue to work my side jobs of tutoring and babysitting, I really committed to babysitting this year and it has definitely paid off.

One of the biggest moves I made was refinancing my high interest private student loans from 7% to 4.97%. My monthly minimum payment increased, but the amount I will pay in interest decreased. If you’re considering refinancing, check out my post that outlines how you can make the decision if it’s right for you!

My plan for 2019 to pay off debt

2019 is going to be such an exciting year for me, I can’t wait to see where it takes me. I am planning to do everything I can to lower my expenses and increase my income until June. I’ll do this by following a strict budget, you can find the template I use here. My goal is to get as close to paying off my private loans as I can before July.

The reality is that I won’t be able to completely pay off this loan before July, the numbers just don’t add up. But, I want to get as close as possible because I am planning to move out in July and my private loans carry a hefty $865/month minimum payment. If I can get this out of my budget, it will make it much more affordable to move out.

Also, I am planning to find a new job in June and I can’t wait to see where that takes me. I’m so excited to start something new and see what I can do in a new role. This also means that I have so many things in my budget that are totally up in the air once July hits. Normally, this would totally freak me out, but I’m so excited for it!

The first 6 months of 2019 will be all about sticking to a very tight budget and sending all extra money to my debt. I plan to find more ways to increase my income, declutter my space to prepare to move out, and enjoy every minute of this year making memories with loved ones. What do you plan to accomplish in 2019?