Author Topic: Reader Case Study - $144k Student Loan & Starting New Life  (Read 7852 times)

WIJG

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Reader Case Study - $144k Student Loan & Starting New Life
« on: September 07, 2014, 11:35:16 AM »


Topic Title: Reader Case Study - $144k Student Loan & Starting New Life

Income: $100k gross income plus one-time $25k signing bonus (Iím a SAHM & grad student, husband is a transitioning military officer that recently accepted a corporate job)

~$5500/month take-home pay

Current monthly expenses:

Rent    $1,250.00
Cell phones    $23.00
Federal Student Loan    $50.00
Husband Student Loan    $605.96
Wife Student Loan    $663.09
Haircuts    $24.00
Car Lease    $244.69
Care Credit (0% dental payments)    $26.00
electric (12 mo. Avg)    $157.56
auto insurance     $88.76
renters insurance     $12.88
valuable property insurance    $3.50
life insurance $27.00
TriCare Dental     $10.66
gas    $200.00
baby    $60.00
century link    $31.45
water    $18.00
sewer     $18.00
garbage pick up     $15.00
food & toiletries    $400.00
   
TOTAL    $               3,929.55

Graduate School: $1500 * 2 = $3000 out of pocket (done in April 2015)

Retirement Contributions were stopped for several months but will resume January 2015 (10% of take-home pay)


Assets:

Cash Savings: $17,680
Thrift Savings Plan: $21,777.93
2003 Toyota Tacoma: $5,000
Garage Sale Cash: $850
Mutual Fund Roth IRA: $1,125.11
Matured Savings Bonds: $550
TOTAL: $46, 983.04

Liabilities: Private Student Loans

Principal   Interest Rate
$9,379.78    9.50%
$13,989.10    8.12%
$1,600.00    6.80%
$14,751.68    6.25%
$22,341.33    5.25%
$16,077.42    4.75%
$18,967.21    3.25%
$11,473.88    3%
$25,943.76    2.50%
$10,381.84    2.50%
   
TOTAL LOANS: $144,906.00    

Care Credit: $798.20 (0% interest for dental work)

TOTAL: $145,704.20

Background info:

We are a military family (me, husband, and 1.5yr old) that is moving back to the northeast (Wilmington, Delaware) from Savannah, GA to be closer to our families.  My husband just accepted his first civilian job that is located in a downtown corporate area.  We are planning on selling the truck and going down to one car.  However, in order for my husband to commute via walk/bike/bus, our rent will increase for two major reasons:

1) The northeast is more expensive (rent & utilities are both more)

2) Downtown Wilmington is not the safest place and, therefore, you must live in a high rise for security (looking into other neighborhoods that donít require my husband to bike through a rough part of town Ė suggestions?)


Other expenses besides the oneís listed above include things like new clothes (my husband is going from a uniform and warm climate to corporate and cold climate + baby and I need winter clothes), baby shower and engagement/bridal/shower gifts.  These were easy to avoid when we lived far away from everyone but now there is an expectation to come home more often.  In addition to traveling to NY, we also have an obligation to go to Europe once a year where the rest of my family is. Them traveling to the states is not an option since they simply donít have the means.  I would love to hear some feedback about this and some suggestions on cutting costs.

Another concern I have is socialization. I feel like our social life has taken a hit since we had a baby and started saving money. We had an idea to start a Meetup for young families or a Supper Club once we get settled it.  How do you meet other Mustachians or socialize when you move to a new location? Please consider our location when answering this question.

Next is the age old question of daycare.  I have a bachelorís degree in Mechanical Engineering, a graduate certificate in Project Management, finishing a masters in IT with a specialization in Project Management, and zero work experience  I graduate in April and plan on doing a summer internship when my mother in law can watch our baby Ė hopefully, followed by full time employment.  However, I am stressed about the childcare situation.  I feel like Iím going to be working to pay for daycare and like most moms that kills me! What would you do in my position? How would you find a great daycare in a city youíre unfamiliar with that has many sketchy neighborhoods? Between the baby and school, Iím pretty busy but is there any way I can make a little bit of extra income between now and full-time employment?

