Author Topic: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car  (Read 10613 times)

marioarm2

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Life Situation: 26 y/o, single, no dependents, living at my dad’s house for free in Toms River, NJ. Currently commuting approx. 97 mi RT to Trenton, NJ as an Accountant for the State of New Jersey. B.S. in Accounting/Business. Trying to get free from my debts so I can move out of NJ.

Gross Salary/Wages: $43,094.22 with a raise to $45,053.25 on 9/19/17

Payroll Deductions:
Gross pay (bi-weekly) - $1,657.47
Fed Income Tax – 167.16
FICA – 99.17
NJ Income Tax – 35.51
Medicare – 23.19
Pension – 121.66
Unemployment Insurance – 7.04
Disability – 3.98
Pre-Tax Dental – 9.03
Pre-Tax Health – 48.94
Family Leave Insurance – 1.66
Roth – 76.79
Contributory Insurance – 8.29
Union Dues – 19.12
Net Pay (bi-weekly) - $1,035.93

Other Ordinary Income: $450/month from my parents towards my student loans

AGI: $2,522 Monthly Income


Current expenses: 

Current Non-Mustachian Budget (Being completely honest here!)
Lease Payment - $243
Car Insurance - $85
Gas - $175
Tolls - $25
CC Payment - $375
Transfer to Savings - $25
Student Loans - $909
Groceries (includes personal care, cleaning supplies) - $400
Medical (doctors, prescriptions) - $90
Restaurants/Fast Food/Bars - $100 (if you can believe it, this has tapered down over the last few months)
Pets - $40
Misc. (Clothing, concerts, movies, & “wants”) - $44
Netflix - $11

Total Budget/Payments:  $2,522.00

Assets:
Vehicle
2015 VW Jetta S w/ Technology (LEASED)
Turn in Date: 11/8/17
Lease Payment: $242.49
Lease Payments Remaining: $0 (paid off 2-3 months early)
Mileage: 43,000 (currently 13k over lease agreement @ $0.20/mi overage = $2,600 due if turned in + expecting some body damage fees)
Payoff Amount (AKA will need to be financed): $12,913.10
Private Party KBB Value ~ $9,000.00
About $4k underwater

Investment Accounts
Active:  Roth 457(b) - $1,419.71
Inactive: TIAA CREF 403(b) - $1,137.68
                TIAA CREF 403(b) - $6,482.46

Total Investment Accounts - $9,039.85

Savings Account - $50

Liabilities:

Student Loans (Federal *Income Based Repayment* & Private)
Balance            Interest    Min. Payments
 $5,524.99     5.160%F    $41.09  *IBR*
 $2,232.26     4.250%F    $16.60  *IBR*
 $35,770.17    4.300%F    $382.23
 $1,651.60     4.040%F    $12.28 *IBR*
 $5,494.99     3.150%F    $40.87 *IBR*
 $5,403.41     3.150%F    $40.19 *IBR*
 $14,242.34    3.500%V    $178.21
 $15,776.48    3.500%V    $197.40
 $86,096.24               $908.87

Credit Cards
$3,677.25 @ 0% APR (until 9/2018) - $60 min payment > $375 actual payment



Specific Question(s):
How can I realistically work through this crushing student loan debts so I can afford to move out of NJ to a town with public transit/biking options (with a roommate, of course) and start working towards FIRE?

Career - I’ve previously received advice to get a new job to increase my salary. This has been noted and I certainly agree I can’t stay at a job that only gets a ~$2k salary increase each year! I’m currently in the process of studying for my CPA exams – all 4 to go. Have all the college credits. I will have 1 year of eligible work experience as of this September.  However, my resume is VERY jumpy, only staying at each job 1-1.5 years on average. I’ll be at the 1 year mark mid-September for the state. Figured I’d work on banging out the 4 exams while racking up some longer, more appealing employment time. Yay? Nay?

Location - I’ve also been told to move closer to work. While ditching the NJ traffic filled commute would be a dream come true, I feel as if I have no wiggle room to split rent/utilities with someone as of now. A 2-bedroom apartment is easily $1,200+ in this overly expensive state.

Car Lease – This is probably my biggest regret and downfall. I originally leased it while I lived in Colorado and only had a 10mi RT commute to work. My lemon of a car (1997 Mazda Protégé) broke down the day before I left for Colorado, and I leased thinking lower payments in the beginning would be exactly what I needed, and that I could afford to finance it after the 3 years were up (yeah right! Lol). I couldn’t afford to live in CO once my loans were in repayment, so back to Toms River, NJ I went. Drove the car across the country, and now estimate I probably drive about 26k miles annually for work alone. Obviously my mileage is way over the lease agreement and I should have ditched it before that happened – I didn’t.

A big THANK YOU for reading all of this!
« Last Edit: August 04, 2017, 12:40:28 PM by marioarm2 »

Easye418

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #1 on: August 04, 2017, 09:17:16 AM »
Damn.... I had no idea accountants only made $45K in HCOL areas. 

You obviously have very little expenses, so you can't cut spending.  You need to get a higher paying job somehow or continue to live with your dad and funnel most of your money to those huge loans.

I recommend snowballing so you feel little wins. 

You either cut expenses, raise income, or both.  Simple as that.

marioarm2

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #2 on: August 04, 2017, 09:50:42 AM »
Damn.... I had no idea accountants only made $45K in HCOL areas. 

You obviously have very little expenses, so you can't cut spending.  You need to get a higher paying job somehow or continue to live with your dad and funnel most of your money to those huge loans.

I recommend snowballing so you feel little wins.

Accountants only make $45k in HCOL areas if they work for the gov't! I was always told gov't jobs are excellent considering they have tons of paid leave, great healthcare, and pensions, so that's where I went. Later to find out on the forums here that NJ's pension is basically crap and I shouldn't even expect it come retirement time lol. I suppose I've made quite a few poor career choices since graduating 4 years ago.

WhiteTrashCash

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #3 on: August 04, 2017, 10:05:14 AM »
After you can get rid of the lease, I would recommend picking up a used Toyota Prius for that very long commute. If you were getting 50 mpg, it would significantly reduce your fuel expenses. Once you own your car, you'll have an easier time comparison shopping for discount car insurance. Get insurance with a high deductible to save costs, because the point of the insurance is simply to replace your car if it's totalled. You can take care of any minor problem yourself.

I would also immediately start looking for another accounting job closer to home. Don't worry about losing "Public Service Loan Forgiveness" because it's very clear from what's going on in Washington that the program is not going to exist for much longer (and may not even forgive the loans of people who started the program in 2007.) Once you can get a job closer to you in the private sector, it will undoubtedly pay better and you'll be able to put the new income PLUS the fuel savings toward your student loans.

When you are paying off your student loans, put all the extra payments into the loans with the highest interest rate each month until each loan is paid off. You'll need to live very frugally and learn to appreciate things like public libraries, cooking dinners at home, board game nights with friends and family, going to free museums, and other low cost stuff, but it's fully possible to pay off your student loans in a few years.

dmac680chi

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #4 on: August 04, 2017, 10:47:29 AM »
What's the interest of the car loan (%)? Also how much can you allocate to debt? I calculated $1284 but want to make sure that's correct.


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marioarm2

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #5 on: August 04, 2017, 11:14:41 AM »
After you can get rid of the lease, I would recommend picking up a used Toyota Prius for that very long commute. If you were getting 50 mpg, it would significantly reduce your fuel expenses. Once you own your car, you'll have an easier time comparison shopping for discount car insurance. Get insurance with a high deductible to save costs, because the point of the insurance is simply to replace your car if it's totalled. You can take care of any minor problem yourself.

I would also immediately start looking for another accounting job closer to home. Don't worry about losing "Public Service Loan Forgiveness" because it's very clear from what's going on in Washington that the program is not going to exist for much longer (and may not even forgive the loans of people who started the program in 2007.) Once you can get a job closer to you in the private sector, it will undoubtedly pay better and you'll be able to put the new income PLUS the fuel savings toward your student loans.

When you are paying off your student loans, put all the extra payments into the loans with the highest interest rate each month until each loan is paid off. You'll need to live very frugally and learn to appreciate things like public libraries, cooking dinners at home, board game nights with friends and family, going to free museums, and other low cost stuff, but it's fully possible to pay off your student loans in a few years.

