Hey Everyone,
So... an old college roommate of mine turned me onto the
MMM ways maybe a month ago. I've been reading up on the topics covered by MMM since his first post, delving into some other people's posts on the following topics, and I am having a bit of a problem relating it to my situation.
I have seen my faults regarding previous spending habits, the habits taught to me regarding my family's financial tendencies (who would've thought following in the footsteps of parents in debt would make it hard to figure out money?.... *punch self in face*). So, after hours of icing a swollen face, i turn to the aid of those with fuzzier upper lips than myself.
Here is my situation...
I, being a young, virulent, clean shaven, 'recent' college graduate (ok, may 2011.. not recent but go with it) made a few poor choices financially upon graduation. I may or may not be one of the individuals listed in this article...
https://forum.mrmoneymustache.com/ask-a-mustachian/kill-off-remaining-student-loans-new(used)-car-maxing-401k/regarding a car purchase....
I spent frivolously when i got my first official job paying, what i thought to be an unending amount of money, 55k/year. Made finance choices all before the big brother of student loans came due.
Now, i wasn't being completely oblivious to upcoming expenses, i had assumed student loans would come to roughly 3-400 a month, with rent coming at ~800-1000 a month and 100 for utilities. With those numbers, i assumed 460/month for a car, 548 after insurance, was not insane. little did I know, my student loans came back at $850 a month... anyways I digress, and to avoid a novel i'll spell it out in less of a mass of text.
I'm not sure where to go from here. Everything I read says pay off the high interest loans first after emergency fund. Ok, got that. My high interest loan is clear:
Loans:Sallie Mae: ~450 / month
35568 @ 9.75%
6109 @ 4.75%
Wells Fargo Private Loan8739 @ 3.5% -- i pay 75 / month to slowly plink this away versus the 65.87
Gov't Loans: comes to ~230 / month
3831 @ 6.8%
19885 @ 4.5%
Campus Loan:3582 @ 5.0% this comes to $40 a month, i'm paying $50.
Non Loan PaymentsI have a car lease payment (as mentioned above) of 460/month
Insurance 88/month
Gym (only stress outlet these days) ~$53/month
cell phone $60/month
health ins /dental - ~45 or so out of paycheck before taxes 2x/month
Misc StuffGas runs me around $250-300 / month, as i'm living at home and commuting 45 minutes to work one way, since i can't afford housing near work...
Ez-Pass typically runs me 40 / month for seeing my girlfriend, yes i have to pay tolls to see her... only for another 2 months, then she moves in-state for grad school... so this i expect to go away.
i spend ~$100 / month on restaurants, typically weekends with the girlfriend
another ~100 on 'entertainment' be it driving range balls, a movie, or whatever. I have knocked this down from 250 already, and am working on making it even less without driving my better half away...
I don't go to bars
I spend around $60 on food from the grocery store for work lunches
I'm 95% sure thats everything that is a typical expense for my month to month.
So this leaves me ROUGHLY with $1140 left over each month after the consistent expenses listed above.
I take home two paychecks of ~1600 a month after taxes, 5% roth IRA contribution, healthcare, and such already taken out. so 3200 a month.
I 'stache away (try to) $1000 a month for my rainy day funds/incaseshithappens fund. That is currently at ~7000. I only started doing this recently, say late January of 2011 (as per punching self in face after using mint.com 's interface realizing a net of about 200 since i started working each month). I assumed this would end up being rent money out of my paychecks.
SO there i go, thats the background. Now the rising action...
The sallie mae loan at 9.75%, it is VARIABLE which is joyous... I've had several attempts to consolidate the loan, and had some results come back in the 6.5% range, also variable, subject to change every month. Among the other questions that come up, the sallie mae loan (from my understanding) is at the max variable rate allowed by my initial agreement hence, it is semi fixed at that. To consolidate the ~30k in loans at 6.5% variable could potentially shave my stubbly 'stache off if, say next month wells fargo wants to make it 18%. In the short term, i would reduce monthly payments significantly, which I could then use to pay it off 'faster' than the allotted 15 year repayment time frame. Would this be advisable? I understand 9.75% is outrageous, however is chancing to a free floating, no cap, subject to change every month, variable rate consolidation financially sound?
I look forward to some feedback.
Oh, i forgot something... I currently live at home with no rent or utilities to be paid (only 'saving grace' right now).
Do i trim the savings to chunk the loans? or keep the savings to potentially move out with at some point in my "near" future. From what i've read, the general synopsis would be chunk savings down to less than 1k a month, blow that into unfriendly student loans. In theory, i could make a loan disappear every 3-4 months by taking it all into loans. gov't loan, campus loan, sallie may round 2, wells fargo loan... or do i use the extra $500 a month to chunk away principal amount of the salliemae 36g's
I apologize for the long winded description(s), and look forward to your feedback