There's a lot of talk about the credit market and the result of upcoming changes in credit regulations; in my case, my card is from my credit union and has a small credit line, though a fairly high interest rate. Someone much more financially smart than I said that credit card interest isn't a problem until you carry a balance of more than $1,000. Currently, I have a balance, though in the last year, I have not carried a balance; I try to make one purchase on the card each billing cycle but think I missed one.
My current balance is a result of a blowout the other day and a trip to the tire store, where I made an unplanned purchase of two new tires. Of course it happened in the middle of my pay cycle, so I didn't have a whole lot of unallocated funding; I get paid every other week, so pay dates change monthly, but my student loan comes out of my account on the same date each month. It's meant to come out of the second paycheck in the month, but this time it didn't work out that way. The money is scheduled to leave my account two days before payday. And I have a substantially similar sized check outstanding that's making me nervous. I have money in savings and am only concerned about whether it gets pulled into checking. So far that large check hasn't cleared and I hope it holds off until payday. At that point, I know I'm fine, as my next bills aren't due until more than a week after payday.
Now that my tax return took care of some small outstanding debts, I'll be in a much better financial position, once that big check clears. My total monthly payments have gone down by $400 for the moment. Because I want to buy a house, I'll put as much as possible into savings. Theoretically I would be able to pay off my bar loan next year, upon receipt of my income tax refund; while the interest rate is lower than a mortgage would be, the interest isn't tax-deductible so it makes more sense to eliminate it first. It's also my smallest payment. Whether or not I buy a house, I would like to pay off that debt as soon as possible.
Showing posts with label student loans. Show all posts
Showing posts with label student loans. Show all posts
Thursday, July 30, 2009
Thursday, July 23, 2009
ABA information on Loan Forgiveness Programs
Here's information from the ABA on some loan forgiveness programs. I didn't read through all of it so don't know how it would work with the capped repayments.
Wednesday, July 22, 2009
More on Student Loans
We all went to school optimistically and I graduated, from high school, college and law school during times of great economic distress so have a history of trying to find a job when the market sucks. Now that all I have are student loans, it's not so bad; it was horrid a few years ago, when I had consumer debt as well.
I feel bad for the recent graduates, who grew up in better economic times and are part of the spoiled generation. There's a whole generation out there unaccustomed to adversity in any form and now they're learning that mommy and daddy can't fix everything.
The so-called helicopter parents who intervened in every part of their children's lives, provided them with every possible consumer good and gave them the expectation that they could have whatever they wanted immediately, no question, did them a huge disservice; these same parents aren't necessarily in a position to follow through on tuition payments, new cars, condos and unlimited use of credit cards due to the current economy. Their kids just don't have the tools to cope with that.
I feel bad for the recent graduates, who grew up in better economic times and are part of the spoiled generation. There's a whole generation out there unaccustomed to adversity in any form and now they're learning that mommy and daddy can't fix everything.
The so-called helicopter parents who intervened in every part of their children's lives, provided them with every possible consumer good and gave them the expectation that they could have whatever they wanted immediately, no question, did them a huge disservice; these same parents aren't necessarily in a position to follow through on tuition payments, new cars, condos and unlimited use of credit cards due to the current economy. Their kids just don't have the tools to cope with that.
Sunday, July 19, 2009
Income Based Repayment
I found the calculator, unfortunately at a time it was broken but am just not sure about this; currently I'm working for government and if I sign up for this, my Federally Subidized loan will have reduced payments and if I work for eligible entities and make payments for ten years while I'm in this program, the remainder of the debt will be forgiven.
Because my job is temporary, I don't know if this is worth it; I keep hearing rumors that a position will come open but it hasn't yet happened; I have less than four months to go, though it's possible my position would be extended. Because I have a few other questions, I'm not sure this is the way to go.
If you look at the fine print, while the cap is 15% of income, it's based on household income, not individual's income. The problem I have with that is that student debt is owned by the student, not the spouse; in effect, with the higher payments with joint income, the spouse is required to pay on this loan. That doesn't make sense to me. If I change to this, my payments go down a couple hundred bucks; if I were married to someone with a job so had higher household income, my payments would go up.