How do you recommend getting rid of the lease? By turning it in and paying the mileage overage fees and fees for some of the dents and dings? Or by beginning the financing process and selling it to a private party and taking the loss? 

PSLF is a total crap-shoot for me. I'll pay them off using the IBR payment plan before I even have the 120 payments necessary to qualify. I guess you can't ever really trust the gov't!

ixtap

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #6 on: August 04, 2017, 11:19:26 AM »
How much did you get back in taxes last year? Your take home pay seems low relative to your salary. If you didn't get a refund, then my estimations are off. However, if you have been getting refunds, it is time to check your W4.

marioarm2

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #7 on: August 04, 2017, 11:20:51 AM »
What's the interest of the car loan (%)? Also how much can you allocate to debt? I calculated $1284 but want to make sure that's correct.


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I don't have a car loan right now, unless you are referring to the interest of the lease? If so, I don't know what the interest rate on that was.. I'm at the point where I either have to turn the car in and pay for any body damage and mile overage, OR I can start financing the $13k to buy the car. I haven't inquired the rates for financing through VW yet.

As for the $1284, that's correct. Doing $375 CC + $909 Student Loans

marioarm2

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #8 on: August 04, 2017, 11:27:51 AM »
How much did you get back in taxes last year? Your take home pay seems low relative to your salary. If you didn't get a refund, then my estimations are off. However, if you have been getting refunds, it is time to check your W4.

IRS $1,371.00
NJ $66
CO $224

W4 I usually claim 0 exemptions

ixtap

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #9 on: August 04, 2017, 11:29:50 AM »
How much did you get back in taxes last year? Your take home pay seems low relative to your salary. If you didn't get a refund, then my estimations are off. However, if you have been getting refunds, it is time to check your W4.

IRS $1,371.00
NJ $66
CO $224

W4 I usually claim 0 exemptions

That is $1500 you could be using yourself if you were to adjust your W4

dmac680chi

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #10 on: August 04, 2017, 11:33:10 AM »
Plug in your debts into Undebt.it, I was bored and did it for your stuff. Looking at 6.5 years though I'd encourage you to find a higher paying job. I'd also recommend job hopping but staying at a a company for 1.5-2.5 years. Maybe someone else has an opinion on this.


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czr

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #11 on: August 04, 2017, 11:41:49 AM »
Your car isnt’ killing you; it’s your student loans and the payment for that is actually being offset by your living at home and your parents giving you money. Find a job closer to home that pays the same but with more potential like for a big company or growing company. If you can cut your commute to say half an hour you’ll be able to save some time and money. Also, start studying for the CPA. You could also find a job for a local or regional accounting firm and they may subsidize your path to the CPA. Join the AICPA. After you have your CPA, you will have more options and your earning potential will increase. Keep your lifestyle low and knock off the student loan and cc debts.  You just have to be tight with your budget and keep grinding at the accounting thing. I was in a similar position to yours in the past and there is hope as you can inflate your income out of this hole. 

Short term:
Cut your budget even more
Stop contributing to your ROTH
Pay only the minimum towards your credit card
Try to find out if you can consolidate your loans into one. This will just be short term to free up your cash flow.
Sort out your car situation. Your $12,900 car will really only be $10,300 without the overage payment and it should be pretty cheap to run. Since you have $0 cash, maybe finance a $5-7k car but you probably need some spare cash for maintenance and repair?

Whatever you do, consider the long-term impacts and the biggest investment you can make is finishing your CPA.

Laura33

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #12 on: August 04, 2017, 11:45:25 AM »
OK, triage here.  There are many good ideas for finding a better job, and you have a lot of debt to tackle, but all of these are long-term plans.  Looking at your list here, you have more pressing priorities:

1.  Car:  in 3 months, you need to either buy your current car (with a loan you can't afford that will be for 1/3 more than the car is worth), or come up with $3K (that you don't appear to have) just to give the car back. 

2.  Next fall, you need to have $3600 of CC debt paid off.

3.  Sometime between now and a year from now, you need to get out of your parents' place and into an apartment, which requires both room in the budget and cash for a security deposit/moving expenses. 

My suggestions:  you start by cutting back everything possible, and putting the money in cash for these immediate needs.  That means:

- Stop contributing to a Roth.  Yeah, this sucks, I never recommend this.  But you are not getting a current tax deduction, and if you get the higher-paying job, you will have time to catch up on investments when you are self-supporting.

- Stop prepaying the CC.  Yes, you need to have the balance paid before the 0% rate expires.  But right now you need cash in hand for the lease payoff.

- Cut the groceries, going out, wants, and Netflix to the bone.  Your can't afford this when you already owe more than 2x your gross annual salary.  $200-$250 for groceries, no more than $50 for any extras.  Join the library and rent movies for free.

This should give you almost $1K/mo. to save (including the car lease that has been prepaid).  All of this money goes to savings.

The first priority is the car:  in 3 months, you're going to need to come up with something on the order of $3K just to give the car back.  Conveniently, you should have about $3K saved by then.  Go negotiate with the dealer for the best deal to turn it in, and get rid of it.  Do not buy this car -- why would you willingly buy it for $4K more than it's worth?  And you can't afford a $13K car now anyway. 

Now you have a choice:  do you move into your own cheap apartment where a car is not necessary, or do you continue living at home and buy a replacement vehicle?  You mention that apartments close to work are running $1200, and so you can't afford to split that with a roommate.  But you are already spending over $500/mo. on car payments/insurance/gas/tolls/etc.  So when you consider that an apartment won't break down on the way to work and saddle you with repair bills, it is basically a wash.  If you do this option, you need to find another @$2K for a security deposit and moving/setup costs. 

Alternatively, you could get a replacement car.  In that case, get something as cheap as possible that is still reliable and gets excellent mileage.  You cannot afford perks right now, just reliable transportation.  You will need a loan for this, so go talk to a credit union now to start getting that lined up.

Once this is settled, continue living on that budget, and put the extra $ you save toward paying off the CC.  Once that is done, put it to any car loan that you took out and to a security deposit/apartment expenses.

If you can do all of that, then a year from now, you will be financially able to live on your own, in your own apartment, with just the SL to tackle -- and that's before you even find a new job.  At that point, you can get Netflix back, and then throw all the rest of your money at the private loans, followed by the IBR loans with interest rates above 4%. 
Laugh while you can, monkey-boy

Frankies Girl

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #13 on: August 04, 2017, 11:50:12 AM »
Damn.... I had no idea accountants only made $45K in HCOL areas. 

You obviously have very little expenses, so you can't cut spending.  You need to get a higher paying job somehow or continue to live with your dad and funnel most of your money to those huge loans.

I recommend snowballing so you feel little wins.

Hahahaha. That's funny. I see lots of fat to cut, but then it depends on how serious the OP is about digging out of this mess.

If it was me, I'd be laser-focused on the enormous debt ball, so all extras - gone. Facepunches to follow, but I'll try to land them gently. I'm not calling you stupid - just some of your decisions (and this is the obligatory part where I say "because we've all made stupid decisions so please don't get offended").

Payroll Deductions:
Gross pay (bi-weekly) - $1,657.47
Fed Income Tax – 167.16
FICA – 99.17
NJ Income Tax – 35.51
Medicare – 23.19
Pension – 121.66
Unemployment Insurance – 7.04   Unless this is mandatory, cancel it.
Disability – 3.98         Unless this is mandatory, cancel it.
Pre-Tax Dental – 9.03
Pre-Tax Health – 48.94
Family Leave Insurance – 1.66   Unless this is mandatory, cancel it.
Roth – 76.79   Unless this is mandatory, cancel it. You don't have the change to spare on saving for the future right now, because your past self screwed your current self over. Stop all contributions and just let it alone unless you're receiving a match from the employer
Contributory Insurance – 8.29  Unless this is mandatory, cancel it.
Union Dues – 19.12    Unless this is mandatory, cancel it.
Net Pay (bi-weekly) - $1,035.93

Other Ordinary Income: $450/month from my parents towards my student loans

AGI: $2,522 Monthly Income


Current expenses:

Current Non-Mustachian Budget (Being completely honest here!)
Lease Payment - $243
Car Insurance - $85
Gas - $175
Tolls - $25
CC Payment - $375
Transfer to Savings - $25 Where is this savings account in your assets? How much do you currently have?
Student Loans - $909 Is this IN ADDITION TO THE $450 your parents front you for school loans? Holy crap on a cracker.
Groceries (includes personal care, cleaning supplies) - $400 You are a single person right? I honestly can't even fathom how a single adult person spends $300 even in a high cost of living on groceries and toiletries. Cut this to the bone. You should be able to cook. Look up cheap, easy meal prep like Budget Bytes, start shopping real, cheap foods and batch cook. You should be able to cut this to $150 a month if you really tried.
Medical (doctors, prescriptions) - $90
Restaurants/Fast Food/Bars - $100 (if you can believe it, this has tapered down over the last few months) This is fucking horrible. Stop all extra spending on stuff that isn't necessary for living. Eating out at a restaurant or liquor in a fucking bar? Holy shit, seriously, do you really want to be in debt forever?
Misc. (Clothing, concerts, movies, & “wants”) - $84 No. You have no reason whatsoever to spend one red cent on "wants." Stop acting like you even have money to spend - every future dollar for the next several years is already spent - you have to change your mindset.
Netflix - $11 Gone. Go to the library and rent movies/television series for free.

