Author Topic: CASE STUDY: Student loans eat all my money  (Read 4464 times)

Dsteadma

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CASE STUDY: Student loans eat all my money
« on: August 24, 2015, 10:58:00 PM »
My husband is a 26 year old cisco network administrator who is getting his second year of experience at a hospital.  After his second year, we'd like to move to a bigger town where he'd get paid more.  I am a MedAide with a degree in wildlife ecology.  He works days and I work evenings so even though we've been married for a year I hardly ever see him.  Ever since we got married I've been trying desperately to get rid of the student loans.  I would like to have kids in the next two years and don't want the loans hanging over me.

Mistakes:
I chose a degree without considering the job prospects.  My husband signed up for lots of unsubsidized loans without worrying about them and then took forever to graduate. 

Student loans:
46,000 at 2-6.8%
15k of which are still deferred for the next 5 months.

Assets:
2002 Toyota Corolla with 160,000 miles that eats oil like crazy. The mechanic said replace the engine or just keep putting oil in it. Completely paid off.
403b - 750
IRA - 2377.84
Emergency - 1100
Moving money - 752.87
The bike that gets me to work.


Total family income is 2970 net a month. 35,640 net a year

Bills:
Church     162
Internet/cell     122.94
Rent          375
Utilities      160
Car insurance 26.01
Food         400
Gas           215
Health insurance 151.16
Clothes     40
ICE savings 100
Car savings 100
Xmas savings 10
Vet savings 50
CC - 110 at 2%
Student loans - 734.8 at 4-6.8%


Total bills: 2756.72

Left: 213.28

Whatever's left is often spent on miscellaneous or put towards loans.  Loans are also supplemented by whatever overtime I can get, which varies but goes directly towards loans.  Food category also pays for household items and pet food. Cell and internet can't be changed.  The provider is the only one with service out here and we still have an unlimited data plan. We are looking to get out of our bad housing situation, but we need to stay in the area for another year for my husband's job.  There isn't much housing to chose from here. Credit card debt is a student loan we moved over for a lower interest rate.  My husband has a 20 minute commute and I can walk/bike to work.

The Goal: Get rid of debt ASAP!

My plan: Pay minimum on the credit card debt and move it over to another card for 2-3% when my offer ends.  Pay as much as possible on the 6.8% loans.  Save for a car replacement for when this toyota blows or a car for me when we move somewhere else.

Question: What can you see that I don't?  What do I need to save for or have forgotten in my budget? Where is fat that needs to go and face punches that need to occur?

*Edit ICE is In Case of Emergency. It's our FU fund. Car savings are funds to fix our car/replace it in the future.
I make 0-500 in over time a month but none of it is guaranteed. We ARE paying extra on our loans by 200.
« Last Edit: August 25, 2015, 11:05:19 AM by Dsteadma »

MDM

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Re: CASE STUDY: Student loans eat all my money
« Reply #1 on: August 25, 2015, 12:03:55 AM »
Total family income is 2970 net a month. 35,640 net a year
Question: What can you see that I don't?  What do I need to save for or have forgotten in my budget?

If you can list gross pay and then each line item that gets you to your net pay, there may be something.  See also http://forum.mrmoneymustache.com/ask-a-mustachian/how-to-write-a-'case-study'-topic/ in case we both missed something else besides the gross vs. net.

iamlindoro

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Re: CASE STUDY: Student loans eat all my money
« Reply #2 on: August 25, 2015, 12:04:08 AM »
A few items right off the bat:

* I know that I am likely wasting my breath, but you cannot afford to be donating money to a church right now.  If contributing is non-negotiable, how about volunteering time instead?  Have you spoken to your church leadership about your dire straits, and if necessary, asked to fulfill your obligation in another way?

* Why not switch to a Verizon MVNO?  You'll still have the same exact service and coverage, but at a drastically reduced price.

* You cannot afford unlimited data.  You also don't need it.  Wifi is everywhere, and you can economize when there's not by only using data when absolutely necessary.  This is not that hard to adjust to-- take it from a former data binger!

* Food is a little expensive for two.  Does this include eating out?  If yes, you cannot afford to eat out until your situation improves.  Go on picnics.

* Do you really need to spend $40 a month on clothes?

What's ICE?
« Last Edit: August 25, 2015, 09:13:53 AM by iamlindoro »

seattlecyclone

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Re: CASE STUDY: Student loans eat all my money
« Reply #3 on: August 25, 2015, 12:21:02 AM »
Revisit your assumptions about your cell service being unchangeable. Unlimited data is a luxury you can't afford right now. Drop the data plan. It's okay to not have internet access when you're out of WiFi range.