The interest rates are higher than on my current debt and people who graduated a few years after me have even lower rates so not necessarily a good idea. When employment is so uncertain, this might not be that good of a deal for those of us currently mired under in debt. Especially for those married folks who would have higher payments and higher interest.
Because my job is temporary, I don't know if this is worth it; I keep hearing rumors that a position will come open but it hasn't yet happened; I have less than four months to go, though it's possible my position would be extended. Because I have a few other questions, I'm not sure this is the way to go.
If you look at the fine print, while the cap is 15% of income, it's based on household income, not individual's income. The problem I have with that is that student debt is owned by the student, not the spouse; in effect, with the higher payments with joint income, the spouse is required to pay on this loan. That doesn't make sense to me. If I change to this, my payments go down a couple hundred bucks; if I were married to someone with a job so had higher household income, my payments would go up.
The interest rates are higher than on my current debt and people who graduated a few years after me have even lower rates so not necessarily a good idea. When employment is so uncertain, this might not be that good of a deal for those of us currently mired under in debt. Especially for those married folks who would have higher payments and higher interest.
Wednesday, July 15, 2009
Changes to Student Lending
The private student loan industry is not happy with Obama's plan to change the game on them; they make crazy amounts of money, and if you recall, there was a big scandal a few years ago about gaming the system so that the loan officers would recommend loans with whatever company made it most beneficial to the school. I believe that was mostly for-profit institutions but could be wrong on that.
It used to be that people could get part time jobs and work their way through school. Tuition costs have escalated so that isn't possible. It's even worse once you get into advanced degrees.
Remind me now, why did we do this?
It used to be that people could get part time jobs and work their way through school. Tuition costs have escalated so that isn't possible. It's even worse once you get into advanced degrees.
Remind me now, why did we do this?
Saturday, April 4, 2009
Finances and Conventional Wisdom
Conventional wisdom used to indicate that the way to reduce debt and plan to be more secure in the future was to pay off any serial debt such as credit cards by first paying off the smallest balance or the highest interest. You would at least pay minimum + monthly interest so the balance would actually decrease. The smallest balance is easiest to pay off, so you feel a sense of accomplishment. Then, you were supposed to add the amount you paid on that bill to the next smallest/highest and so on, until you had eliminated your serial debt. That's the method I used a few years ago when I had way too much debt. It took awhile, but was effective.
Today's conventional wisdom is different. Because the world's economy has imploded and even in the world of document review there isn't too much work lately, the new plan is to pay minimum balances on everything and stash a little more into savings. Or stash something into savings. While I'm paying extra on two of my student loans, I don't have too much extra being paid out so I don't know how much sense that makes for me; it's about $80/mo so not a whole lot.
One of my colleagues plans to make minimum payments because we work for the state and it's a contract negotiation year so who knows what's going to happen. She plans to change her habits for the next 2-3 months, but has more room for changes than I do. She has a bill with Dell and a credit card balance, in addition to having wireless internet for which she pays $60/mo but doesn't use even monthly. She likes the convenience of it. Me? I'd like the convenience of having $60 more to pay to Dell or to pay on my credit card! She also pays $90/mo for a cellphone package, which includes a family plan for a husband who uses 3-min/mo. That would be an incentive to me to change my package; I did at one point pay for extra cellphone services and not use them much so got rid of that option.
My priorities are somewhat different and I have a greater need to have less debt than to pay for services I don't use. While I would like to put more money in savings, I'm not sure it makes more sense than attempting to reduce my student loans. I really want them to go away though that's going to take some time. My smallest loan used to be the highest rate of interest but has reduced itself over time and is now lowest. Meaning that with previous conventional wisdom, this is not the loan to target. Then again, the lower interest rate means more money goes on principal and I have a better chance of paying if off sooner.