Total Budget/Payments:  $2,522.00


Stop with the idea of leaving your parents house. They are amazingly generous in letting you live there, and also paying some of your school loans, so I would hope that living there isn't so terrible that you can't stay for a few more years until you get a better handle on your debt. As long as they are okay with it, it is a FANTASTIC deal for you. Moving into your own place -even if you got roommates - is a terrible idea right now. You have too much debt to even afford rent/rental insurance/utilities/furnishings/etc.

You have no assets. The car is not yours; it's the finance company's property. You can't even sell it and get out of the lease or anything without owing a giant balloon payment - which is typical of Volkswagon (and many other lease type situations). You have a stupid stupid lease with a giant fucking idiotic balloon payment - you're paying them to take a piece of shit car back at the end of the stupid stupid lease. You have to find another vehicle this year and you have no savings or even way to do this other than finance again. Don't do that. Find an older/reliable car and buy it outright with the savings of all the extras you should cut I mentioned above (at least this will drop your insurance down since you won't have to pay full coverage). You should be able to save up around $2,500 by November not even counting the payroll deductions since I wasn't sure how many are mandatory.

Find a job closer to home. Start looking ASAP. If you can cut back on the commute you should also be able to save on the gas/tolls. And I agree it should pay lots better as well. Any raise you get is gravy compared to the commute cost reduction.

Cut out all extras. I am being seriously hard about this stuff, but you need to understand you have hair on fire debt. You should be PANICKING and freaking the hell out - and if so - seriously cut out all the wants and fun stuff for at least a year it will take you to dig out of the car mess and credit card and get on top of your school loans and maybe in a few years if you are lucky enough to find a better paying job closer to home, might have the ability to move out on your own.

Fun stuff should be free stuff for quite some time. I mentioned the library - they rent movies, books, music - for free. They sometimes offer interesting classes. You can ask friends over for movie or game night or hang out at their place - learn to cook some fun meals and cook together and watch television and talk and play games. If you need clothes, thrift shop, if you absolutely have to replace anything. Learn to cook, and I hope to dog that you're packing your lunches every day and not spending $10 a pop at some stupid restaurant.

I mentioned this above, but really really try to understand - your loans, your car mess and your lower pay combined with some poor past decisions mean you have no spending money - you are earning money NOW that you already spent. That is what debt really is. Every dollar you blow now on wants is costing you extra hours/days/months/years in that debt hole. Until you choose to make some sacrifices NOW - future you is going to be stuck right where you are in the present.

No one things this stuff is going to be easy. It will suck when your friends ask you to go hang out at "really fun bar" and have a few drinks, or totally amazing band is playing next month - let's get tickets!" and you have to say no, I can't afford that. It is going to be sad, and you're going to feel left out sometimes. But it is temporary pain for long term happiness.

I frequently have no idea what I'm talking about. Like now.

FIREd as of: March 6th, 2015!

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Imma

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #14 on: August 04, 2017, 12:27:18 PM »
Am I right that you have no cash emergency fund at all? It may not seem a priority when you're spending $1000 on paying off debts every month, but it is always a priority to have a little cash on hand.

I see you're living at your parent's place and still spend $400 in groceries. Are you living there on your own while he lives somewhere else? Or are you able to share meals with him? Either way, you could almost certainly cut back on groceries. The $150 in 'wants' need to go too. While you are working towards these exams and looking for a better paying job, you can't keep spending like that. As your cc-debt is 0%, you could consider saving all the money up in a savings account instead of paying them off straight away, but that's a risky strategy if you're naturally a spender. If you're able to throw $250 more every month towards your credit card debt, you'd be rid of it in a couple of months and it would give you some space to breath in your budget. 

marioarm2

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #15 on: August 04, 2017, 01:04:40 PM »
How much did you get back in taxes last year? Your take home pay seems low relative to your salary. If you didn't get a refund, then my estimations are off. However, if you have been getting refunds, it is time to check your W4.

IRS $1,371.00
NJ $66
CO $224

W4 I usually claim 0 exemptions

That is $1500 you could be using yourself if you were to adjust your W4

I'll get to it. I'll bump it up to 1 exemption.

marioarm2

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #16 on: August 04, 2017, 01:47:01 PM »
Am I right that you have no cash emergency fund at all? It may not seem a priority when you're spending $1000 on paying off debts every month, but it is always a priority to have a little cash on hand.

I see you're living at your parent's place and still spend $400 in groceries. Are you living there on your own while he lives somewhere else? Or are you able to share meals with him? Either way, you could almost certainly cut back on groceries. The $150 in 'wants' need to go too. While you are working towards these exams and looking for a better paying job, you can't keep spending like that. As your cc-debt is 0%, you could consider saving all the money up in a savings account instead of paying them off straight away, but that's a risky strategy if you're naturally a spender. If you're able to throw $250 more every month towards your credit card debt, you'd be rid of it in a couple of months and it would give you some space to breath in your budget.

This is correct. I have $50 in my savings account, so basically NO cash emergency fund whatsoever.

No, I am living currently living there with my dad and sister. Their meals basically consist of McDonald's, cookies, chips, ice cream, and cereal, so I basically buy my own food aside from sneaking some of the occasional fruit he buys. I agree I can cut corners in groceries, and knock out the "wants". The CC is 0% until 9/2017. I've considered doing only the minimum payments, but then I was just worried about the big lump sum/lack of cash flow to pay off the remaining balance before the promotional rate ends. As you mentioned, it's a risky strategy in my book. I'm so looking forward to paying off that CC and rolling it into my student loan payments!

marioarm2

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #17 on: August 04, 2017, 01:49:25 PM »
Plug in your debts into Undebt.it, I was bored and did it for your stuff. Looking at 6.5 years though I'd encourage you to find a higher paying job. I'd also recommend job hopping but staying at a a company for 1.5-2.5 years. Maybe someone else has an opinion on this.


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I'll check out undebt.it! I can also agree I need to find a higher paying job.. I'll be at this job for 1 year as of 9/19, so maybe by time I find something new I'll be closer to the 1.5 year mark lol

Righty

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #18 on: August 04, 2017, 01:53:39 PM »
Find a job closer to home. Start looking ASAP. If you can cut back on the commute you should also be able to save on the gas/tolls. And I agree it should pay lots better as well. Any raise you get is gravy compared to the commute cost reduction.

Good, honest advice here.

Not to make excuses though, but finding a decent paying professional job within 30 miles of Toms River will be tough if not impossible - ocean on one side and pine barrens on the other.

marioarm2

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #19 on: August 04, 2017, 02:01:03 PM »
Your car isnt’ killing you; it’s your student loans and the payment for that is actually being offset by your living at home and your parents giving you money. Find a job closer to home that pays the same but with more potential like for a big company or growing company. If you can cut your commute to say half an hour you’ll be able to save some time and money. Also, start studying for the CPA. You could also find a job for a local or regional accounting firm and they may subsidize your path to the CPA. Join the AICPA. After you have your CPA, you will have more options and your earning potential will increase. Keep your lifestyle low and knock off the student loan and cc debts.  You just have to be tight with your budget and keep grinding at the accounting thing. I was in a similar position to yours in the past and there is hope as you can inflate your income out of this hole. 

Short term:
Cut your budget even more
Stop contributing to your ROTH
Pay only the minimum towards your credit card
Try to find out if you can consolidate your loans into one. This will just be short term to free up your cash flow.
Sort out your car situation. Your $12,900 car will really only be $10,300 without the overage payment and it should be pretty cheap to run. Since you have $0 cash, maybe finance a $5-7k car but you probably need some spare cash for maintenance and repair?