You'll probably bristle at the suggestion of cutting back on church donations or finding another home for your pet. In case these are at all negotiable, they could provide a significant boost to your budget.

I'm not sure what ICE savings is. Why do you need that?

Your food spending is a bit high. Avoid pre-packaged food. Beans and grains are good. So are fresh fruits and vegetables. Try to eat less meat, and buy what's on sale.

You're not earning very much. Assuming full-time hours for both of you, $35,640 per year for two people averages out to under $9 per hour. What can you do earn more? If you're not working full time, you should find full-time work. Is it absolutely essential for your husband to stick around working at that hospital for another year? $9/hour seems comically low for a network administrator with a year of experience. If he's any good at his job I would expect him to be able to land a job paying at least double that in any sizable community. He should start applying today.

The fact that you're so close to the edge right now while some of your student loans are still in deferment should be a big red flag. You should not even think about adding child care expenses to the mix until you reduce your spending, increase your income, and take care of a good chunk of your loans.

Kaikou

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Re: CASE STUDY: Student loans eat all my money
« Reply #4 on: August 25, 2015, 03:29:02 AM »
I sympathize because i'm in debt myself.

first please write out a real case study.

What is ICE and car savings 100?

This is what onetonline list for 15-1142.00 - Network and Computer Systems Administrators:

 Median wages (2014)   $36.44 hourly, $75,790 annual

obviously experience is everything.

MedAide aka 31-1014.00 - Nursing Assistants:

 Median wages (2014)   $12.07 hourly, $25,100 annual

I know that's right.

Are you guys in the South?

At your earnings you might want to look at government aide(which can also include phones & internet assistance), at least to get your footing. Sounds like it's going to get worst ($15000 looming in the backdrop).

Food is too high. Stop the contribution to retirement unless there's a match. What do you have to sell? Second jobs?

Have you heard of Dave Ramsey?

ShoulderThingThatGoesUp

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Re: CASE STUDY: Student loans eat all my money
« Reply #5 on: August 25, 2015, 05:01:19 AM »
I normally don't say this, but you're borrowing money to donate it to the church. Stop. When you have those loans under control you can build wealth and engage in much more charity.

fb132

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Re: CASE STUDY: Student loans eat all my money
« Reply #6 on: August 25, 2015, 05:23:54 AM »
I agree, you should stop donating until you are debt free. If you are in debt, it is basically like if you are borrowing to donate. The cell phone plan is also way too high, get something cheaper. You eliminate those 2 and you will have approx. 285$ more per month. You can also lower your clothing bill, do you really need to buy clothes every month??? I would only buy clothes if necessary.

Rosy

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Re: CASE STUDY: Student loans eat all my money
« Reply #7 on: August 25, 2015, 07:54:22 AM »
1. One more - you are borrowing!!! money to donate to the church. Stop or at the very least drop it to fifty bucks if you must. Even Dave Ramsey says to get your own house in order before you give up money to the church. Once you have a grip on your finances donate time or money - but right now you are in serious money trouble - you are slipping off the edge and you know it in your gut.

Unless you take care of yourself first - you are not in any shape, both emotionally, healthwise and definitely not financially able to help anyone.

2. I'm guessing the $100 is a car fund for repairs and replacement? ICE - is?

3. Your gut feeling is right - his 46K student debt is a huge roadblock for getting ahead at present (so it is really only temporary like 5 yrs or so:)

4. Do fill in a bit more detail so you can get some real help.

5. Re-evaluate everything - even the things you thought you could not change. Find a way - there are always alternatives - from food to cell plans.  Do not ever accept that you are stuck in a situation or a cell plan. There are sections on communication and cell plans on this forum with a sticky - look them up.

My main suggestion would be - do what you need to do to increase your income. It is the elephant in the room. Consider moving sooner - definitely have husband start looking now.
Consider a different career for yourself, just because your parents insisted - I understand, I was living my mother's dreams for a while too:), you are not stuck with that forever. Sometimes degrees as such do not matter at all, just the fact that you have one will get you in the door for other positions that you might enjoy a great deal more. I switched from admin to commercial insurance which doubled my salary in three years and never looked back - in the end mom was just happy and proud to see me doing so well.

Bottomline - you can do this, but it will take a little time and most of all - re-think everything:) keep obsessing about your budget so you can one day breathe easy and start thinking about children.