Today's conventional wisdom is different. Because the world's economy has imploded and even in the world of document review there isn't too much work lately, the new plan is to pay minimum balances on everything and stash a little more into savings. Or stash something into savings. While I'm paying extra on two of my student loans, I don't have too much extra being paid out so I don't know how much sense that makes for me; it's about $80/mo so not a whole lot.
One of my colleagues plans to make minimum payments because we work for the state and it's a contract negotiation year so who knows what's going to happen. She plans to change her habits for the next 2-3 months, but has more room for changes than I do. She has a bill with Dell and a credit card balance, in addition to having wireless internet for which she pays $60/mo but doesn't use even monthly. She likes the convenience of it. Me? I'd like the convenience of having $60 more to pay to Dell or to pay on my credit card! She also pays $90/mo for a cellphone package, which includes a family plan for a husband who uses 3-min/mo. That would be an incentive to me to change my package; I did at one point pay for extra cellphone services and not use them much so got rid of that option.
My priorities are somewhat different and I have a greater need to have less debt than to pay for services I don't use. While I would like to put more money in savings, I'm not sure it makes more sense than attempting to reduce my student loans. I really want them to go away though that's going to take some time. My smallest loan used to be the highest rate of interest but has reduced itself over time and is now lowest. Meaning that with previous conventional wisdom, this is not the loan to target. Then again, the lower interest rate means more money goes on principal and I have a better chance of paying if off sooner.
Tuesday, March 24, 2009
Walking away from your Home Loan
People are starting to talk as though walking away from your home loan isn't a bad thing. I have mixed feelings about this; if you're overextended because you're greedy, it's totally different than if someone was a fraud victim or has lost their job.
At the same time, I can see that there will be a different result if you walked away or were foreclosed upon these last few years rather than at a better time for the economy. I don't know what the answer is, but am not certain that FICO scores taking into account the fact that the housing bubble burst and the banking system imploded is the right answer.
Again, people who are responsible are being screwed.
At the same time, I can see that there will be a different result if you walked away or were foreclosed upon these last few years rather than at a better time for the economy. I don't know what the answer is, but am not certain that FICO scores taking into account the fact that the housing bubble burst and the banking system imploded is the right answer.
Again, people who are responsible are being screwed.
Saturday, January 31, 2009
Saving Money
Last year I bucked the trend and spent my government stimulus check, albeit to pay off an existing debt. But that's one less monthly payment I have to make so it was well worth it.
This year, in addition to having to pay for glasses, contacts and a contact lens fitting, I have other medical bills to pay. I do have a healthcare savings plan, but underestimated the amount of money I would use; it's a use or lose benefit which I've never used when offered previously. I put what seemed like enough money to pay for glasses in the account and it isn't enough. Which is fine; this is just another way of using pre-tax dollars. I'm waiting for my debit card, which will have $250 free dollars from my employer on it in addition to my payroll deductions. The additional money would carry over, but there's no reason for me not to spend it on medical expenses since I have plenty of them.
While I'm saving for retirement through paycheck deductions, I need to increase my savings which is difficult. Right now I'm so focused on getting rid of the random bills that I've incurred recently that I'm not nearly as concerned as I should be about saving money. They say you should have the equivalent of 4-6 months expenses in savings. At the rate I'm going, that'll take me forever to achieve. Especially since I want to reduce my debt.
What I need to do is sit down and create a budget for myself and figure out if there's a way for me to achieve my goals of a) cleaning up my new, annoying medical debt; b) not carrying a balance on a credit card in order to do so; c) reducing my overall debt and d) increasing my savings.
My federal student loans are at a fixed rate and are unfortunately are the highest interest rate I have; however, the rate is much lower than the one I had for my undergrad loans. When I consolidated it seemed better to get a fixed rate loan because the rate I got was the lowest ever at that time. Now it isn't.
My other loans are really at a negligible rate of interest, differing by about .25 from one another; they both just recalibrated and got lower. I could decide that with such a low rate of interest I'd be better off not worrrying about paying extra on either of these loans and merely pay off my other debt as quickly of possible and put more in savings until the interest rates on these loans goes up again. That might be the most practical thing to do instead of worrying about getting the smaller one paid off sooner; the same payment at a lower interest rate will reduce principal by a slightly higher amount each month.