Whatever you do, consider the long-term impacts and the biggest investment you can make is finishing your CPA.

Put in the request to put the ROTH on hold.

What should I use the money from the CC towards instead if I'm only going to be paying the minimums? Highest interest student loans?

As for consolidating the loans, I've looked into this. I can refinance them into a 20-year payment plan at 5.4% interest, but that's doubling the term (currently on 10-year plan), and bumps the interest rate up. The average interest rate I have now is ~3.85% I believe. I figured the higher interest rate/cost would negate the value of refinancing and consolidating. Yes? No?

marioarm2

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #20 on: August 04, 2017, 02:10:36 PM »
OK, triage here.  There are many good ideas for finding a better job, and you have a lot of debt to tackle, but all of these are long-term plans.  Looking at your list here, you have more pressing priorities:

1.  Car:  in 3 months, you need to either buy your current car (with a loan you can't afford that will be for 1/3 more than the car is worth), or come up with $3K (that you don't appear to have) just to give the car back. 

2.  Next fall, you need to have $3600 of CC debt paid off.

3.  Sometime between now and a year from now, you need to get out of your parents' place and into an apartment, which requires both room in the budget and cash for a security deposit/moving expenses. 

My suggestions:  you start by cutting back everything possible, and putting the money in cash for these immediate needs.  That means:

- Stop contributing to a Roth.  Yeah, this sucks, I never recommend this.  But you are not getting a current tax deduction, and if you get the higher-paying job, you will have time to catch up on investments when you are self-supporting.

- Stop prepaying the CC.  Yes, you need to have the balance paid before the 0% rate expires.  But right now you need cash in hand for the lease payoff.

- Cut the groceries, going out, wants, and Netflix to the bone.  Your can't afford this when you already owe more than 2x your gross annual salary.  $200-$250 for groceries, no more than $50 for any extras.  Join the library and rent movies for free.

This should give you almost $1K/mo. to save (including the car lease that has been prepaid).  All of this money goes to savings.

The first priority is the car:  in 3 months, you're going to need to come up with something on the order of $3K just to give the car back.  Conveniently, you should have about $3K saved by then.  Go negotiate with the dealer for the best deal to turn it in, and get rid of it.  Do not buy this car -- why would you willingly buy it for $4K more than it's worth?  And you can't afford a $13K car now anyway. 

Now you have a choice:  do you move into your own cheap apartment where a car is not necessary, or do you continue living at home and buy a replacement vehicle?  You mention that apartments close to work are running $1200, and so you can't afford to split that with a roommate.  But you are already spending over $500/mo. on car payments/insurance/gas/tolls/etc.  So when you consider that an apartment won't break down on the way to work and saddle you with repair bills, it is basically a wash.  If you do this option, you need to find another @$2K for a security deposit and moving/setup costs. 

Alternatively, you could get a replacement car.  In that case, get something as cheap as possible that is still reliable and gets excellent mileage.  You cannot afford perks right now, just reliable transportation.  You will need a loan for this, so go talk to a credit union now to start getting that lined up.

Once this is settled, continue living on that budget, and put the extra $ you save toward paying off the CC.  Once that is done, put it to any car loan that you took out and to a security deposit/apartment expenses.

If you can do all of that, then a year from now, you will be financially able to live on your own, in your own apartment, with just the SL to tackle -- and that's before you even find a new job.  At that point, you can get Netflix back, and then throw all the rest of your money at the private loans, followed by the IBR loans with interest rates above 4%.

Put in a request to stop the ROTH. Next statement I'll only pay the minimum on the CC and put the rest right into my savings account. I'll bite the bullet and return the car come end of the lease. I'm very fortunate to have the opportunity to live at home for free, so I'll likely buy a used car that gets me to and from work. Thanks for the straightforward advice.

marioarm2

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #21 on: August 04, 2017, 02:23:01 PM »
Damn.... I had no idea accountants only made $45K in HCOL areas. 

You obviously have very little expenses, so you can't cut spending.  You need to get a higher paying job somehow or continue to live with your dad and funnel most of your money to those huge loans.

I recommend snowballing so you feel little wins.

Hahahaha. That's funny. I see lots of fat to cut, but then it depends on how serious the OP is about digging out of this mess.

If it was me, I'd be laser-focused on the enormous debt ball, so all extras - gone. Facepunches to follow, but I'll try to land them gently. I'm not calling you stupid - just some of your decisions (and this is the obligatory part where I say "because we've all made stupid decisions so please don't get offended").

Payroll Deductions:
Gross pay (bi-weekly) - $1,657.47
Fed Income Tax – 167.16
FICA – 99.17
NJ Income Tax – 35.51
Medicare – 23.19
Pension – 121.66
Unemployment Insurance – 7.04   Unless this is mandatory, cancel it.
Disability – 3.98         Unless this is mandatory, cancel it.
Pre-Tax Dental – 9.03
Pre-Tax Health – 48.94
Family Leave Insurance – 1.66   Unless this is mandatory, cancel it.
Roth – 76.79   Unless this is mandatory, cancel it. You don't have the change to spare on saving for the future right now, because your past self screwed your current self over. Stop all contributions and just let it alone unless you're receiving a match from the employer
Contributory Insurance – 8.29  Unless this is mandatory, cancel it.
Union Dues – 19.12    Unless this is mandatory, cancel it.
Net Pay (bi-weekly) - $1,035.93

Other Ordinary Income: $450/month from my parents towards my student loans

AGI: $2,522 Monthly Income


Current expenses:

Current Non-Mustachian Budget (Being completely honest here!)
Lease Payment - $243
Car Insurance - $85
Gas - $175
Tolls - $25
CC Payment - $375
Transfer to Savings - $25 Where is this savings account in your assets? How much do you currently have?
Student Loans - $909 Is this IN ADDITION TO THE $450 your parents front you for school loans? Holy crap on a cracker.
Groceries (includes personal care, cleaning supplies) - $400 You are a single person right? I honestly can't even fathom how a single adult person spends $300 even in a high cost of living on groceries and toiletries. Cut this to the bone. You should be able to cook. Look up cheap, easy meal prep like Budget Bytes, start shopping real, cheap foods and batch cook. You should be able to cut this to $150 a month if you really tried.
Medical (doctors, prescriptions) - $90
Restaurants/Fast Food/Bars - $100 (if you can believe it, this has tapered down over the last few months) This is fucking horrible. Stop all extra spending on stuff that isn't necessary for living. Eating out at a restaurant or liquor in a fucking bar? Holy shit, seriously, do you really want to be in debt forever?
Misc. (Clothing, concerts, movies, & “wants”) - $84 No. You have no reason whatsoever to spend one red cent on "wants." Stop acting like you even have money to spend - every future dollar for the next several years is already spent - you have to change your mindset.
Netflix - $11 Gone. Go to the library and rent movies/television series for free.

Total Budget/Payments:  $2,522.00


Stop with the idea of leaving your parents house. They are amazingly generous in letting you live there, and also paying some of your school loans, so I would hope that living there isn't so terrible that you can't stay for a few more years until you get a better handle on your debt. As long as they are okay with it, it is a FANTASTIC deal for you. Moving into your own place -even if you got roommates - is a terrible idea right now. You have too much debt to even afford rent/rental insurance/utilities/furnishings/etc.

You have no assets. The car is not yours; it's the finance company's property. You can't even sell it and get out of the lease or anything without owing a giant balloon payment - which is typical of Volkswagon (and many other lease type situations). You have a stupid stupid lease with a giant fucking idiotic balloon payment - you're paying them to take a piece of shit car back at the end of the stupid stupid lease. You have to find another vehicle this year and you have no savings or even way to do this other than finance again. Don't do that. Find an older/reliable car and buy it outright with the savings of all the extras you should cut I mentioned above (at least this will drop your insurance down since you won't have to pay full coverage). You should be able to save up around $2,500 by November not even counting the payroll deductions since I wasn't sure how many are mandatory.

Find a job closer to home. Start looking ASAP. If you can cut back on the commute you should also be able to save on the gas/tolls. And I agree it should pay lots better as well. Any raise you get is gravy compared to the commute cost reduction.

