Author Topic: Help Appreciated  (Read 2374 times)

TrainingWheels

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Help Appreciated
« on: July 10, 2020, 11:00:22 AM »
Let me start by introducing myself. I am a long time lurker but unfortunately have been very stupid throughout my entire 20's and made a lot of mistakes that I am dealing with now. All help is appreciated. My longterm goals would definitely be early retirement by 50 but I have a long way to go. I currently have no retirement savings other than a pension.

I am currently 29 year old male, divorced, and have a fire lit under my ass to help me pay down my debts and overall progress towards my goals. I know that face punching is going to happen and I am eagerly awaiting each of your inputs.

Life Situation: I have been an RN for the past 6 years and recently graduated as a Nurse Practitioner. I currently work as a hospitalist in the hospital that I have been at for those number of years but I work with an independent practice group of physicians. The hours and work are pretty flexible. I am recently divorced (early 2019).

Net Pay: My net pay after Alimony ($200/month for the next 1.5 years) is $4600

Current expenses:

Rent - $1050 (Nice area, roughly <5 minutes from my hospital so I save a lot in gas money and my owners pay the Water/sewage)
Renters Insurance - $20/month
Electric - Around $80 but it fluctuates given month/season
Car Insurance - Geico $90 I did check around and this was the cheapest I could find
Internet - $60 200mb Internet for work/gaming
Phone - $150 Verizon ( It's very high I know, this is one area that I need to improve on)
Food - $800/month (this is probably my worst area as far as expenses. I know I need to cut down)
Gas - <$20/week

Debts:

Student Loans (federal) - $105K (unfortunately I was not smart about paying for my education. I know, I know...) $300/month
Car - $13k $300/month through Ally
Student Loan (independent) - SallieMae $3300 , $90/month
Credit Card 1 - $12400 (ya, stupid decisions...) $340/month
Credit Card 2 - $2800 $85/month

So as bad as the above may be I do have a plan. I have currently payed off two other credit cards totaling around $3000 in the last few months. I have been putting about $700/month and anything else extra towards my debt. I should have my credit cards payed off by the end of next year and then I am going to focus paying off my car.

Of note: I pay $200/month alimony for the next 1.5 years which should free up cash by then. I currently make $85k/year salary which should increase to $100k within the next year or two. Also after two years of working I can apply to be a teacher at the University ( I have connections with the staff) and that should bring in an extra $2k/month for some part time work.

I guess my main question would be: If you were in my situation how would you handle my debt situation? I know its really bad but I do have a plan and have been doing better lately with my money. I have been eating at home more and trying to cut my grocery bill and did invest in a crockpot which has helped.

Do you think early retirement is still possible given my situation?

Laura33

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Re: Help Appreciated
« Reply #1 on: July 10, 2020, 11:18:19 AM »
Can you list out the interest rates and scheduled payback terms on the various debts?  It's hard to give reliable advice without all of the data.

Bigger-picture, of course it's possible!  You're going to be making six figures in no time -- and you're not even 30 yet!   Start with this for the big-picture:  https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement -- use this to figure out the balance between the kind of lifestyle you want and the amount of time you're willing to work to get there.  Then look at the investment order sticky, and apply your spare money accordingly.

Really, whether you can FIRE at 40 (or any other arbitrary date) is irrelevant.  The reality is that in 11 years, you're going to be 40 no matter what you choose now (unless you're not around any more, in which case you won't have to worry about it any more).  So do you want to be 40 with zero debt and money in the bank?  Or do you want to be 40 with SLs still hanging over your head and CC debt and wondering where all your money is going?  Any move you make now toward being the first guy is going to put you in a much better position down the road, regardless of whether it gets you all the way to FIRE by then or not.

Playing with Fire UK

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Re: Help Appreciated
« Reply #2 on: July 10, 2020, 11:27:20 AM »
Would you be willing to sell the car? Get a bike or a beater and free yourself of the payments, insurance (and gas) in one go? You are spending less than $20 on gas a month: how many miles can be done on a bike? What would be the cost of uber/lyfting the remainder?