This year, in addition to having to pay for glasses, contacts and a contact lens fitting, I have other medical bills to pay. I do have a healthcare savings plan, but underestimated the amount of money I would use; it's a use or lose benefit which I've never used when offered previously. I put what seemed like enough money to pay for glasses in the account and it isn't enough. Which is fine; this is just another way of using pre-tax dollars. I'm waiting for my debit card, which will have $250 free dollars from my employer on it in addition to my payroll deductions. The additional money would carry over, but there's no reason for me not to spend it on medical expenses since I have plenty of them.
While I'm saving for retirement through paycheck deductions, I need to increase my savings which is difficult. Right now I'm so focused on getting rid of the random bills that I've incurred recently that I'm not nearly as concerned as I should be about saving money. They say you should have the equivalent of 4-6 months expenses in savings. At the rate I'm going, that'll take me forever to achieve. Especially since I want to reduce my debt.
What I need to do is sit down and create a budget for myself and figure out if there's a way for me to achieve my goals of a) cleaning up my new, annoying medical debt; b) not carrying a balance on a credit card in order to do so; c) reducing my overall debt and d) increasing my savings.
My federal student loans are at a fixed rate and are unfortunately are the highest interest rate I have; however, the rate is much lower than the one I had for my undergrad loans. When I consolidated it seemed better to get a fixed rate loan because the rate I got was the lowest ever at that time. Now it isn't.
My other loans are really at a negligible rate of interest, differing by about .25 from one another; they both just recalibrated and got lower. I could decide that with such a low rate of interest I'd be better off not worrrying about paying extra on either of these loans and merely pay off my other debt as quickly of possible and put more in savings until the interest rates on these loans goes up again. That might be the most practical thing to do instead of worrying about getting the smaller one paid off sooner; the same payment at a lower interest rate will reduce principal by a slightly higher amount each month.
Sunday, November 23, 2008
Thankful
As we approach Thanksgiving, I'd like you all to know that I'm thankful that people read and comment on my blog; I'm always excited to see comments, even if I don't respond right away. I've been spending less time with my computer recently, I'm sure it feels neglected.
I'm also thankful to have had an income these several months; while I haven't paid off my targeted loan due to a few unexpected expenses along the way, I'm feeling more optimistic about the prospect of doing so. I'm going back on an austerity program for a few months; I have most of my Christmas shopping done and have a medical bill that needs some attention.
The project is still going on, but we're not sure how long it's going to last. Hopefully there's another one out there.
I'm also thankful to have had an income these several months; while I haven't paid off my targeted loan due to a few unexpected expenses along the way, I'm feeling more optimistic about the prospect of doing so. I'm going back on an austerity program for a few months; I have most of my Christmas shopping done and have a medical bill that needs some attention.
The project is still going on, but we're not sure how long it's going to last. Hopefully there's another one out there.
Friday, November 7, 2008
Student Loan Fugitives
While I find my student loans to be an albatross around my neck, and am not pleased that it appears they'll be with me approximately forever, I haven't reached the point of no return.
The most surprising thing to me is that people actually leave the country, thinking that they're going to make more money overseas and will be able to pay off their loans! Mine are dwindling, but not as fast as I'd like them to. My next payment is due Tuesday but fortunately it's a small one. It's much easier to pay the small amount of money than to pay the gigantic one; they take that one automatically so I have no margin for error, or the ability to mail the check on the due date when it arrives the day before payday. In the end, that's a small price to pay for a reduction in interest.
Lately I hear more people complaining that you can't get rid of student loan debt by filing bankruptcy; in this economy that might be helpful; however, we're paying for the actions of previous generations of students, who became doctors and lawyers, got jobs and just didn't feel the need to bother paying on their loans so filed for bankruptcy. The law was changed in the early 80's, I believe; I've heard stories about people fleeing to other states and getting away with non-payment of loans because the government hadn't caught up to them.
