Author Topic: 200k in debt, better make a goal to add more in 2013  (Read 22619 times)

dragoncar

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Re: .
« Reply #50 on: January 20, 2015, 12:24:01 PM »
Thanks for the update on this old thread, justajane.


Quote
I have the sneaking suspicion that they are just paying the minimum until they are forgiven


student loans?

What is the likelihood of this happening in your country?

In the US, student loan debt is forgiven after 25 years of repayment (20 in some cases, 10 for public service).

sorry if this is rambling :
one thing about this whole loan forgiveness thing that i wonder, esp in her case:


if they are federal, every year you have to send in paperwork proving you cant afford your loans. this program is for people who will never in those 25 years start earning 'decent' money

as she and her husband are both high potential earners,  i would be concerned that at some point the government will decide you can afford the payments, at that point you are on the hook for normal payments.

i mean based on inflation and tiny raises alone , I  assume that at some point she will be earning enough to afford her loans.

and from my understanding they look at what they think you should pay, not what you think you can afford to pay. ( so this may raises gradually every year any way)

since she is doing interest only payments this means the balance hasnt changed in oh lets say 10 years.  so she now starts making interest and principal payments based on the original  loan in the remaining 15 years. ( she wasted 10 making interest only payments in this scenario)



id be concerned i would end up paying for the loan and more. and maybe she actually reaches 25 years without paying it all off. now she owes the taxes on being 'forgiven' $200,000. im assuming this would be at the 34% tax rate. ( cause this is on top of what ever her and hubbers make for that year)

i did the math for the best case scenario based on the programs available for federal loans. i doutb this is the case for her.

 taxes after forgiveness= 68k
interest only payments for 25 years= 199800 ( im giving her a 4% apr, which with grad loans i doubt she has. )

Yes, I once ran the numbers for a law school friend who was considering working for the government.  I ran scenarios under normal payment, IBR, etc.  One option was IBR for 10 years until the loan is forgiven.  But the huge risk was that she might go into private sector in, say, 5 years if she doesn't like working for the government.  Then her salary and payments would jump and most importantly she'd have to pay back all that deferred interest.  The deferred interest issue is equally a problem for the 25-year repayment case if you end up having a large salary in later years (isn't this really the most likely scenario?). 

It's often an equally good option to just pay back as quickly as possible and continue to live like a grad student.  But that's interest rate sensitive too (I think we were talking around 6-8% blended rate)
« Last Edit: January 20, 2015, 12:29:32 PM by dragoncar »

mhufft920

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vivophoenix

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Re: 200k in debt, better make a goal to add more in 2013
« Reply #52 on: January 20, 2015, 12:33:11 PM »
i owe a large amount of student loans  and i doubt that they qualified for many of the programs offered.


you are allowed to no questions asked claim some forbearance or deferment months. but to be honest the math of her paying 400/ month towards her loans totaling  ~100k does not add up.

unless they arent legally married. she does mention only making 40k somewhere  which would probably qualify her for the newer IBR they just rolled out

SuperSaver

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Re: 200k in debt, better make a goal to add more in 2013
« Reply #53 on: January 22, 2015, 02:30:13 PM »
Kirsten Wong just left GRS. I use to read it all the time when JD started out, when he sold out I started reading a few articles every few months. Too much garbage and filler. I would read Kristen & El Nerdo :)

& like a total rubber necker gawk at Honeys lack of financial sense on a "personal finance" forum.

 They are officially out of writers worth reading. The best thing from GRS in the past 2 years was it led me to MMM via comments.

KodeBlue

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Re: 200k in debt, better make a goal to add more in 2013
« Reply #54 on: January 22, 2015, 09:06:42 PM »
Get Rich Slowly....very slowly...

zephyr911

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Re: 200k in debt, better make a goal to add more in 2013
« Reply #55 on: January 23, 2015, 02:39:47 PM »
Get Rich Slowly....very slowly...
The MMM approach of pedal-to-the-metal may not be for everyone, but hot damn is it nice when you look back and realize how far you've come. (I just did my quarterly-ish review and giggled a little)
Everyone comes from a different place but once it sinks in how easy it is to really change your situation - and FAST - one wonders why anyone would ever do things any other way.

damize

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Re: 200k in debt, better make a goal to add more in 2013
« Reply #56 on: January 23, 2015, 02:59:11 PM »
The best thing from GRS in the past 2 years was it led me to MMM via comments.