Cut out all extras. I am being seriously hard about this stuff, but you need to understand you have hair on fire debt. You should be PANICKING and freaking the hell out - and if so - seriously cut out all the wants and fun stuff for at least a year it will take you to dig out of the car mess and credit card and get on top of your school loans and maybe in a few years if you are lucky enough to find a better paying job closer to home, might have the ability to move out on your own.

Fun stuff should be free stuff for quite some time. I mentioned the library - they rent movies, books, music - for free. They sometimes offer interesting classes. You can ask friends over for movie or game night or hang out at their place - learn to cook some fun meals and cook together and watch television and talk and play games. If you need clothes, thrift shop, if you absolutely have to replace anything. Learn to cook, and I hope to dog that you're packing your lunches every day and not spending $10 a pop at some stupid restaurant.

I mentioned this above, but really really try to understand - your loans, your car mess and your lower pay combined with some poor past decisions mean you have no spending money - you are earning money NOW that you already spent. That is what debt really is. Every dollar you blow now on wants is costing you extra hours/days/months/years in that debt hole. Until you choose to make some sacrifices NOW - future you is going to be stuck right where you are in the present.

No one things this stuff is going to be easy. It will suck when your friends ask you to go hang out at "really fun bar" and have a few drinks, or totally amazing band is playing next month - let's get tickets!" and you have to say no, I can't afford that. It is going to be sad, and you're going to feel left out sometimes. But it is temporary pain for long term happiness.

Facepunches are expected, deserved, and appreciated!
The only deduction that I can cancel is my Roth – cancelled.
Savings account is only at $50. Student loan payments total $909. The $450 my parents give me go right towards the loans. I lumped the $450 income into my AGI.  Groceries/restaurants/”wants” will be gutted. And any leftover will be put right towards my future cheap, reliable used car purchase.
As for living at my parents’ house, trust me I’m SO grateful. I’m just mentioning it for the long-term, because eventually I want to leave NJ to a more mustachian-friendly state.
You mentioned the PANIC I should have – it’s here and growing! I’ve let myself be a consumer sukka for way too long, and I’m tired of living beyond my means and feeling trapped in my own life. I’ll gladly nix those unnecessary expenses for true long-term happiness.
Thanks for your advice, wisdom, and facepunches!

marioarm2

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #22 on: August 04, 2017, 02:25:03 PM »
Find a job closer to home. Start looking ASAP. If you can cut back on the commute you should also be able to save on the gas/tolls. And I agree it should pay lots better as well. Any raise you get is gravy compared to the commute cost reduction.

Good, honest advice here.

Not to make excuses though, but finding a decent paying professional job within 30 miles of Toms River will be tough if not impossible - ocean on one side and pine barrens on the other.

This is true. Most people here commute to Philly, Princeton, or NYC. I can definitely find a job in one of the northern counties, but within 30 miles? We'll see. I'll start putting my feelers for new opportunities.

Lady SA

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #23 on: August 04, 2017, 02:41:43 PM »
Your car isnt’ killing you; it’s your student loans and the payment for that is actually being offset by your living at home and your parents giving you money. Find a job closer to home that pays the same but with more potential like for a big company or growing company. If you can cut your commute to say half an hour you’ll be able to save some time and money. Also, start studying for the CPA. You could also find a job for a local or regional accounting firm and they may subsidize your path to the CPA. Join the AICPA. After you have your CPA, you will have more options and your earning potential will increase. Keep your lifestyle low and knock off the student loan and cc debts.  You just have to be tight with your budget and keep grinding at the accounting thing. I was in a similar position to yours in the past and there is hope as you can inflate your income out of this hole. 

Short term:
Cut your budget even more
Stop contributing to your ROTH
Pay only the minimum towards your credit card
Try to find out if you can consolidate your loans into one. This will just be short term to free up your cash flow.
Sort out your car situation. Your $12,900 car will really only be $10,300 without the overage payment and it should be pretty cheap to run. Since you have $0 cash, maybe finance a $5-7k car but you probably need some spare cash for maintenance and repair?

Whatever you do, consider the long-term impacts and the biggest investment you can make is finishing your CPA.

Put in the request to put the ROTH on hold.

What should I use the money from the CC towards instead if I'm only going to be paying the minimums? Highest interest student loans?

As for consolidating the loans, I've looked into this. I can refinance them into a 20-year payment plan at 5.4% interest, but that's doubling the term (currently on 10-year plan), and bumps the interest rate up. The average interest rate I have now is ~3.85% I believe. I figured the higher interest rate/cost would negate the value of refinancing and consolidating. Yes? No?

At this point, I'd be more concerned about your monthly cashflow. Is your monthly loan payment $909 + $450 (from your parents)? That is a shit ton and a huge chunk out of your monthly income. Check out SoFi and Earnest (link in my sig) to see what options you have. If you can get your monthly payment down to give yourself some breathing room that would be ideal, even if the interest is more. In the future when you get a higher paying job and a bit more flexibility, you can start more aggressively paying off those debts.
Obviously, if the monthly payment stays the same, I wouldn't do it.
https://www.earnest.com/invite/lillian2 --> Use this referral to refinance your student loans with Earnest and get a $200 bonus!

dpc

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #24 on: August 04, 2017, 02:59:29 PM »
Definitely check out Sofi on refinancing the student loans.

dpc

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #25 on: August 04, 2017, 03:01:16 PM »
Also, do you have entirely seperate food from your parents? You're food should be way low if they're subsidising your calories our of their fridge. That's pretty normal living with parents, but of course be respectful whatever the situation is.

Kwill

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #26 on: August 04, 2017, 03:08:07 PM »
What about civilian jobs on the military base? My brother went to high school in Toms River when my father was stationed at Lakehurst. Looking up Lakehurst just now, it seems it's been combined with the other bases, but maybe it's worth checking. http://www.jointbasemdl.af.mil/Questions/Civilian-Employment-Opportunities/

You can withdraw contributions from a Roth IRA (not interest though), unless you have it in a CD or something with a penalty. That might be a way to help pay off your car when it's time to turn it in.

Once you get your car sorted out, it doesn't seem so bad overall. Lots of people make less money than you do. You can do this. Follow everybody's advice, save a month's expenses as a cushion so that you don't run up more credit card debt, and put the effort into paying extra on the loans that have the highest interest rates.

mrspendy

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #27 on: August 04, 2017, 03:20:04 PM »
this is how I see it

$86K of debt + $4K car underwater = $90K

$9K of retirement assets, $6.3K of which you'll pay a 10% penalty on to get = $5.6K after penalty - taxes of 15%* = $4.76K

$1.7K roth plus $4.76K accessible 403b = $6.4K accessible cash. I'd take it all out and keep that liquid.

You spend $2,500 / month, $1,300 of which is related to your debt so if you had no debt you spend $1,200 a month, before any austerity measures. Let's say austerity gets you to $1,000

I would refi your private loans out to the longest term possible. 90,000 at 6% turns into a $644 / month payment. $450 of which is covered by your parents, so your debt burden is a meager $200 / month. This may not be cool with your parents, but you're not in a great situation and it would help a lot. the payment will actually be lower because you won't do it for the federal ones. lowering your monthly payment increases the percentage they are paying.

So you need ~$200 / month for debt service and $1,200 in total with the new austerity measures.

Take advantage of the increase in cash flow to max out your retirement accounts (do you have a 457 and a 403b?) to reduce your federal and state taxes and payments on your income based loans to nothing. invest in stable value or whatever (not stocks).

I think that's the quickest way to zero net worth without changing your income drastically.

No need to pay the tax man any more than he deserves, stretch out the loans so that your parents fixed dollar becomes a greater percentage of the debt burden, reduce your income to further reduce your IBR loans. no need to pay the federal and state tax man and the federal loan man when you don't have much to go around, and in your situation taking FULL advantage of parental largesse is in order.


*a rough guess
« Last Edit: August 04, 2017, 03:23:53 PM by mrspendy »

ysette9

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #28 on: August 04, 2017, 03:22:45 PM »
I think if you can keep your head low and bust your butt for the next year or so you will find yourself in a much better situation. I would focus on fixing that car situation and studying hard to pass the CPA exam so you can get a better-paying job. That will open up a lot of options you don't currently have. I realize you don't want to live at home, but you seem to have good perspective on that front. If you can get a better job and move someplace that is within walking distance of work, that would allow the cash flow to let you move out. From my HCOL perspective $1200/month for a 2-bedrooom apartment seems very affordable. Get a roommate to split the rent and that is barely more than the nonsense you are forming out now on transportation. Good luck!
"It'll be great!"

ysette9

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #29 on: August 04, 2017, 03:32:39 PM »
Quote
Take advantage of the increase in cash flow to max out your retirement accounts (do you have a 457 and a 403b?) to reduce your federal and state taxes and payments on your income based loans to nothing. Invest in stable value or whatever (not stocks).

