Now yes, I've talked a lot about the other reasons that I still live with Mom. And yes, those still trump any financial reasoning I can come up with. But if I decided right here and now that I wanted to move out of my mother's house, I would have to stretch my budget and cut away a lot of things to make it work.
Before I get too far into this post, I want to say that I know full well that I am well off. I have both feet firmly in the middle class. For a single man, without a wife or children, living in a smallish Midwestern town, I make a good amount of money. I live comfortably and can afford the things I want. I am NOT complaining. To those that are financially struggling, I am in no way comparing my problems with yours. I lived for a long time working jobs that didn't pay me enough to live on and I am grateful for the job and income that I have now. But with that being said and understood, I do have debt that I have to deal with and it does occupy my mind. I haven't written a post like this in the past because I didn't ever want to be seen as complaining when I do have these blessings... but this has been on my mind lately and I write here about the things that are on my mind. So here it goes.
Some financial numbers first. I'm not going to go into what I make an hour or what I make a year. I'm sure if someone wanted to do the calculations they could get close, but I'm not here to talk about what I make. At the same time, I want it understood how much of each check goes toward each debt. So I get paid every other week and my current check is around $1,700. I have little bits of overtime on each check, so that's a slight variable but its never over $1,900 and never under $1,650.
I've made sure that all of my bills are taken care of monthly. Even my insurance is put onto a monthly plan even though it costs me $3 extra a month, just so I can budget it out properly. I spent so much time pinching pennies together and worrying about if I was going to be able to make any particular payment, that I have made a spreadsheet showing all incoming and outgoing payments. That became a habit so I still use that spreadsheet. I call my spreadsheet my 'Oracle' because it lets me see into the future.
By far, the two biggest payments per month are my car lease payment and my student loan payment. The car lease is $644 and the student loan payment is $640. Now above I said that my student loan payment is the largest payment I make each month and that's because I haven't paid 'only' $640 for my student loans in a single month for a couple years now. I've wanted to get those paid off early for awhile and have pushed a little extra on every payment. As I earned more each month, I paid more each month. It's not much, but it goes toward the principal and as I'm paying interest over 10 years, that's a lot of savings. Right now I pay $700 a month for my student loans. I used to do the same thing for the car payment, but as it's a lease now instead of a payment, I just make the standard payment and don't pay any extra.
The other big payments each month are; Mom's car at $300, Rent at $250, Cigarettes at $220, Credit Card at $200, and Insurance (car, renters, personal liability for my nursing licence) $200. the rest of my regular payments are under $100 each and include things like cable television, internet, cell phones (mine and mom's), Google music, public radio (yeah, I pay them monthly... I'm a public radio nerd), Netflix, and Hulu.
As I get paid every other week and that doesn't exactly line up with twice a month, the payments don't line up exactly per check. But on average my set bills are between $1,100 and $1,400 per pay period. I still have to buy gas and food for the two weeks, but the rest is money to spend or save (and yeah, I generally spend it).
So I know at first blush, getting $1,700 every other week sounds pretty good. But as you can see, even without having my own home or paying for the associated costs of living in a home (water, electricity, garbage service, upkeep, food...) I still spend almost all of the money I make. Take out that $700 a month though and that's a tidy mortgage payment. If I stop financially taking care of mom (paying for her cable TV, phone, internet, car, the rent I pay her), and not only could I afford a nicer home that I currently live in (have one room in!), but could also continue to live my life in the exact same way. But it really boils down to the student loans as $700 a month is just to high a number on my income to budget around.
The only advantage that keeps me ticking is that they'll get paid off. I was so happy in 2013 when I started paying on them. I knew it started a timer that would go for 10 years and at the end of that 10 years, in 2023, I would have my student loans completely paid off. But thanks to my student loan servicer getting sued over and over again (thanks Navient!), I recently found out that my student loans will NOT be paid off in 2023. But before I get into that, lets go into why I have so much student loan debt.