This.

arebelspy

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Re: 200k in debt, better make a goal to add more in 2013
« Reply #57 on: January 23, 2015, 03:08:34 PM »
Everyone comes from a different place but once it sinks in how easy it is to really change your situation - and FAST - one wonders why anyone would ever do things any other way.

Well said.
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James

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Re: 200k in debt, better make a goal to add more in 2013
« Reply #58 on: January 23, 2015, 07:14:35 PM »
Get Rich Slowly....very slowly...


I wrote something to that effect in the comments on her post... :D

Lauran75

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Re: 200k in debt, better make a goal to add more in 2013
« Reply #59 on: January 24, 2015, 08:31:44 PM »
I don't have any student loans, but my bf does. They just started letting him do IBR (they'd been in deferment? for years before that.) He's never going to make more than he is right now ...(he's 48 - went back to school at 38 and got a two-year business degree which he did nothing with.)  When he talked about doing the IBR thing, I wondered about the interest racking up - but it sounds like they don't charge interest while you are doing IBR?? If so, that is good news!

(I was extremely lucky to make it through college and grad school with no loans. College due to my dad being a minister and the 70% tuition deduction +trust fund from a medical malpractice suit my mom won = grad school I paid for out of pocket from previous savings while living as cheaply as possible and working 25 hours a week, not to mention a good bit of scholarship money.)

dragoncar

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Re: 200k in debt, better make a goal to add more in 2013
« Reply #60 on: January 24, 2015, 09:16:30 PM »
I don't have any student loans, but my bf does. They just started letting him do IBR (they'd been in deferment? for years before that.) He's never going to make more than he is right now ...(he's 48 - went back to school at 38 and got a two-year business degree which he did nothing with.)  When he talked about doing the IBR thing, I wondered about the interest racking up - but it sounds like they don't charge interest while you are doing IBR?? If so, that is good news!

(I was extremely lucky to make it through college and grad school with no loans. College due to my dad being a minister and the 70% tuition deduction +trust fund from a medical malpractice suit my mom won = grad school I paid for out of pocket from previous savings while living as cheaply as possible and working 25 hours a week, not to mention a good bit of scholarship money.)

I'm pretty sure they charge interest.  The interest may not compound, though.

Lauran75

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Re: 200k in debt, better make a goal to add more in 2013
« Reply #61 on: January 24, 2015, 09:21:30 PM »
I don't have any student loans, but my bf does. They just started letting him do IBR (they'd been in deferment? for years before that.) He's never going to make more than he is right now ...(he's 48 - went back to school at 38 and got a two-year business degree which he did nothing with.)  When he talked about doing the IBR thing, I wondered about the interest racking up - but it sounds like they don't charge interest while you are doing IBR?? If so, that is good news!

(I was extremely lucky to make it through college and grad school with no loans. College due to my dad being a minister and the 70% tuition deduction +trust fund from a medical malpractice suit my mom won = grad school I paid for out of pocket from previous savings while living as cheaply as possible and working 25 hours a week, not to mention a good bit of scholarship money.)

I'm pretty sure they charge interest.  The interest may not compound, though.

Ok, that makes more sense. Thanks!

JustTrying

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Re: 200k in debt, better make a goal to add more in 2013
« Reply #62 on: January 24, 2015, 11:16:47 PM »
I don't have any student loans, but my bf does. They just started letting him do IBR (they'd been in deferment? for years before that.) He's never going to make more than he is right now ...(he's 48 - went back to school at 38 and got a two-year business degree which he did nothing with.)  When he talked about doing the IBR thing, I wondered about the interest racking up - but it sounds like they don't charge interest while you are doing IBR?? If so, that is good news!