I think that's the quickest way to zero net worth without changing your income drastically.

No need to pay the tax man any more than he deserves, stretch out the loans so that your parents fixed dollar becomes a greater percentage of the debt burden, reduce your income to further reduce your IBR loans. No need to pay the federal and state tax man and the federal loan man when you don't have much to go around, and in your situation taking FULL advantage of parental largesse is in order.

I'm very uncomfortable with this advice. Let's see if I can articulate why.

First of all, DO NOT extend out the terms of your loans if the only thing you're going to do with that extra monthly cash flow is stick the money in a stable value fund. That is just plain dumb. Why pay 6% interest on borrowed money so you can stick it under the mattress? Yes, I realize you get the tax benefits and (possibly) matching in a 401(k) or similar, but that is still a terrible investment choice. At your age if you are investing, it should be much more aggressive or otherwise your money is better put to work paying down your debt. Just check out the Investment Order sticky for more details.

Can you clarify the terms of the parental support on your student loans? Personally I find it distasteful to actively work to maximize that very generous gift to your own benefit. It is wonderful that they are helping you out but I think your goal should be to get rid of as much of that debt as you can yourself. Call it part of being an independent adult. Since their support there is a gift, they could presumably pull it at any time. That may be a reason to refinance your loans and reduce the minimum payment so that you can cover everything should their own financial house go into disorder. Only you can judge how stable or long-lasting that arrangement is likely to be.
"It'll be great!"

mrspendy

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #30 on: August 04, 2017, 03:35:31 PM »
my advice is distasteful and should make everyone uncomfortable.

refinancing your $64K of private loans  out to 6% / 20 years would decrease payment from $757 to $460 (basically being covered by the parents). the rate doesn't matter. OP wouldn't be paying it.

the remaining $26K is federal on Income based repayment. OP is in control of his/her as a state employee with access to a 457 and 403b and possibly IRA's / HSA's / whatever other deductions.

I think that plan is the rational way to maximize cash flow and net worth and get out of this bind. but its distasteful for sure.

OP pays $5,200 in state and federal taxes when his non financial income needs are $12,000-$14,000 per year. The plan basically gets rid of that $5K by eliminating the debt service cash needs.

« Last Edit: August 04, 2017, 04:02:18 PM by mrspendy »

Dee18

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #31 on: August 04, 2017, 03:40:46 PM »
Get a job on the weekends.....bar tending or waiting tables would be fine.  With tips you could earn several hundred dollars a month and get some free social interaction out of your dad's house.

Imma

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #32 on: August 04, 2017, 03:44:31 PM »
Damn.... I had no idea accountants only made $45K in HCOL areas. 

You obviously have very little expenses, so you can't cut spending.  You need to get a higher paying job somehow or continue to live with your dad and funnel most of your money to those huge loans.

I recommend snowballing so you feel little wins.

Hahahaha. That's funny. I see lots of fat to cut, but then it depends on how serious the OP is about digging out of this mess.

If it was me, I'd be laser-focused on the enormous debt ball, so all extras - gone. Facepunches to follow, but I'll try to land them gently. I'm not calling you stupid - just some of your decisions (and this is the obligatory part where I say "because we've all made stupid decisions so please don't get offended").

Payroll Deductions:
Gross pay (bi-weekly) - $1,657.47
Fed Income Tax – 167.16
FICA – 99.17
NJ Income Tax – 35.51
Medicare – 23.19
Pension – 121.66
Unemployment Insurance – 7.04   Unless this is mandatory, cancel it.
Disability – 3.98         Unless this is mandatory, cancel it.
Pre-Tax Dental – 9.03
Pre-Tax Health – 48.94
Family Leave Insurance – 1.66   Unless this is mandatory, cancel it.
Roth – 76.79   Unless this is mandatory, cancel it. You don't have the change to spare on saving for the future right now, because your past self screwed your current self over. Stop all contributions and just let it alone unless you're receiving a match from the employer
Contributory Insurance – 8.29  Unless this is mandatory, cancel it.
Union Dues – 19.12    Unless this is mandatory, cancel it.
Net Pay (bi-weekly) - $1,035.93

Other Ordinary Income: $450/month from my parents towards my student loans

AGI: $2,522 Monthly Income


Current expenses:

Current Non-Mustachian Budget (Being completely honest here!)
Lease Payment - $243
Car Insurance - $85
Gas - $175
Tolls - $25
CC Payment - $375
Transfer to Savings - $25 Where is this savings account in your assets? How much do you currently have?
Student Loans - $909 Is this IN ADDITION TO THE $450 your parents front you for school loans? Holy crap on a cracker.
Groceries (includes personal care, cleaning supplies) - $400 You are a single person right? I honestly can't even fathom how a single adult person spends $300 even in a high cost of living on groceries and toiletries. Cut this to the bone. You should be able to cook. Look up cheap, easy meal prep like Budget Bytes, start shopping real, cheap foods and batch cook. You should be able to cut this to $150 a month if you really tried.
Medical (doctors, prescriptions) - $90
Restaurants/Fast Food/Bars - $100 (if you can believe it, this has tapered down over the last few months) This is fucking horrible. Stop all extra spending on stuff that isn't necessary for living. Eating out at a restaurant or liquor in a fucking bar? Holy shit, seriously, do you really want to be in debt forever?
Misc. (Clothing, concerts, movies, & “wants”) - $84 No. You have no reason whatsoever to spend one red cent on "wants." Stop acting like you even have money to spend - every future dollar for the next several years is already spent - you have to change your mindset.
Netflix - $11 Gone. Go to the library and rent movies/television series for free.

Total Budget/Payments:  $2,522.00


Stop with the idea of leaving your parents house. They are amazingly generous in letting you live there, and also paying some of your school loans, so I would hope that living there isn't so terrible that you can't stay for a few more years until you get a better handle on your debt. As long as they are okay with it, it is a FANTASTIC deal for you. Moving into your own place -even if you got roommates - is a terrible idea right now. You have too much debt to even afford rent/rental insurance/utilities/furnishings/etc.

You have no assets. The car is not yours; it's the finance company's property. You can't even sell it and get out of the lease or anything without owing a giant balloon payment - which is typical of Volkswagon (and many other lease type situations). You have a stupid stupid lease with a giant fucking idiotic balloon payment - you're paying them to take a piece of shit car back at the end of the stupid stupid lease. You have to find another vehicle this year and you have no savings or even way to do this other than finance again. Don't do that. Find an older/reliable car and buy it outright with the savings of all the extras you should cut I mentioned above (at least this will drop your insurance down since you won't have to pay full coverage). You should be able to save up around $2,500 by November not even counting the payroll deductions since I wasn't sure how many are mandatory.

Find a job closer to home. Start looking ASAP. If you can cut back on the commute you should also be able to save on the gas/tolls. And I agree it should pay lots better as well. Any raise you get is gravy compared to the commute cost reduction.

Cut out all extras. I am being seriously hard about this stuff, but you need to understand you have hair on fire debt. You should be PANICKING and freaking the hell out - and if so - seriously cut out all the wants and fun stuff for at least a year it will take you to dig out of the car mess and credit card and get on top of your school loans and maybe in a few years if you are lucky enough to find a better paying job closer to home, might have the ability to move out on your own.

Fun stuff should be free stuff for quite some time. I mentioned the library - they rent movies, books, music - for free. They sometimes offer interesting classes. You can ask friends over for movie or game night or hang out at their place - learn to cook some fun meals and cook together and watch television and talk and play games. If you need clothes, thrift shop, if you absolutely have to replace anything. Learn to cook, and I hope to dog that you're packing your lunches every day and not spending $10 a pop at some stupid restaurant.

I mentioned this above, but really really try to understand - your loans, your car mess and your lower pay combined with some poor past decisions mean you have no spending money - you are earning money NOW that you already spent. That is what debt really is. Every dollar you blow now on wants is costing you extra hours/days/months/years in that debt hole. Until you choose to make some sacrifices NOW - future you is going to be stuck right where you are in the present.

