Author Topic: Deleted  (Read 1607 times)


  • 5 O'Clock Shadow
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« on: September 21, 2018, 09:28:05 AM »
  Removed, thank you all.
« Last Edit: October 01, 2018, 10:52:18 AM by aumaha »


  • 5 O'Clock Shadow
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Re: Case Study: How to Move Forward / Stop Being a Noob
« Reply #1 on: September 21, 2018, 09:37:05 AM »
Grocery isn't terrible, but you spend more than we do for two people so can probably improve. Eating out should be *much* easier to improve -- get a thermos to take coffee, pack dinner even if you might not need it for days you stay late, etc. Eating out should be entertainment budget, not food budget.

former player

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Re: Case Study: How to Move Forward / Stop Being a Noob
« Reply #2 on: September 21, 2018, 01:31:08 PM »
Hello and welcome.  Congrats on the changes you have already made.

Should there be an amount in your 403b to be listed as an asset?

Your budget as laid out shows a spare $500 a month.  Is that really spare or does it get spent?  Because it's $6,000 a year that could be going to paying off debt even without any changes to your current budget.  My understanding is that PSLF won't apply to the private loans whatever, and one of those private loans is at your highest rate of interest, so perhaps start putting the $500 a month towards paying that off?

If your car has a value of $9,100 and you have it listed for $10,500 I guess you might get lucky but more likely not.

You are working while going to grad school: that's probably enough on your plate at the moment to not add buying a house to it.  Look at that again once you graduate, perhaps.


  • 5 O'Clock Shadow
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Re: Case Study: How to Move Forward / Stop Being a Noob
« Reply #3 on: September 21, 2018, 04:58:51 PM »
Just as a passing thought.  SO SO many people have purchased homes and really haven't had a clear idea how much things can go sideways expense wise.   I would hold off too.


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Re: Case Study: How to Move Forward / Stop Being a Noob
« Reply #4 on: September 22, 2018, 06:09:35 PM »
Good job on the work youíve already done to lower your expenses. Here are a few thoughts to move forward.

Get rid of the car and replace with a cheaper reliable car ASAP. Thereís no need to be driving around in a Volvo. Thatís lifestyle inflation. Ideally, donít replace the car and just bike, but I understand in some locales that is not realistic.

That will free up car loan/insurance/gas money. Put that money towards paying off your highest interest rate loans. General rule of thumb is anything over 5% interest should be paid off ASAP.

Your monthly expenses are still really high for a single person, even after you take out the loan payments. Cut down/out your restaurant/bar/entertainment expenses. Is there some way to lower your rent? Move to somewhere cheaper or get a roommate?

It may feel like youíre making a lot of money, but youíre really not because Past You already spent all the money that Current You are making. Actually, more than the money you are currently making since it looks like Past You spent $71000 in student loans.

So please donít even think about making any other large purchases (house, anyone?) until youíve dealt with Past Youís profligate spending.


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Re: Case Study: How to Move Forward / Stop Being a Noob
« Reply #5 on: September 22, 2018, 09:03:50 PM »
$16 grand seems like a lot of tax for someone with a taxable income of 50k!

I think you'd benefit from the non-optimal debt method payoff.... get rid of the smallest balance loans so you simplify and don't have so many monthly payments to make.

Clearing the $2208 and $2364 loans should be the first priority.

Oh, and when you do get payrises, split it between debt payoff and investments. You can live without the extra money now, you'll be able to live without it in future.

Best of luck, and keep us updated!


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Re: Case Study: How to Move Forward / Stop Being a Noob
« Reply #6 on: September 23, 2018, 11:29:14 PM »
Agree with the others.  Also, I'd be wary of PSLF for reasons articulated elsewhere on this forum.  It's risky, and it locks you in to making mediocre financial decisions for 10 years in hopes maybe someday you can be free.  You have a lot of loans, but you don't have so many that you can't bear down and knock them out before PSLF would do you as much good. 

I also agree you may want to knock out your smallest loan first to see the power of having that payment disappear.  It sounds odd, but it's a strong psychological motivator.

Keep up on the car downsizing ideas. 

No house for now: you have too much debt.  Every dollar you set aside for a house costs you 6.75% interest, plus, you already have a lot of debts and don't want to create a cash-flow problem when (not if) the house ends up costing more than you plan for.  Clean up the balance sheet first.  Or, as someone else put it, it's time to cash the checks that Past You has been writing.

You don't want to walk into house purchasing with too much debt: it can also encourage you to make bad decisions.  Say you put $1,300 into inspections, then find some big issues.  You don't want to feel pressure to stay in a deal because you can't afford another $1,300 for inspections next time.  You want to be able to walk away - easily - from a questionable deal.

For now, your priority is simple: pay down debts.   


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Re: Case Study: How to Move Forward / Stop Being a Noob
« Reply #7 on: September 24, 2018, 09:37:55 AM »
First, I'd ask you to be a little kinder to yourself.  You are apparently working full-time and going to school, and you have been doing this for several years.  While doing this, you are getting a handle on your money and making cuts that also cost you time and energy (e.g., biking to work, hunting for street parking).  No, you are not there yet -- but you are headed in the right direction.  So you should be proud of what you have done so far.  Sure, you made some silly decisions with undergrad loans -- who hasn't?  Really, are you the only person who ever made a stupid decision when you were 18 or 20? ;-)  The key to success is not never making a mistake; it's making sure that you are always making new mistakes.