That doesn't make so much sense to me because presumably they have your social security number from the loan and from your workplace, as well as the ability to match them up and garnish your wages.
Several years ago, I met someone at a party who screened all calls to miss the creditor calls. They do tend to call once you stop paying your bills. This group of bills included student loans and I don't think the government gives up on that until you die. I was unimpressed with the thought that someone would take out loans with no intention of paying them back. I can't imagine!
The most surprising thing to me is that people actually leave the country, thinking that they're going to make more money overseas and will be able to pay off their loans! Mine are dwindling, but not as fast as I'd like them to. My next payment is due Tuesday but fortunately it's a small one. It's much easier to pay the small amount of money than to pay the gigantic one; they take that one automatically so I have no margin for error, or the ability to mail the check on the due date when it arrives the day before payday. In the end, that's a small price to pay for a reduction in interest.
Lately I hear more people complaining that you can't get rid of student loan debt by filing bankruptcy; in this economy that might be helpful; however, we're paying for the actions of previous generations of students, who became doctors and lawyers, got jobs and just didn't feel the need to bother paying on their loans so filed for bankruptcy. The law was changed in the early 80's, I believe; I've heard stories about people fleeing to other states and getting away with non-payment of loans because the government hadn't caught up to them.
That doesn't make so much sense to me because presumably they have your social security number from the loan and from your workplace, as well as the ability to match them up and garnish your wages.
Several years ago, I met someone at a party who screened all calls to miss the creditor calls. They do tend to call once you stop paying your bills. This group of bills included student loans and I don't think the government gives up on that until you die. I was unimpressed with the thought that someone would take out loans with no intention of paying them back. I can't imagine!
Wednesday, August 20, 2008
Loan Reduction
Because I didn't work for most of the summer, I may not achieve my goal of paying off one of my private loans by the end of the year. It has a co-signer and no way to reduce interest like my other loans. It's also the mid-range of interest rates. My Federal loan is fixed, which has its upside as well as down; I graduated, consolidated and obtained a fixed rate, however, in the meantime, rates went waaaay down, and are now on an upswing. I know someone with higher rates of interest on a student loan for undergrad who is going to look into automatic payments and find out if that will reduce interest. I don't think it would be possible several years later to consolidate and get a better rate; if it had been possible before the whole banking industry implosion, it's not likely to be possible now.
My targeted loan will likely increase in another month or two, as the associated webpage lists interests rate that I believe are good through September; the trend is upward, so I can expect this loan to increase. My bar loan has been all over the map and my recent payment was required to be about $3 less than the upcoming payment. While it isn't a significant increase, and the difference between that and my private loan, isn't likely to be that much, the private loan is a significantly higher amount of money, so it makes the most sense to put more money on that.
I waffle between targeting the private loan entirely and paying extra on the bar loan so I can get a slight reduction in interest. Which is probably silly; the extra is around $40 and it would be better to direct another $50 to the private loan.
They say you should target the smallest bill or the highest interest rate in order to reduce debt. While I'm deviating from that plan in order to free my co-signer from the obligation, I will still see progress by targeting extra payments to one portion of the loan. Once that portion is gone, my payments to each other segment will automatically increase
My targeted loan will likely increase in another month or two, as the associated webpage lists interests rate that I believe are good through September; the trend is upward, so I can expect this loan to increase. My bar loan has been all over the map and my recent payment was required to be about $3 less than the upcoming payment. While it isn't a significant increase, and the difference between that and my private loan, isn't likely to be that much, the private loan is a significantly higher amount of money, so it makes the most sense to put more money on that.
I waffle between targeting the private loan entirely and paying extra on the bar loan so I can get a slight reduction in interest. Which is probably silly; the extra is around $40 and it would be better to direct another $50 to the private loan.