When I pay off my student loans with all the interest and fees and such, I'll have paid roughly $120,000. I know, I know... President Obama had a similar loan amount. But I'm not a constitutional scholar or a lawyer with a doctorate degree, or president of the United States of America. I'm a registered nurse with two associates degrees. One in photography and one in nursing. Sure, a lot of that is interest, but I still took out around $60,000 in student loans. Here's how I got to that astronomical number.
I went to college straight out of high school on a full music scholarship. My first two years of school were paid for free and clear. I was in a 'pre optometry' program at the local community college. After those two years I went to the four year university that had a great optometry program to finish up the pre-requisites, get my bachelors degree, and get into the optometry program. At that point in my life I had never lived on my own, had never had to pay for college, and had never had to pay for much of anything. Hell, I had some lawsuit settlement money from when my parents sued an ophthalmologist that screwed my eyes over as a child. I was living on cloud nine and had it all figured out.
I was wrong.
That year was a quick hard lesson on student loans and how expensive it was to 'live'. It was also a lesson on what I wanted to do with my life as I quit out of the idea of being an optometrist and went into photography. The best photography program was a 3 year associates program at a community college close enough to my parents house for me to commute... so I moved back in. But I still had to pay for 3 years of school and that meant more loans. Understand, I was applying for and getting just about every scholarship and grant that I could, but it just didn't cover that cost of college and my parents didn't make enough to help me out. So after 6 years of school, 4 of which were paid for with student loans, I had my degree.
I had my degree in a field that never earned me enough money to pay for the student loans. You've heard this part before. I worked on and off as a photographer and graphic designer for 10 years without ever fully earning a living at it before giving up and going to school to be a nurse. Going to school to be a nurse was another 3 years of student loans. 7 years of student loans at mostly community colleges is $60,000. Paying that off with all the interest is $120,000.
Now thankfully this degree (and a lot of hard work) got me a job as a nurse, and a job as a nurse earns me enough money to pay it back. But while I'm firmly in the GenX generation, I have full sympathy for millenials coming out of college with a bachelors degree and $60,000 in student loan debt. Of course they can't buy a house straight out of college like their parents did.... they have $600 a month student loan payments like I do and a lot of those jobs that bachelors degrees get you don't pay what my registers nurse job pays me (trust me on this... I work with people that have Masters degrees that I earn more money than!).
But the sympathy ends there as those millenials have a 40 year career ahead of them.... I have about 20 to 25 years left to work. If I don't buy a house soon, I won't be able to have it paid off before I reach retirement.
So that brings me back to my student loans and them NOT being paid off in another 5 years. With Navient, up until 3 months ago, I would tell them I wanted to pay extra toward the principal of my loans, and they would simply apply it as they saw fit. I really had no idea if they were putting it toward my biggest or smallest loans, my highest interest rate loans or my loans with no interest, or if they were splitting it up evenly. I had no idea. But they were getting sued by the feds and several states for not giving out such information so they started to make that information more clear. And part of it was listing out the loans with their interest rate, their balance, their normal monthly payment... and their payoff date.
The first time I saw the loans listed this way I glanced at the payoff date and saw that the months were all different but that the years were all 2023. I didn't pay too close attention and figured the months were different just because some would be paid off exactly 10 years later while others would take one extra payment. But the next time I made a payment I figured I'd look a little closer and see what the difference was. I never got the chance to track down why some were going to be paid off months in advance because I saw that my two biggest loans (the consolidated loans of everything before nursing school) would be paid off in 2033. Not 2023, but 10 years later.
MOTHER FUCKER!!!!!
I have no idea what, how, why, or when, but evidently in my joy at being able to START paying my student loans, I signed a 10 year payment plan for all of my 'current' student loans and a 20 year payment plan for my consolidated loans. And my consolidated loans are 60% of my monthly payment or about $330. Yeah, my monthly payment will go down significantly in 5 years but $330 is still nothing to sneeze at and I'll be paying that for ANOTHER 10 years.