So on to the plan:  you graduate in May.  Is that degree going to qualify you for a raise, a promotion, a different/better/higher-paid job?  I assume so, because why else would you be working so hard to get that degree?  So think of this in phases.  Phase I is now.  Looks like you have about $500/mo.  So first things first:  get yourself an emergency fund.  Set aside money for the next couple of months to handle any upcoming expenses:  do you have another semester's tuition to pay (I am assuming you will take the upcoming $4500 and send it directly to next semester's tuition, but if you need to cover the tuition first, what's your plan)?  What about car repairs, oil changes, getting a flat?  If you will be looking for a better job, do you have the wardrobe you need?  Etc.  You need a little money floating around in a checking or savings account to cover life's variabilities.

Once you have your little slush fund, I actually agree with the advice to knock out the smallest loan* -- if you can get even one loan done by the time you graduate, you will free up not only your time, but also room in your budget.  If you can get both of those two, even better.  And personally, I would not worry about the car right now.**  You have a lot going on, so focus on your work, your school, and managing your other spending/keeping to a frugal lifestyle in general.

Then you graduate.  This is Phase II.  I am assuming you plan to stay put with your company, because you usually have to commit to 2 years or so to get the tuition reimbursement.  But that's fine.  Now you are presumably in the job/career you have studied for and are basically entering "real life" post-school, so this is the time to plan your longer-term financial approach.  So first, sign up for PSLF (if you haven't already).  It may or may not be around, sure, and you may or may not decide to stick with it the full 10 years.  But why not keep your options open, since it doesn't cost you anything? 

Beyond that, go look at the Investment Order sticky -- it will tell you what to do.  Generally, that means 401(k) up to the match, and then tackle those high-interest loans.  In your case, I would also qualify the second part of that:  when you focus on your high-interest loans, start with the private loans, because those don't qualify for PSLF.  So why not start with the loans you know you're going to have to pay off, before worrying about ones that Uncle Sam may pay for you? 

This is also the time to think about the car.  If you do not need it for your long-term job, then by all means, ditch it.  Even if you do need a car, you can probably do better selling it for what you can get and buying a little used econobox -- really, if you're street parking in the city, do you want a nice car anyway?***

Then, at some point, you will no longer be required to stick with your current company because of the tuition reimbursement.  This is Phase III, and this is when you make the decision:  do you want to stick with the PSLF path, because you like your job and you think the program is going to stick around?  Or can you get a sufficiently larger salary elsewhere that it justifies dumping the program and just paying them off yourself?  Note that we are probably 2-5 years down the road, though.  This means that you don't actually have to worry about this right now!  Sure, if you get the private loans paid off, go ahead and turn your focus to the high-interest public loans.  But worry about whether to leave the program when you are actually presented with the option of a higher-paid job in the private sector.

So, in short, triage.  You have a long life ahead of you, and a not-extravagant lifestyle (especially considering that more than 25% of your expenses is simply paying off the education that earned you your current income).  The key to success for you just comes down to not inflating your lifestyle once you have more money -- keep focused on paying down the loans one way or the other, start saving in your available tax-sheltered retirement plans, and then just make sure that all of your future raises and bonuses go toward those same causes, and you will be more than fine.

Finally, the house:  do not even think about this until Phase III.  (A), yes, you have loans that are more than your current salary, and a car payment to boot.  But also (B):  at some point you may want to look for a different job, and so you do not want to tie yourself down to a specific location before you do so.****  IMO, you should not even consider buying a house before you (1) have a paid-off car (or no car); (2) have a long-term job; (3) have saved at least a 3-month emergency fund, and (4) either have fully committed to the PSLF path, or have paid off all of the loans above about 4% (which, btw, is only about half of your total loans and is totally doable in a year or two once the car is gone and school is done).

*Note that this is completely contrary to my standard advice and is only because we're focusing on what you can do in the next @9 mos.

**I know, I know, I am being so unlike me today!

***My boss used to take the train to DC every day and park on the street by Penn Station.  He made several hundred thousands a year, and he still drove about a 15-year-old Corolla, because he didn't want to have to care if it got broken into or dinged.

****Ask me about my condo in downtown Baltimore that I bought immediately before they sued the builder and then couldn't sell and so rented at a loss while I moved for a job in DC and then out-of-state, before finally selling @5 years later for a 20% loss.  A/K/A "The Albatross."


  • 5 O'Clock Shadow
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Re: Case Study: How to Move Forward / Stop Being a Noob
« Reply #8 on: September 25, 2018, 11:50:31 AM »
Thank you for your thoughtful response! Making new mistakes, check. This plan is well-tailored to what I have started (and where I stand with those changes) as well as my plans for the future. The inferences you made about education, contract due to tuition reimbursement receipt, etc. are correct/appropriate. I will stay put with this company for a minimum of 3 years (from now), very likely longer but not definite. I am in a role with an obvious ladder and more room for growth within the project and this is not a point of stress but as you detailed, I am focused on graduating in May.

I have minor concerns about transportation (e.g., to my practicum site this spring semester) but I am not attached to the vehicle for other reasons. The concern or discussion point I wanted to offer was being upside down on it.

Thank you for the advice on the house.

Thinking of it this way is really helpful to me and a great way to move forward without becoming overwhelmed to the point of losing confidence. Thanks again.