No one things this stuff is going to be easy. It will suck when your friends ask you to go hang out at "really fun bar" and have a few drinks, or totally amazing band is playing next month - let's get tickets!" and you have to say no, I can't afford that. It is going to be sad, and you're going to feel left out sometimes. But it is temporary pain for long term happiness.

Facepunches are expected, deserved, and appreciated!
The only deduction that I can cancel is my Roth – cancelled.
Savings account is only at $50. Student loan payments total $909. The $450 my parents give me go right towards the loans. I lumped the $450 income into my AGI.  Groceries/restaurants/”wants” will be gutted. And any leftover will be put right towards my future cheap, reliable used car purchase.
As for living at my parents’ house, trust me I’m SO grateful. I’m just mentioning it for the long-term, because eventually I want to leave NJ to a more mustachian-friendly state.
You mentioned the PANIC I should have – it’s here and growing! I’ve let myself be a consumer sukka for way too long, and I’m tired of living beyond my means and feeling trapped in my own life. I’ll gladly nix those unnecessary expenses for true long-term happiness.
Thanks for your advice, wisdom, and facepunches!

You're not in the worst place possible. You can do this! If you hold on for about a year, you'll be in a much better situation. You can pay off your consumer debt in that time, rearrange your student loans (I'm not American, I can't give you any advice about that) pass your exams, look for a different job and save up some money to move out. You live cheaply now, you could live even cheaper, you're on the right track. A lot of people life like this for 30 years and never reach the point where you are now. It's only going to get better from here. You can join some threads (paying of debt, saving up to $10.000 etc) for moral support from likeminded people.

ysette9

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #33 on: August 04, 2017, 03:46:18 PM »
In this case I think a better use of time than a side hustle is to study hard and pass those CPA exams. That has better long-term $ potential.
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mrspendy

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #34 on: August 04, 2017, 04:31:20 PM »
I should clarify that my ridiculous plan assumes there is loan forgiveness because of public service on the horizon, is this correct?

SimpleCycle

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #35 on: August 04, 2017, 06:00:02 PM »
I should clarify that my ridiculous plan assumes there is loan forgiveness because of public service on the horizon, is this correct?

Private refinancing disqualifies you from PSLF, which only applies to the federal loans to begin with.  OP didn't indicate any additional loan repayment programs he's eligible for.

marty998

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #36 on: August 04, 2017, 06:14:15 PM »
Frankies Girl - I think I'm in love <3

What a post!

With This Herring

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #37 on: August 04, 2017, 06:16:21 PM »
Career - I’ve previously received advice to get a new job to increase my salary. This has been noted and I certainly agree I can’t stay at a job that only gets a ~$2k salary increase each year! I’m currently in the process of studying for my CPA exams – all 4 to go. Have all the college credits. I will have 1 year of eligible work experience as of this September.  However, my resume is VERY jumpy, only staying at each job 1-1.5 years on average. I’ll be at the 1 year mark mid-September for the state. Figured I’d work on banging out the 4 exams while racking up some longer, more appealing employment time. Yay? Nay?

I know you said you are studying, but have you actually sent in the application materials and had your education approved so that you are good to sit for the CPA?  If not, you should do that right now.  It can take a while to get your education approved, especially if any of your classes have odd names (such as "Cost Management" instead of "Cost Accounting" or "Management Accounting").

When studying for the exams, you should allow yourself maybe a month for each.  Completely cut out all vestiges of a social life.  Get out of work at night, eat supper, prep food for sticking in the slow cooker before work the next morning, then lock yourself in your room or a library and study hard.  Spend your weekends studying.  Bang out these exams as quickly as you can.  Make sure you know the material front and back, because it is really expensive to have to retake the exams.  I would not recommend trying to take the exams after just using your school notes; a system such as Becker is the way to go.  Your classes were probably not focused on the CPA exams, and the material is likely out of date, as IASB material has become a large component of the exams and there have been some major changes in GAAP, especially with the new revenue ruling a couple years ago.

Job-wise, your best bet might be to find the nearest walkable city with one of the Big Four (or at least another large firm) and see if you can get a job there.  The Big Four have a bad work-life balance, but they pay more and are more likely to cover exam study materials, exam costs, and possibly pay a bonus when you pass your final exam.  For this, it would be ideal to be already employed at an actual accounting firm, not the State, when you take your last couple exams.  When you apply at accounting firms, make sure you have on your resume that you are a CPA Candidate (assuming you have submitted your paperwork and have approval) and mention whether you have passed any of the exams.
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6-year CPA currently on hiatus.  Botched this.  Working again. 
Go soak your beans.  You know you keep forgetting.

Debts_of_Despair

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #38 on: August 04, 2017, 06:22:17 PM »
Do you have anything you can sell on ebay/craigslist?  Living at home with your parents tends to lead to a lot of Amazon Prime-type shopping, i.e., buying a bunch of useless crap you probably don't need.

marioarm2

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #39 on: August 05, 2017, 09:32:16 AM »
I should clarify that my ridiculous plan assumes there is loan forgiveness because of public service on the horizon, is this correct?

Private refinancing disqualifies you from PSLF, which only applies to the federal loans to begin with.  OP didn't indicate any additional loan repayment programs he's eligible for.

@mrspendy & @SimpleCycle - PSLF wouldn't even help me out at this point. The federal loans should be paid off by time I rack up the 120 monthly payments to qualify for PSLF. There's also a lot of hubbub going on about PSLF right now.. Sounds like the program might not follow through on forgiving the loans. Only time will tell though..

http://www.npr.org/2017/08/02/541126799/new-fears-for-public-service-loan-forgiveness

marioarm2

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #40 on: August 05, 2017, 09:42:07 AM »
Do you have anything you can sell on ebay/craigslist?  Living at home with your parents tends to lead to a lot of Amazon Prime-type shopping, i.e., buying a bunch of useless crap you probably don't need.

You hit the nail on the head in regards to Amazon Prime. I was going to rummage through the garage this weekend and see if I cost sell some of my old PokeMon cards or something. Plenty of junk to be found in this house!

marioarm2

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #41 on: August 05, 2017, 09:47:29 AM »
Career - I’ve previously received advice to get a new job to increase my salary. This has been noted and I certainly agree I can’t stay at a job that only gets a ~$2k salary increase each year! I’m currently in the process of studying for my CPA exams – all 4 to go. Have all the college credits. I will have 1 year of eligible work experience as of this September.  However, my resume is VERY jumpy, only staying at each job 1-1.5 years on average. I’ll be at the 1 year mark mid-September for the state. Figured I’d work on banging out the 4 exams while racking up some longer, more appealing employment time. Yay? Nay?

I know you said you are studying, but have you actually sent in the application materials and had your education approved so that you are good to sit for the CPA?  If not, you should do that right now.  It can take a while to get your education approved, especially if any of your classes have odd names (such as "Cost Management" instead of "Cost Accounting" or "Management Accounting").

When studying for the exams, you should allow yourself maybe a month for each.  Completely cut out all vestiges of a social life.  Get out of work at night, eat supper, prep food for sticking in the slow cooker before work the next morning, then lock yourself in your room or a library and study hard.  Spend your weekends studying.  Bang out these exams as quickly as you can.  Make sure you know the material front and back, because it is really expensive to have to retake the exams.  I would not recommend trying to take the exams after just using your school notes; a system such as Becker is the way to go.  Your classes were probably not focused on the CPA exams, and the material is likely out of date, as IASB material has become a large component of the exams and there have been some major changes in GAAP, especially with the new revenue ruling a couple years ago.

Job-wise, your best bet might be to find the nearest walkable city with one of the Big Four (or at least another large firm) and see if you can get a job there.  The Big Four have a bad work-life balance, but they pay more and are more likely to cover exam study materials, exam costs, and possibly pay a bonus when you pass your final exam.  For this, it would be ideal to be already employed at an actual accounting firm, not the State, when you take your last couple exams.  When you apply at accounting firms, make sure you have on your resume that you are a CPA Candidate (assuming you have submitted your paperwork and have approval) and mention whether you have passed any of the exams.

Yes, I've actually sat for an exam once before but was in way over my head and failed horribly. I also do have Wiley CPAexcel and some NINJA stuff as a study program to work with. After I received my accounting degree, I made the mistake of thinking I didn't ACTUALLY need my CPA in order to be successful as an accountant. I don't know what I was thinking!