So that's been stewing in the back of my head for 3 months now. I thought I was half way done with my student loans and I'm not even a third of the way done.
Now I could easily take my car payment down quite a bit. In fact, the lease I'm paying is WAY more than it should be, but that's because I came into it with owing more on my car than it was worth. It's one of the reasons I went into the lease though... this will be the only time I go into a lease upside-down. If I go with the same car in a couple years at the end of my lease, my monthly payment should drop down by about $100 or $150. More than likely though, I'll keep the payment close to what it is and just get a 'better' car. I'm still to far out to consider what car I'd like, but this payment could get me a good high trim Mercedes C class, an Ecoboost Mustang with all the trimmings, a Caddy ATS with just about all the trimmings, or many other really REALLY nice cars. If I got to save money though it will be with a car more like Fiona, my 2012 Focus. A brand new small car with all the bells and whistles who's monthly payment will be closer to $400. The whole idea behind the Fusion was because I was putting so many miles on it, but now I"m just not driving it enough to warrant the payment or the enjoyment.... and you can see why I'm not anywhere near deciding on what kind of car I want. That's a decision that will take the entire 2 years I have.
Mom's car is probably in the sweet spot for payments. $300 a month got her a high end, reasonably low mileage Escape that was only 3 years old. I'll be paying on it for 5 years and it shouldn't ever be TOO far upside-down on the loan, so if (God forbid it from happening) Mom passes away I can sell it and just be done with that payment. But I"m planning on her being around for awhile and therefore in 3 or 4 years we'll trade it in and get what we can get for $300 a month.
The credit card. I only have one major credit card. It's from my local credit union where I do all of my banking. They give me a good interest rate but not much else. There's a reward program but by spending a few thousand dollars on it I 'earned' a new lunchpail and a bluetooth speaker. Not exactly something I will think of as a benefit. The benefit is that I can transfer money to it without issue from my man account, if I have any issue with the card I can deal with a person face to face about it, and again, they give me a good interest rate. I always laugh at the cards that have a 'great' reward program like 2% cash back... but that at the same time charge you like an extra 5% in interest. Sure, if you pay it off every month, that's great but I don't pay off my credit card every month. I have a $10,000 limit and carry about a $5,000 balance. That's just stuff that would have taken too big of a dent out of my savings. Like the trip a few weeks ago to Beer City. The hotel there cost $550 and instead of paying cash, I just put it on the card. If I go to Chicago in a couple weeks (that's in the works) I'll probably put that hotel on the card. But I pay around $200 a month on it and between what I put on it and what I pay off, it stays around $5,000. When I purposefully put something big on it like an appliance (most recently the new dryer went on it), I calculate the 'extra' to pay off that purchase and divide it up in payments and then add it to my credit card payment each month until that particular purchase is 'paid off'.
My brother's car. I don't really pay anything on R's Jeep Grand Cherokee. That's his and he makes all the payments on it. But when he went to purchase it, he had NO credit record. I don't mean that he had a bad credit record, I mean that it had been so long since his bad credit or any of his good credit or him doing ANYTHING with his credit, that he had a credit score of N/A. Seriously, it should be a number, but it came back as N/A at the dealership. So while it's not bad as in he has to pay a higher interest rate, it's not good enough to earn him a loan at all. He's like an 18 year old with no credit, except it looks strange to the dealership as he's a 46 year old man (at the time of purchase). So I co-signed with him... or so I thought.
The fucking dealership ended up just doing the easiest thing possible... they put the loan in my name and put my brother on as a signatory. At it's most basic level, it's not OUR car loan, it's MY car loan. If R stops paying on it and they come after us for the money, they won't even blink at R... they'll just come straight after me. Now unless R goes through a major hardship, I'm not worried about him not making payments. And even if he doesn't have the money, he put so much cash down that the payments are like $200 a month. But still.... if he passes away, I'm on the line for a 2012 Jeep Grand Cherokee Overland.