Thank you for taking the time to read our situation! Ready for face punches!!!

iris lily

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Re: Reader Case Study - $144k Student Loan & Starting New Life
« Reply #1 on: September 07, 2014, 11:49:58 AM »
no punches from me. While that's a lot of student debt, you guys with your current income can dispense with that in a few years. And then here you are with an engineering degrees and lots of degrees on top of that, ready to go out in the world for a job.

I would immediately questions these assumptions in your post:

1) you need to go upstate to NY several times a year--your family is now your nuclear family. The extended family could be lucky to see you 2X annually. That is reasonable.
 
2) gifts are a measurable part of your budget -- Start out NOW with a clear picture of how you will scale down Christmas so that you are not shopping for a dozen people. Establish yourself as someone who doesn't participate in the consumerist frenzy of Xmas. Gifts for showers and weddings--really? This is a big thing? I would not cave to expectations, change that, but then, I've heard that East Coast expectations are $250+ for weddings. Ugh. Here in the Midwest we are not so grabby.

3) clothing can be very inexpensive at thrift shops assuming your husband is a standard size. Shirts--there are thousands of nice shirts. Pants--depends on his size. For us, DH in as 34" waist 32" length, so that's kind of short and it's hard to find pants. Still, We get 95% of his clothes at thrifts and buy blue jeans retail.

WIJG

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Re: Reader Case Study - $144k Student Loan & Starting New Life
« Reply #2 on: September 07, 2014, 12:06:34 PM »
Thanks for the reply!

1) We've been going home once or twice a year for the past 7 years.  Now that we will be 2 hrs from home AND have a baby/their first grandchild there is lots of pressure.

2) UGH is right and so is the $250+ expectation for weddings and this does not include engagement parties, bridal showers, and bachlorette parties. Obviously I don't HAVE to attend any of these events but how do I keep my close friends when I am consistently RSVPing no? I feel like the oddball in the group. NY is ridiculous about this and it is really frustrating :( Christmas and birthdays have already gone out the window for a couple of years. We are minimalists and don't partake in consumerist culture minus the wedding situation I am faced with.

3) Tricky situation since I wear a 00 petite and size 5 shoe :( Hubby is 5'9 with 30' waist. We can get by with our regular clothes for a while. Work clothes is the hard part since we are both just entering the workforce. Baby clothes is the easiest by far!

Argyle

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Re: Reader Case Study - $144k Student Loan & Starting New Life
« Reply #3 on: September 07, 2014, 12:10:54 PM »
I suggest reframing how you consider working.  You are not working to pay for daycare -- you and your husband are both working, and out of both your salaries comes daycare money. 

Remember also that you are getting your foot on the ladder.  With those degrees plus skills and experience, you should be able to work up to some impressive earning.  But you have to put in the time.  That's what you'll be starting.

WIJG

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Re: Reader Case Study - $144k Student Loan & Starting New Life
« Reply #4 on: September 07, 2014, 12:14:44 PM »
Thanks Argyle. I agree. I just have to get the ball rolling. This may be more of a confidence issue that I developed after moving around a lot and following my husband's military career, in addition a surprise baby :)

Rebecca Stapler

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Re: Reader Case Study - $144k Student Loan & Starting New Life
« Reply #5 on: September 07, 2014, 12:17:45 PM »
So, based on your monthly expenses, you're looking at $1600/mo in savings or to put towards annual expenses. Annual expenses, for us, are things like vacations, Christmas, and life/disability/auto insurance (b/c we're billed annually or semi-annually for these).

For the vacations / visits, I would calculate a reasonable amount to spend on those trips, divide it by 12, and have that amount automatically deposited into a savings account each month. I find it's easier to sit down w/ MH and figure out how many times a year we'll travel to see family if it's a big (overnight) trip.