As for the Big Four, I was under the impression unless you get recruited through your college career event, that you're SOL? Honestly, most of my experience is AP, AR, collections, and bookkeeping.. not the most stand out experience for my resume! I know that CPA would really help my cause though.. Financially and for job prospects. I'll hit the books!

With This Herring

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #42 on: August 05, 2017, 10:06:22 AM »
Hmm.  I don't know about Big Four recruiting, as I didn't go to a college with a large accounting program, and I specifically avoided the Big Four.  But you would probably have a decent shot at a larger firm in an entry-level position, as you do have real-world bookkeeping experience.  A lot of new hires take a while to intuitively understand the bookkeeping end of things (which is really useful when doing financials for smaller businesses with only one not-terribly-competent bookkeeper), so that may put you ahead of some.  It can't hurt to apply!  The worst they can do is not hire you.

If you took that first exam a while ago, the tests may have changed enough that your program materials are dangerously out of date.  I know Becker updated their study materials at least annually, and they had their program set up so that you would only have the books and CDs shipped as you requested them, so you didn't buy all four courses at once but then get stuck when you were taking the tests in different years.  That would be an advantage of going to a larger firm now as opposed to later - they might provide you with current study materials.
Because your toaster got hacked because you tried to watch porn on your blender.

6-year CPA currently on hiatus.  Botched this.  Working again. 
Go soak your beans.  You know you keep forgetting.

kwarden13

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #43 on: August 05, 2017, 09:08:16 PM »
I actually do not have an accounting degree and work at a big four. You do realize most accounting jobs are in a finance department. You do not need a CPA for most to be an analyst. You can also work remote at the Big Four firms. You really should do some research. Just because you have an accounting degree does not mean you need to be a CPA. There are many other jobs under Finance that you could use your skills at and make more money. Hell, you would make more money applying for any analyst job at most companies.

Imma

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #44 on: August 06, 2017, 02:35:52 AM »
I don't have an accounting degree either and have a pretty good job in finance (just turned 27). I worked AP-type office jobs when I was in college and after I graduated I had enough experience to get a much better paid job in finance than I would have had in my chosen field. No regrets about going to college though - it's the combination of skills and title after my name that helped me secure the job. On the other hand, when you're already working towards exams, there's really no reason to not take them.

kwarden13

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #45 on: August 06, 2017, 09:26:24 AM »
I just did a google search for analyst jobs in Toms River, NJ and there is a credit analyst with TD Bank among about 10 other analyst jobs right in Toms River. If you expand the search 10-20 miles I am sure you will find many more. I would be more open to jobs in Finance and not just solely focused on an accountant.

marioarm2

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #46 on: August 06, 2017, 12:37:02 PM »
I just did a google search for analyst jobs in Toms River, NJ and there is a credit analyst with TD Bank among about 10 other analyst jobs right in Toms River. If you expand the search 10-20 miles I am sure you will find many more. I would be more open to jobs in Finance and not just solely focused on an accountant.

@kwarden13 &  @Imma  - I'm willing to work in Finance. While my job title is "Accountant Trainee", I work in the finance department for the Lottery. Specifically in Collections. I'll take a look at Analyst jobs and see what they're all about! Thanks!

Snowman99

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #47 on: August 07, 2017, 02:54:08 PM »
I was more or less in the same situation you are in at 26, except that I had a $325.00 car payment (loan, not lease) on a brand new pick up truck, and my student debt was  less (about $75k), but I had about $10k in credit card debt (stupid me).  I was making just about what you are making and living with my parents, albeit I did not have my parents helping me with my payments.

What I also did not have at the time, and what you have, is the benefit of being on the path to FIRE and being a part of this forum.  Being financially responsible was not even on my radar at 26 (see above), so you are already ahead of the game. 

To move out of my parent's house, I relocated to a higher paying job (50% pay increase) and consolidated my student loans to a longer repayment period.  I still lived well below my means (rented a studio in a basement), unless you count all of the money I wasted going out to bars (which you should not do).

Don't extend your loans unless you can get a good interest rate.  Otherwise, throw everything you can at them.  You will make more money as you get older, and they will be easier to pay off, so don't sweat extending payment now if you can get a good rate.  Not so sure if staying with the govt will get you there though, so think about the private sector.

When your lease is up, get yourself a cheap, used, Honda, Toyota, etc. VW's are expensive to maintain and don't last as long.

I'm 35 now, have plenty of money in the bank, maxing out the retirement accounts, and support a wife (stays home) and two kids in a nice house (that we own) with ocean views.  26 seems just like yesterday, and I was more or less where you are when I was that age. I too felt trapped and never thought in a million years I would be able to live the way I am today.

I guess my point is that it will work out if you make smart choices, and you will make much smarter choices than I did because you have way more resources just by reading MMM and being on this forum.  In hindsight, if I had come across MMM when I was your age, I would be in much better shape, which is already pretty good.  In other words, don't worry so much: you can do it!  You should be enjoying your 20s and not crippling yourself with anxiety.  Just find ways to enjoy it without wasting your money.  There will be light at the end of the tunnel if you just take one step at a time.

FYI:  I no longer drive that shiny new pick up.   I proudly commute in a 11 year old Honda Civic with over 150k miles.  Runs great, $0.00/month car payment,  and cheap repairs!

ysette9

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #48 on: August 07, 2017, 03:16:48 PM »
Quote
FYI:  I no longer drive that shiny new pick up.   I proudly commute in a 11 year old Honda Civic with over 150k miles.  Runs great, $0.00/month car payment,  and cheap repairs!

And probably way nicer to drive. :)
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marioarm2

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Re: Feeling trapped! 26 y/o living at home w/ $90k debt & leased car
« Reply #49 on: August 08, 2017, 01:58:12 PM »
I was more or less in the same situation you are in at 26, except that I had a $325.00 car payment (loan, not lease) on a brand new pick up truck, and my student debt was  less (about $75k), but I had about $10k in credit card debt (stupid me).  I was making just about what you are making and living with my parents, albeit I did not have my parents helping me with my payments.

What I also did not have at the time, and what you have, is the benefit of being on the path to FIRE and being a part of this forum.  Being financially responsible was not even on my radar at 26 (see above), so you are already ahead of the game. 

To move out of my parent's house, I relocated to a higher paying job (50% pay increase) and consolidated my student loans to a longer repayment period.  I still lived well below my means (rented a studio in a basement), unless you count all of the money I wasted going out to bars (which you should not do).

Don't extend your loans unless you can get a good interest rate.  Otherwise, throw everything you can at them.  You will make more money as you get older, and they will be easier to pay off, so don't sweat extending payment now if you can get a good rate.  Not so sure if staying with the govt will get you there though, so think about the private sector.

When your lease is up, get yourself a cheap, used, Honda, Toyota, etc. VW's are expensive to maintain and don't last as long.

I'm 35 now, have plenty of money in the bank, maxing out the retirement accounts, and support a wife (stays home) and two kids in a nice house (that we own) with ocean views.  26 seems just like yesterday, and I was more or less where you are when I was that age. I too felt trapped and never thought in a million years I would be able to live the way I am today.

I guess my point is that it will work out if you make smart choices, and you will make much smarter choices than I did because you have way more resources just by reading MMM and being on this forum.  In hindsight, if I had come across MMM when I was your age, I would be in much better shape, which is already pretty good.  In other words, don't worry so much: you can do it!  You should be enjoying your 20s and not crippling yourself with anxiety.  Just find ways to enjoy it without wasting your money.  There will be light at the end of the tunnel if you just take one step at a time.

FYI:  I no longer drive that shiny new pick up.   I proudly commute in a 11 year old Honda Civic with over 150k miles.  Runs great, $0.00/month car payment,  and cheap repairs!

Thanks for sharing your own personal story. It definitely makes me feel a lot better about the poor situation I've gotten myself into! myself in. I've always been a very hopeful person, but that hope quickly disappears when I think about how slowly my debts are being paid off.

I've taken a look at consolidating/refinancing my loan for an extended term, but the fixed rate offered is above my current 3.85% average. I was offered $586/mo for 20 years @ 5.41%F and $680/month for 15 years @ 4.74%F. A solid $200-$300 lower monthly payment, but the interest rates are higher and the extended term adds another 5-7 years. I'm assuming both those options are not very MMM friendly, and I should rough out my $910/mo just to be done sooner at lower interest.