Appliances. At the moment, I don't owe on any appliances. In the past couple years I've put the refrigerator, the clothes washer, the television, the dryer, the grill, and the snowblower, all on credit cards. Some of them were on my own credit card (explained above where I was making extra payments to pay them off), but some were on store credit cards. The only time I put it on a store card is when they have a 0% interest deal. And when they have that deal I make DAMNED sure I get it paid off in time enough so that there is no interest. But while I"m not making any extra payments right now, the dishwasher is on it's last legs and will need to be replaced soon. Like this month. I'm hoping to get Mom out tomorrow, but I'm sure she'll want to wait for R to help shop for it and he's out of town this weekend.
The only other major purchase/debt thing I have is the house itself. Now I consider this Mom's house and I just live here. But at the same time, I respect her decision and she considers this OUR house (R, her, and myself). She was worried about passing away and leaving us a huge debt with giving us the house (it's paid off but transferring it to a deceased owner to a new person involves taxes and stuff), so she put the house in a trust that has my brothers and I on it. She's the president of the Trust with full control and will remain that way until she passes away. At that time it passes on to my brothers and I in the form of the trust. We can then divy it up however we want (sell it, transfer it to one or two of us, or just keep it in the trust to keep the taxes the same). But I put this here because I want Mom to do the changes to the house she wants to do. Dad's been gone for 10 years and a house requires maintenance. Since Dad's passed away we've put in a completely new HVAC system (including running it up to the second story dormer for the first time ever), painted the house, put on a new roof, a new car port, and new carpet in the living room. Realistically we should put a new floor in the kitchen and bathroom (it's linoleum and OLD), new carpet in the dining room, and new carpet in the bedrooms. We should probably do a major rebuild of the driveway as we have a tree root lifting up a major section of it and now only have 3 cars down from our high of 5.
When I was going back to school for nursing, I stopped working for awhile. I still had a car payment though, plus car insurance, and gas, and a cell phone, and... yeah, bills. For 3 years Mom more or less took on $250 a month in payments for me. So the first payment I made when I got my job as an RN was paying her $250 a month back for 3 years. And once that 3 years was up, I just renamed that payment to 'rent'. She doesn't charge me rent and I don't pay rent... but I do pay it to her every month so that she can continue to do the things she does to the house. You see, while I was paying her back that's the money she used to put the new HVAC system in. And once that was paid off, that's the money she used to pay for the roof, and that's NOT paid off yet. It's a home equity loan that whenever we want something major done to the house we can use... and the payment is roughly $250 a month. Paid by me. So that payment won't go away.
So where does that leave me? Realistically, beyond the car and the student loans, I live fairly modestly. I don't mean to say I live inexpensively or don't spend a lot of money. But outside of the huge student loan payment and the outlandish car lease payment, I'd say most of the other things I regularly pay for are reasonable and really can't be reduced (at least not without telling Mom to screw off and that's just not going to happen).
As I can't do anything about the car for 2 years, and is a short term commitment, I'm not too worried about that. I AM worried about the student loans thought. I can't express just how devastated I was when I learned that I wasn't half way done with my student loan payments.
Thankfully, I'm not out of options there. I just don't have the one option I wanted to have. I've looked around a bit at forgiveness programs, and I've looked a bit at various alternative payment programs but none of them seemed worth it. Oh don't get me wrong, if I could get the loans forgiven, I'd take it... but he forgiveness programs come in two flavors; Nursing and Public Service and they were both complicated and involved paying off MOST of the loans anyway in addition to a LOT of paperwork. As I looked at them, they looked to be more for nurses or public service employees that had a huge student loan debt that weren't earning a lot of money. Like those people I work with that have a masters degree but earn half my pay. So when I looked into them before I figured i'd just take the pride of paying off my student loans myself in 10 years and be done with it.
