Reader Case Study – Long Commute worth it for Loan Reimbursement

[emilyhun]

Reader Case Study – Long Commute worth it for Loan Reimbursement

Income -    Salary $119,000
                Loan reimbursement 20,000/year per contract
                         – This comes in a lump sum once a year. This amount is greater than the minimum I need to pay per year, so I do not                  have to make monthly payments to my school loan

Current Expenses -    $400/month on car loan
                 $1000/month pay back loan to partner for help with down payment on home
                 $1500/month bills:
                  Car and home insurance
                  Mortgage paying 1000/mo ($663/mo is minimum payment)
                  Utility bills
                  Cell phones - $80/mo for 2 lines
                  Groceries
                  Misc. shopping for home
                                      gas
                              $2000/month into savings which is used to purchase MMF from Vanguard
                              $670/month; max amount I can put in my 403b (my company contributes 5%
                                     regardless of my contribution)   
                              $50/month put into savings account for travel/vacation fund
                              $ Sorry I have not quantified this but may $100-400/month that I also spend money on things like running shoes, a                          massage every couple of months, a haircut ever couple of months, clothes for work, and books that I can’t get at our small town library

         Loans: ~90,000 on home @ 3.625%
               ~90,000 on school loans @ 6.8%
               ~15,000 on payback to partner for home down payment help @ 0%
               ~17,000 on car loan at 0%

I work as a pharmacist at a federal organization. My commute to work is 60 min. one way. I am currently using my vacation/PTO time to help reduce my work load to 32-36 hours per week, which allows me to work only 3 days per week of 8-12 hour shifts. There is provider housing available near the clinic. As of now I either make the drive only once per week to save on gas money and time (120 miles and 2 hr), but this means I have to stay over 2 nights and every other week I am not home for 3 solid days. If I get lonely for my partner and home I make the drive twice (240miles and 4 hr drive time) and only have to stay over 1 night per week.

I can continue this arrangement for one year, at that point I will run out of PTO/Vacation and I will have to work a schedule alternating 3 days of 12 hours one week and 3 days of 12 hr + one 8 hr day the next week. This just increases either the time away from home and/or miles I drive; and will subsequently increase my unhappiness.

My contract is complete next October of 2015. I can sign up for an additional year next summer. I will continue to get $20,000 (pre-taxed) payment for every one-year contract I sign, until my loans dip below $40,000, at that point I will be reimbursed at a lower rate.

So the questions is that 20,000 (really more like +/-18,000 after taxes) worth the commute and time away from home. When a job opens up in my town should I jump on i?. It may not be as great of a job but I will be able to walk/ride my bike to work and sleep in my own bed every night. Also, if that job becomes available before my contract is up in October2015, is it worth it to take it and violate my contract requiring me to pay back the loan reimbursement plus interest?

Feel like I have to keep this up to get ahead, but it is exhausting me and making me sad. My goal is to pay off my school loans and then work part-time 24-30 hours as soon as possible. Ultimate goal is to have house, car, and school loans paid off by 2020.

[Timmmy]

I'd cut back the extra mortgage payment and stop investing until you pay off the student loans.  It looks like you could have the student loans paid off in < 2 years at your current salary and then you can stop worrying about the job. 

Actually it looks like you might have to hold the money until to not dip below the 40k.

Do you have any savings built up? 

[emilyhun]

I've only been at my job for 15months. I am a new graduate. I have about $26,000 in my 403b and about $20,000 in a money market fund at Vanguard, plus $5,000 emergency buffer in my checking account.

[flyfig]

I would add that $1000 for the 0% home loan (unless you are required to pay that much right now), could also be used to pay down the student loan even faster.
Also, does the closer job pay at a similar rate? And if you took the new job, could you ask for a sign on bonus (ask for at least the repayment loan amount + interest so it's neutral to you if you break contract)
Do you like your current job, outside the commute?

What's the part that makes you sad and tired? Living apart for periods of time, the commute or the contract? All three? I sympathize - also doing the distance thing for money reasons. Since we need a plane to see each other, it's every few weeks for a weekend visit. Teaching me some interesting life skills. =)

Based on your goal for "school loan free and part time ASAP" it looks like you are depending on the contract for loan re-payment ($20k per year). You're spending $24k on home loan, $24k on Vanguard and $24k on mortgage so the student loan doesn't look like it's your #1 priority. Maybe do as Timmmy suggests and see where your numbers end up.

[emilyhun]

If/When a job opens up in town it would be comprable salary. Sign-on bonus isn't likely but possible.

I like my job, but it is a stressful place, many co-workers are struggling emotionally, and after a previous year+ of being apart frequently from my SO(for his job)I am not looking forward to continuing this for another year or more if I stay with the company.

I had not previously paid much into my loans because I was on a grace period then I started getting loan reimbursement. The logic was if I was to stay there was no sense making payments as the interest accrued wouldn't matter if I was to keep getting loan reimbursement. I don't think that's the case anymore.

[Retired To Win]

Here are the numbers I see.

You get $20,000 a year for the driving.  One round trip commute takes you 2 hours.  If you do the commute once a week , you are earning $200 per hour for the driving ($20,000 divided by 2hrs x 50 weeks).  If you do the commute twice a week, then you are getting $100 an hour for your driving.

So, the question for you is whether $100 a hour -- or maybe as much as $200 an hour -- sounds like a good deal to you for that driving and the attendant inconveniences. (To compare, you are getting less than $60 an hour for your actual work time.)

Let us know what you decide!