For the "working to pay for childcare" issue, I absolutely understand where you're coming from. It seems like a losing proposition. But if you would like to work, it has a long-term payout to start sooner rather than later. If you can afford it, even work at a loss for a year or two. Daycare expenses will go down. But in the meantime, you will be gaining valuable experience, making important connections, and maybe even getting a raise or two in the meantime. Sheryl Sandberg's "Lean In" discusses this. You will find that opinions in this forum on this issue run the gamut, so it's important to come at the issue understanding how YOU feel about it -- not other people.

I'm not clear on whether you're giving up the car or not and whether the rent amount you quoted is an actual amount in a location where you've decided to live. Which car would you give up -- the one with the loan, I hope? I'm not a city dweller, and even less so since having a child, so I wouldn't move to the city simply to avoid paying for gas. We drive a Prius and it's treated us really well so far in terms of gas expenses and maintenance (knock on wood!)

About the new clothes ... when are you moving? If you're moving in December, then you will find a lot of winter clothes and gear start to go on sale / clearance at that point. Regardless of when you're moving, I recommend getting into town and seeing what kind of outdoor gear you'll need -- a jacket with a zip out liner or a big puffy jacket that's instantly warm, something knee-length or waist-length, etc. I've found that my coat needs change with the commuting experience (eg, waiting for the commuter train outside in the snow meant I needed something instantly warm that was knee-length. But driving to work every day I needed something waist-length that wasn't as warm b/c I didn't spend as much time out in the cold).

Kids' clothes are really easy to get inexpensively if you go to a few semi-annual consignment sales, and they happen in the fall. I'm a HUGE fan of them! Then again, if you're moving in December then you'll be able to get kids' clothes on clearance at some deep discounts.

Does it snow a lot in Delaware? If so, you'll both need snow boots. It IS hard to get a deal on those. Expect to pay $100 each for good pairs. For the coats, also set aside $100 each. Your toddler will probably need snow boots, but I wouldn't pay more than $50 for them new or more than $50 for a new jacket ... but again, if you're moving in December or you can get them at a consignment sale, you'll pay a whole lot less. (don't forget snow pants for your little one!) Also, with a toddler jacket, if you'll be driving with your little one in the car, you should get a warm blanket and use that for warmth in the car instead of putting him/her in a big bulky jacket -- they're not safe in carseats and once the car heats up, you can't take them off if your little one is buckled in.

As for the gift expenses, you could annualize that and save for it throughout the year, too. I live in the northeast, though, and I don't think we got more than a handful of $250 checks at our wedding. Our go-to cash gift is $75. For baby showers, I have been couponing to get baby supplies and wrapping them up creatively (diaper cake). Or, if you have a particular talent, you could offer that as your gift. A friend of ours made our wedding cake, and that was her gift. It was priceless, because we couldn't find someone who would bake the flavor we wanted!

iris lily

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Re: Reader Case Study - $144k Student Loan & Starting New Life
« Reply #6 on: September 07, 2014, 01:03:47 PM »
About going to Europe once a year: I will not dispute that because we ALL have something in our lives that is an "out there" cost. (Mine is bulldog vet bills. We are old and still, after decades, have spent thousands on dog health issues yet spend hardly anything on our own health issues.)

My assumption is that you stay with family members when you are in Europe, so that is 1/2 of the biggest cost of European travel (the other half is airfare.)

But I will offer these thoughts about European travel annually:

Keep in mind that when you work, your vacation days will be limited. You may not be able to leave for a ten day vacation to Europe 1X annually. And also, we have European relatives in our family, my MIL was born in Switzerland. She would be your grandmother's age. And back then, she didn't assume, nor did her family, that an annual visit was the norm. I think DH went to Europe with his family maybe 2 times before he was 18.

That's sort of what Mustachean living is--scaling back to essentials and looking to the previous generation of what was a rich life without the excesses of today.

Were  it me, I would in your situation with your rich opportunities for employment do this: jump whole hog on that career treadmill for 3 years, get good experience under your belt, then negotiate your way into a job that pays decently but that might be stronger on vacation time for you.  By then your daycare costs will nearly be reduced because your child will be entered school. This all assumes that you want to work in your chosen field which will be well paid, even if you swap time off for higher salary. This gives you more freedom to travel to Europe. You DH may not always be able to go with you.