But now its worth looking into more. First, nursing. I looked and looked and looked and looked... and none of the nursing specific loan forgiveness programs seem to apply to me. First, and this is the tricky part, most will only apply to student loans taken out that went toward your nursing degree. Right there, it would only cover about half of my loans and it's the half that WILL be paid off in 5 more years. Second, I couldn't find any of them that would specifically cover a nurse working directly for the state. As I'm an employee for the State of Michigan that means they won't work for me. And finally, the ones that looked like they might have just enough gray area for me to sneak into, require you to apply for the privilege and then require you to work for between 7 and 10 years in their program while making regular payments and at the end of that period they'll pay off the remaining loans. In other words... by the time I apply and get accepted and work through the time period, I'll have all of my nursing student loans paid off.
That leaves public service. There's the most basic and easy form of that... the Public Service Loan Forgiveness program from the George Bush presidency. Basically if you make 10 years worth of student loan payments on a qualifying plan and work for a public service agency (in my case working for a state government qualifies), they'll pay off your remaining student loan balance at the end of the 10 years.
The kicker there is 'qualifying plan'. I'm on a regular 10 year payment plan and a regular extended 20 year payment plan. The qualifying plans are all income contingent. I never went to an income contingent plan as I made enough money that it wouldn't save me anything. But of course that was when I thought all of my loans were on 10 year plans, not 20 year plans. Now I"m five years into paying off my loans and I haven't made one single payment on a 'qualifying plan'. This morning and much of this afternoon, I took a long hard look at what would happen if I went to one of the many income contingent plans.
First, the hassle. Going on an income contingent payment plan as I'm sure you can imagine, has the unfortunate hassle of proving how much money I make every single year. As I get a slight raise every year, my student loan payment will go up every single year. And if I don't go through the process of reporting how much I make and resetting up the income contingent plan? Well then I'm thrown back onto a regular plan and my payment changes drastically.
I know it doesn't sound like much of a hassle of the payment going up slightly every year, but did I tell you about the spreadsheet? About my nerdy, anal-retentive, obsessive need to plot out every single payment I have going out months in advance? And beyond that annoyance, there's the fact that with all the raises I've gotten my student loan payment has felt 'smaller' every year. When I first started paying on it, my car payment was $300 a month and I wasn't buying Mom a car, but my student loan payment was still $640 a month. It was bigger than my two next (almost my three next!) largest payments put together! And now, it's just a little bit LOWER than my car payment. That won't happen on an income contingent plan. As my pay goes up, so does my payment. It will always 'feel' the same.
Next, the advantage. Going on an income contingent payment plan puts me onto a 10 year payment plan. So instead of my payments extending to 2033, they'll stop in 2028 or 2029. Yeah, it's not as good or as cool as being done in 5 years, but I guess it's better than 15 years. Then there's the fact that by extending out some of my loans and lowering their payments, I'll more than cover the difference in raising the payment of my larger loans and cutting terms down by 5 years. In other words, my payments will actually go down. And we're not talking about pocket change here.
If I put all of my student loans on a income contingent plans (it's complicated to do that as some quality for the REPAYE plan while others only qualify for the standard Income Contingent Plan), my initial year of payments will be $440 a month. If I drop down to that minimum and don't overpay like I am now I'll save $260 a month and be paid off in 10 years.
There are other options, but they're variations on that plan. Some have higher payments initially and pay off some of the loans in 5 years then drop the payments down considerably and pay the rest off in another 5 years. But it's so strange to see how they work out interest over that long of a period of time. And it got me thinking... how long would it take to pay off if I just keep paying $700 a month? And better yet, what if I stop looking at all of these amounts as separate loans with separate payments and separate interest rates and just consolidate them into one big loan (technically two loans as one would be subsidized and have no interest!)? Could I have all of this paid off in like 7 years without reducing my payments?
I don't know, and at this point, I don't have an answer. I do know this; I won't have my student loans paid off in 5 years. I also know this; I won't be paying on my student loans for 15 more years. I can certainly get them done in 10 years. I just need to keep looking and plugging away and hopefully in a month or two I can update you on my new payoff date. 2025 anybody?
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