MayDay

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Re: CASE STUDY: Student loans eat all my money
« Reply #8 on: August 25, 2015, 08:06:46 AM »
Since your H is at work during the day anyway, can you pick up a second day job, or pick up more overtime?

You are hardly putting anything extra on the loans.  Your salaries should go up if you move in a year for higher paying jobs, but you will likely have higher housing costs as well, and you need to be planning for car expenses as well (we had a '99 Corolla that burned oil like crazy......  it eventually got sold for 900$ at 180K miles when it was on the verge of total collapse). 

Ditto the others to get rid of that cell expense.  At your income level (9$ an hour jobs) you really can't afford a smart phone at all.  At most you need super low data pre pay plans that are for emergency use only.

In my rural area with low paying jobs, we have warehouse jobs around 9-11$ an hour, more if you go through forklift training, and nurse aide jobs around 10-12/hour.  Unless you are really rural, I am surprised you can;t increase your salary by finding a new job.  Unless you are working part time, in which case also find a new job!

Cwadda

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Re: CASE STUDY: Student loans eat all my money
« Reply #9 on: August 25, 2015, 08:11:16 AM »
Can either or both of you go back to school for a Masters to get higher paying jobs? I know you probably don't want to go back and get even more debt, but if you can take day classes and work at night that might be possible. If you can get up to double or triple your income the investment in education will pay off pretty quickly.

SomedayStache

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Re: CASE STUDY: Student loans eat all my money
« Reply #10 on: August 25, 2015, 08:20:52 AM »
ICE = In Case of Emergency (Efund I'm guessing)

Kaikou

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Re: CASE STUDY: Student loans eat all my money
« Reply #11 on: August 25, 2015, 09:09:11 AM »
Emergency fund is listed.

SomedayStache

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Re: CASE STUDY: Student loans eat all my money
« Reply #12 on: August 25, 2015, 11:13:46 AM »
Emergency fund is listed.

It's listed as an asset. 

I'm guessing the $100 per month ICE line is how the fund grows/replenishes

Easye418

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Re: CASE STUDY: Student loans eat all my money
« Reply #13 on: August 25, 2015, 11:56:57 AM »
OP,

There is a fix for older Toyotas that are burning oil.  Search the internet. 

I used to have a 01 Corolla (bought with 40k miles on it in 2011) for $6k.  Sold it for $3k with a crack bumper and 70k miles.  Car was a piece of shit.  Probably because of the original owner and a faulty water pump.  Damn thing blew out on me twice within a year.

mandy_2002

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Re: CASE STUDY: Student loans eat all my money
« Reply #14 on: August 25, 2015, 11:59:52 AM »
Having net vs. gross for info would be helpful.  Your federal income tax withholding amount should be really low.  If you got a tax return this year over a couple hundred dollars, increase your exemptions to decrease your withholding.  (You're loaning the government your money interest free while not able to throw more at your loans.)  If you put any money into a qualifying account during the year, make sure you take advantage of the saver tax credit.

I agree you should not be paying that much money just to keep unlimited data.  How much of it do you actually use, and where are you using it?  I'm assuming you've also got internet at home with that bill, so there's no need to use data there.  I had a cheap plan using Verizon's network with a different company, had perfect cell and text coverage, and was able to check emergency things on-line on the really, really not smart phone.  I spent about $9 a month. 

I personally understand the church tithe.  There's a few things that you can do here, but speaking with others that you respect in your congregation would be helpful.  One thing that I've done is keep an Excel sheet with how much I'd like to give each month.  You can't necessarily give it now, but having a plan on when you will can be helpful.

r3dt4rget

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Re: CASE STUDY: Student loans eat all my money
« Reply #15 on: August 25, 2015, 12:09:06 PM »
There really isn't much to say besides earn more money. You can cut down your expenses by a couple hundred a month with various changes, but finding better jobs or more hours is a much better use of your time and energy. Paying down debt quickly requires cash flow that is free to attack the debt each month. With such low income and high amounts of debt, you are looking at a very long road to paying it off right now. If you can't get better jobs or more hours in your current town, do you have parents you can live with for free? Maybe you guys could take on some roommates to cut down on rent? Focus on the largest expenses than can quickly free up cash flow each month. Quit giving money to the church. If you are paying for internet, why data on the phone? You're in a tough situation that calls for drastic changes. They won't be comfortable or easy, but don't let that cloud your judgement.