(I was extremely lucky to make it through college and grad school with no loans. College due to my dad being a minister and the 70% tuition deduction +trust fund from a medical malpractice suit my mom won = grad school I paid for out of pocket from previous savings while living as cheaply as possible and working 25 hours a week, not to mention a good bit of scholarship money.)

I'm pretty sure they charge interest.  The interest may not compound, though.

Ok, that makes more sense. Thanks!

I think that the interest does not compound for the first 3 years while one is paying with IBR - after that, it does??? I read that on a blog today though, so I'm not sure how accurate it is...

justajane

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Re: 200k in debt, better make a goal to add more in 2013
« Reply #63 on: February 28, 2015, 07:58:05 PM »
In new Honey news, she and her husband just spent $5,500 replacing a fully functioning but older HVAC system.

http://www.getrichslowly.org/blog/2015/02/26/honey-progress-report-replacing-our-hvac-part-i/

I just can't fathom replacing a working system if I had that much debt hanging over my head. We replaced ours a few years back before the federal credit for high efficiency units expired, but we had no debt and considerable savings.

brooklynmoney

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Re: 200k in debt, better make a goal to add more in 2013
« Reply #64 on: February 28, 2015, 09:04:47 PM »
The whole Honey saga really just astounds me. I mean I find their fiscal irresponsibility to be shocking. And the constant denial about the state they are in. Oy vey.

zephyr911

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Re: 200k in debt, better make a goal to add more in 2013
« Reply #65 on: March 02, 2015, 08:59:23 AM »
In new Honey news, she and her husband just spent $5,500 replacing a fully functioning but older HVAC system.

http://www.getrichslowly.org/blog/2015/02/26/honey-progress-report-replacing-our-hvac-part-i/

I just can't fathom replacing a working system if I had that much debt hanging over my head. We replaced ours a few years back before the federal credit for high efficiency units expired, but we had no debt and considerable savings.
There's surely some ROI associated with updating HVAC, given the upward trend in SEER ratings. It may not be as high as the APR on their debt, obviously, but it's nowhere near mainstream consumer retardation.

partgypsy

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Re: 200k in debt, better make a goal to add more in 2013
« Reply #66 on: March 02, 2015, 10:15:42 AM »
I learned about MMM from get rich slowly and now read this site way more than GRS.
What other personal finance/development sites would you all recommend.

I also understand the trainwreck aspect of reading Honey's writing. I did the same for this other blog (which no longer exists) which almost seemed made up because of the comically ineffective way the head of the household was trying to save money, but then give money to relatives who would literally buy vehicles, porn, etc.
same thing for MP Dunleavy's writing, which seemed full of rationalizations but were still enjoyable to read (I wonder where she is now?)

justajane

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Re: 200k in debt, better make a goal to add more in 2013
« Reply #67 on: March 02, 2015, 11:42:15 AM »
In new Honey news, she and her husband just spent $5,500 replacing a fully functioning but older HVAC system.

http://www.getrichslowly.org/blog/2015/02/26/honey-progress-report-replacing-our-hvac-part-i/

I just can't fathom replacing a working system if I had that much debt hanging over my head. We replaced ours a few years back before the federal credit for high efficiency units expired, but we had no debt and considerable savings.
There's surely some ROI associated with updating HVAC, given the upward trend in SEER ratings. It may not be as high as the APR on their debt, obviously, but it's nowhere near mainstream consumer retardation.

No, but it's just part and parcel of the same mentality that debt has no consequences and that life can essentially carry on as usual. I guess Honey's story is that in many respects it can, if you are able to divorce yourself from the "what ifs" and live in the moment.

I think we would all be less harsh about this, if she weren't a staff writer for a personal finance blog.

sol

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Re: 200k in debt, better make a goal to add more in 2013
« Reply #68 on: March 02, 2015, 11:47:21 AM »
I think we would all be less harsh about this, if she weren't a staff writer for a personal finance blog.