What are the interest rates on the loans and cards? How's your credit? Any chance of getting a lower interest balance transfer or loan?

MMM had a recent article on cutting phone bills.

Your food is astronomical for one person. You know this. Keep at it. People in debt don't get to have people prepare food for them just because it's convenient. Seriously, pack a lunch.

Once you've made the changes to demolish the debts, ER will happen like magic. If you can't make the changes when you have credit card debt then you won't make it to ER.

All future pay rises and side hustles go to the debt, but you knew that already right?

LifeHappens

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Re: Help Appreciated
« Reply #3 on: July 10, 2020, 12:31:25 PM »
Your list of expenses is missing a lot. Do you ever buy clothes? Travel on vacation? Change the oil in your car? If you don't have full data on your spending you should track everything down to the penny for a few months.

ysette9

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Re: Help Appreciated
« Reply #4 on: July 10, 2020, 03:54:51 PM »
For Verizon you are paying way too much. Check out this thread for how to get your cell phone bill dramatically down. https://forum.mrmoneymustache.com/share-your-badassity/communications-tech-son-of-the-superguide!/
For comparison, I have Mint Mobile and I pay $16/month for unlimited talk, text, and 3GB a month of data.

Your food spending is out of control. We eat well and I make zero effort to save money on groceries and we spent less than you for two adults and three kids. I recommend meal planning and cooking at home. I just started doing my meal planning by scrolling through the recipes on Budget Bytes (yeah, yeah, years after everyone else recommended using them) and that helps keep the mental load of deciding what to cook down.

I agree with others that you should consider selling your car. Take some time riding your bike and using public transit/ride share/car rentals to figure out what you really need. If you determine you do need a car then go buy a used Japanese something for $2-4K.

Have you been tracking your spending or can you recreate it from past statements? It would be good to know how realistic your figures are and whether there are any missing categories.

Freedomin5

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Re: Help Appreciated
« Reply #5 on: July 10, 2020, 04:03:35 PM »
In your position I would handle the debt by:

- Cutting the expenses listed by previous posters (car, phone, food, etc.)
- Putting all of the extra money into paying off the debts, starting with the debt with the highest interest rate, while making the minimum payment on all the other debts. When the highest interest debt is gone, move onto the next highest interest rate.
- Pay off all debt with an interest rate higher than 5%
- Follow the Investment Order in this forum to start building assets

ysette9

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Re: Help Appreciated
« Reply #6 on: July 10, 2020, 04:12:44 PM »
I know almost nothing about student loan debt but I do listen to the White Coat Investir who covers the topic frequently. It would probably be a good use of your time to check out his blog and see if talking to a student loan refinance expert would give a good ROI. There are a lot of complexities with repayment programs (PAYE, RePAYE) that folks on this forum generally don’t know a lot about. Are you on track to do any student loan forgiveness?

the_fixer

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Re: Help Appreciated
« Reply #7 on: July 10, 2020, 07:02:01 PM »
Let me start by introducing myself. I am a long time lurker but unfortunately have been very stupid throughout my entire 20's and made a lot of mistakes that I am dealing with now. All help is appreciated. My longterm goals would definitely be early retirement by 50 but I have a long way to go. I currently have no retirement savings other than a pension.

I am currently 29 year old male, divorced, and have a fire lit under my ass to help me pay down my debts and overall progress towards my goals. I know that face punching is going to happen and I am eagerly awaiting each of your inputs.

Life Situation: I have been an RN for the past 6 years and recently graduated as a Nurse Practitioner. I currently work as a hospitalist in the hospital that I have been at for those number of years but I work with an independent practice group of physicians. The hours and work are pretty flexible. I am recently divorced (early 2019).