They say you should target the smallest bill or the highest interest rate in order to reduce debt. While I'm deviating from that plan in order to free my co-signer from the obligation, I will still see progress by targeting extra payments to one portion of the loan. Once that portion is gone, my payments to each other segment will automatically increase
Sunday, August 10, 2008
Economic Hardship Deferments
I seriously considered applying for an economic hardship deferment for my gigantic student loan, since I'm not working right now and all. That would make it much easier. What stops me is that I'll only end up increasing my monthly minimum and I don't want to do that. I should be able to pay the amount required right now based on my unemployment payments.
I finally received the letter indicating that I qualify to receive unemployment if I jump through the remainder of their hoops; applying for jobs, blah, blah, blah. I have to take a couple of their little classes and have fulfilled other requirements. Their webpage is only available from 6 am to 6 pm Monday-Friday so I have to wait until Monday to look at the schedule and find out when the classes are and if I can just go or if there's a need to sign up.
I have already begun networking as well as having signed up on the state job bank page. I didn't really sign up, just updated my account. I have also signed up to receive other job postings via e-mail so it's really just the classes. One is a creative job search class, which I don't think will have anything new for me to learn; the other is an interviewing skills workshop, which may prove helpful. I'm introverted so don't think I interview the best.
I finally received the letter indicating that I qualify to receive unemployment if I jump through the remainder of their hoops; applying for jobs, blah, blah, blah. I have to take a couple of their little classes and have fulfilled other requirements. Their webpage is only available from 6 am to 6 pm Monday-Friday so I have to wait until Monday to look at the schedule and find out when the classes are and if I can just go or if there's a need to sign up.
I have already begun networking as well as having signed up on the state job bank page. I didn't really sign up, just updated my account. I have also signed up to receive other job postings via e-mail so it's really just the classes. One is a creative job search class, which I don't think will have anything new for me to learn; the other is an interviewing skills workshop, which may prove helpful. I'm introverted so don't think I interview the best.
Sunday, June 8, 2008
Achieving Goals
I just paid off my smallest student loan. The minimum payment was $50 a month, which never seemed to make the loan shrink. This was a loan that I could pay online or over the phone with no additional cost, so I tried to make a payment every payday. My weekly paycheck is usually $XX8.48 and I realized I could pay this off much quicker even if all I did was pay the $8.48 from each week's paycheck; it added up to about $33 so in three months I would make two extra payments.
The next smallest loan, on which I have also been making minimum payments as about two and a half times the amount of money as the last one; it has been re-calibrated several times and the minimum payment has jumped around a bit. The minimum payment on this loan has been lowered a few times with the Fed's rate cuts, so I have continued paying the same amount and am reducing the loan more quickly.
I would like to pay this loan off by the end of the year, but that will only be possible with continuing employment and focus on paying it off. If a project comes my way, I should be able to achieve this goal.
Monday, May 12, 2008
Debt
When I finished law school, I had student loans and credit card debt. I compounded that by buying a new car (the car I had was 13 years old), getting a clerkship, consolidating my credit cards with my credit union and racking up more credit card debt.
Now that my consumer debt is gone, I'm focused on reducing my loans so I can achieve my dream of owning a home. In my case it's likely to be a Condominium or Town House. To that end, I'm paying much closer attention to my spending than I used to. I try not to buy bottled water, instead, I bring water from home when I run errands. Sometimes that's a water bottle, other times I just take a glass of water with me. It fits in the cupholder.
I try to be realistic and don't expect perfect behavior; I have strict goals for 4-5 months at a time, then loosen it up for a few months. I know I'll have trouble if I prohibit buying anything so try to be reasonable about what's okay to buy. While I'm not a lipstick junkie, II allow myself to buy certain things, like Clinique products for the recent bonus. I try to limit myself to buying lunch once a week, but that doesn't always work out. You have to be able to go out with friends and happy hour specials are the perfect way to do that.
I'm also saving money so I have a cushion in the event of catastrophe or lack of work. I'm qualified to make contributions to a 401K and am doing so.
On Friday I got my economic stimulus deposit and am only waiting to get paid this week before paying off my little loan.
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