Unless her idea of "personal finance" is "how to be really stupid with money" then I see no problem with judging in this scenario.  I also judge pacifists who work for the military.

zephyr911

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Re: 200k in debt, better make a goal to add more in 2013
« Reply #69 on: March 02, 2015, 12:35:07 PM »
I think we would all be less harsh about this, if she weren't a staff writer for a personal finance blog.
Fair enough. I don't know all the details of her situation, but that article does mention they had $23K in a savings account before the HVAC debacle, which - since, as mentioned, they have substantial debt - is just dumb. Springy debt cushion, the only way to fly.

sleepyguy

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Re: 200k in debt, better make a goal to add more in 2013
« Reply #70 on: March 03, 2015, 09:22:29 AM »
Agreed!

I've deleted that site from my financial reading material LONG ago...

This is the most sad part

"Honey Smith has been reading GRS since at least 2008"

His articles were decent then... don't think she/they have learned a single thing besides blogging.

I think we would all be less harsh about this, if she weren't a staff writer for a personal finance blog.

Unless her idea of "personal finance" is "how to be really stupid with money" then I see no problem with judging in this scenario.  I also judge pacifists who work for the military.
« Last Edit: March 03, 2015, 09:31:35 AM by sleepyguy »

arebelspy

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Re: 200k in debt, better make a goal to add more in 2013
« Reply #71 on: March 03, 2015, 10:19:07 AM »
"Honey Smith has been reading GRS since at least 2008"

Ouch.  After 7 years (based on where she was starting) she should be out of debt and at least 1/3 of the way to FI, with maybe another 5 to go.

The part that gets me is that she's lauded (in the comments) for her "progress."

It's so crazy what seems normal vs. good when they just don't know a better way (the readers, not her - she has no excuse).
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Re: 200k in debt, better make a goal to add more in 2013
« Reply #72 on: March 03, 2015, 10:30:30 AM »
I used to read GRS regularly about 3-4 years ago. It's hard to really pinpoint what changed. The closest ecplanation I can think of is that it got too... fluffy. It used to provide interesting information. Now a lot of it is kind of like journal entries for the individual writers. None of whom seem to be doing anything particularly interesting.

I like reading progress updates from people who are actually making progress, not just finding new ways to spend money. Lacking Ambition was good, though he seems to have stopped posting.

Kaspian

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Re: 200k in debt, better make a goal to add more in 2013
« Reply #73 on: March 03, 2015, 10:45:50 AM »
Ersh....  Such a trainwreck!!  She was the reason I stopped reading GRS.  (I'd only pop in if Kristin Wong tweeted that she'd written a new article there.)

Check out Honey's 2014 Year-End Goal List and tell me what's wrong with this picture:

Quote
Goal 1: Pay off $10,000 in student loan principal. Fail. ...

Goal 2: Buy a house (or move into a better rental). Achieved! ...

Goal 3: Continue to save for travel. Achieved! In addition to the bridal shower and wedding, we were able to take two other trips together in 2014. The bridal shower and wedding were paid for out of savings. The other two trips were almost entirely paid for with credit card rewards points. Not everyone agrees that we should be prioritizing travel when we still have debt. To us, travel is worth the sacrifice of a slightly longer payoff.

Goal 4: Continue to expand my freelance work. Fail. ...

Way to go on your goals, genius!  Two out of four of those involve spending hoards of money and/or creating debt and two of those are financially wise decisions.  Guess which ones you succeeded at?

http://www.getrichslowly.org/blog/2015/01/19/honey-progress-report-2014-wrap-up-and-2015-goals/
« Last Edit: March 03, 2015, 10:49:19 AM by Kaspian »

arebelspy

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Re: 200k in debt, better make a goal to add more in 2013
« Reply #74 on: March 03, 2015, 01:20:04 PM »
Lacking Ambition was good, though he seems to have stopped posting.

Lacking Ambition was my favorite PF blog besides early (2011-2012) MMM.

But I like that he doesn't update so much anymore.  It makes me happy to think of Mike free, out enjoying life, too busy with FIRE to update some blog.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
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