Net Pay: My net pay after Alimony ($200/month for the next 1.5 years) is $4600

Current expenses:

Rent - $1050 (Nice area, roughly <5 minutes from my hospital so I save a lot in gas money and my owners pay the Water/sewage)
Renters Insurance - $20/month
Electric - Around $80 but it fluctuates given month/season
Car Insurance - Geico $90 I did check around and this was the cheapest I could find
Internet - $60 200mb Internet for work/gaming
Phone - $150 Verizon ( It's very high I know, this is one area that I need to improve on)
Food - $800/month (this is probably my worst area as far as expenses. I know I need to cut down)
Gas - <$20/week

Debts:

Student Loans (federal) - $105K (unfortunately I was not smart about paying for my education. I know, I know...) $300/month
Car - $13k $300/month through Ally
Student Loan (independent) - SallieMae $3300 , $90/month
Credit Card 1 - $12400 (ya, stupid decisions...) $340/month
Credit Card 2 - $2800 $85/month

So as bad as the above may be I do have a plan. I have currently payed off two other credit cards totaling around $3000 in the last few months. I have been putting about $700/month and anything else extra towards my debt. I should have my credit cards payed off by the end of next year and then I am going to focus paying off my car.

Of note: I pay $200/month alimony for the next 1.5 years which should free up cash by then. I currently make $85k/year salary which should increase to $100k within the next year or two. Also after two years of working I can apply to be a teacher at the University ( I have connections with the staff) and that should bring in an extra $2k/month for some part time work.

I guess my main question would be: If you were in my situation how would you handle my debt situation? I know its really bad but I do have a plan and have been doing better lately with my money. I have been eating at home more and trying to cut my grocery bill and did invest in a crockpot which has helped.

Do you think early retirement is still possible given my situation?
I am not sure about the situation right now but typically a nurse can pickup extra shifts. At some point in time you might consider putting in some serious hours for a while to clear the debts.


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marty998

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Re: Help Appreciated
« Reply #8 on: July 10, 2020, 08:25:52 PM »
Wow a minimum repayment of $300 a month on over $100k of student debt is criminal in my view.

For people who only pay that minimum they will never pay that off.

I feel like you know what needs to be done. The challenge will be having the patience to see it through. You may not notice changes as they occur each month, but you will make noticeable inroads into your debts if you keep hammering away at them over time.

Keep us updated!

LifeHappens

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Re: Help Appreciated
« Reply #9 on: July 11, 2020, 10:23:53 AM »
I know almost nothing about student loan debt but I do listen to the White Coat Investir who covers the topic frequently. It would probably be a good use of your time to check out his blog and see if talking to a student loan refinance expert would give a good ROI. There are a lot of complexities with repayment programs (PAYE, RePAYE) that folks on this forum generally don’t know a lot about. Are you on track to do any student loan forgiveness?
Be very, very careful before you do any kind of loan consolidation. As much as FIRE blogs tend to push refinancing there are some serious downsides. Federal loans can often be deferred or go to interest-only in the event of a job loss and they are dischargable upon permanent disability. Private consolidation loans don't have those protections. For some people consolidation makes sense, but it's not without risk.

Cassie

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Re: Help Appreciated
« Reply #10 on: July 12, 2020, 04:48:53 PM »
What’s the interest rate and length of time for car loan? It doesn’t always pay to get rid of the car.

TrainingWheels

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Re: Help Appreciated
« Reply #11 on: July 20, 2020, 11:08:34 AM »
Your list of expenses is missing a lot. Do you ever buy clothes? Travel on vacation? Change the oil in your car? If you don't have full data on your spending you should track everything down to the penny for a few months.

Clothes rarely, I have a lot of clothes and I pretty much live in scrubs except on my days off. I just started my new job a few months back and invested in a lot of scrubs that should last me for a few years. I change my oil every 7000 miles which is rarely since I use synthetic. Extra expenses are usually haircuts which I get every month $25. Other than that I really don't have a lot of extra expenditures other than eating out which I have drastically reduced in the last month or so.