The NY relatives may "pressure" all they like, but you should set boundaries and stick to them. And if you are working, it's always a possibility that your DH can visit his parents (in NY that his family, right?) with your child while you save your vacation days for other events.

I always feel sorry for young families who feel they are obligated to disrupt their lives to travel across states and across countries to visit relatives. I think, if that makes your life frenzied, it's not worth it. But it entirely depends on how much you enjoy the visits, how stressful it is to prepare for them and to get away, and etc. My sister-in-law and  husband would each year get into the car with 4 children and food and all holiday present and drive 4 hours for a holiday stay with her parents. One day I asked her:Isn't this a burden for you? But she said that she loved the idea of "traveling to grandma's house" out in the country for a country Christmas. So for her, it was a fun adventure and was worth the preparation.

About all of the wedding/shower/party stuff: are these friends of your all young and without children? Truly, you having a child changes the game. You simply cannot go to every event that single people go to. They will, when they have children, understand that even it they don't "get it" now.
« Last Edit: September 07, 2014, 01:12:55 PM by iris lily »

mm1970

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Re: Reader Case Study - $144k Student Loan & Starting New Life
« Reply #7 on: September 07, 2014, 01:10:09 PM »
No face punches here, except for the student loan total - ouch!!

#1: I have a college buddy who lives in Wilmington, and his FB comments agree with your assessment on safety. He's an ex-Marine (I think - we were in ROTC together, but he got injured senior year, so honestly, I have no idea if he ever went in our was medically DQd).  Actually, nevermind, the power of the internet, he never went into the military.

#2: you are an engineer.  Whether you do engineering, project management, or IT, you WILL NOT be working "just to pay daycare".  A fair bit of your income will go towards it, but that should change pretty quickly as the years go on.  Depending on if the 1.5 year old gets a baby sibling any time soon.  What you WILL be able to do is pay down those college loans faster.  Live on one paycheck, use the other for debt repayment.

On the European trips, you are not obligated to go annually.  My MIL was from Europe.  My husband's family went every two years until the kids were 10 and 13, and then it became every 4. On the alternate years, his grandparents came over.  We started doing the same thing when we had kids, and we started paying for my mother (and now his mother) to come visit.  It is cheaper to fly one or two people over here than for you 3 to go to Europe (especially after your child becomes >2).
« Last Edit: September 07, 2014, 01:14:24 PM by mm1970 »

MDM

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Re: Reader Case Study - $144k Student Loan & Starting New Life
« Reply #8 on: September 07, 2014, 08:48:24 PM »
WIJG, welcome to the forums and best wishes on navigating the new life.

Took a quick look at the numbers in your post and couldn't reconcile some of them.  See attached spreadsheet (and brief documentation) for back-of-the-envelope numbers mentioned below.
  - Take home pay: OP says $5500 but back-of-the-envelope gets $6600
  - Student loan payments: OP has $50+$606+$663, but back-of-the-envelope needs low interest rates to get those payments from $144K.
Don't know if there are typos in the OP or, more likely, some assumptions in the spreadsheet are incorrect.  Hesitant to give specific advice without being able to reproduce situation described in OP.

Generic thoughts:
  - Use as much of your cash as you can to pay off the highest percentage student loans.  Guaranteed returns >8% should be captured ASAP.
  - The HR department at your husband's company should have a list of "things to do around Wilmington".  Or you can google "whatever-hobbies-you-have in Wilmington" to find groups with similar interests.  And yes, a baby will reduce your social life at least somewhat - that's part of being responsible parents.
  - HR dept. should also be able to provide daycare contacts.

Good luck!

MrsPete

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Re: Reader Case Study - $144k Student Loan & Starting New Life
« Reply #9 on: September 08, 2014, 06:18:51 AM »
Much of what I would've said has already been covered, but I'll echo a few sentiments and add a couple thoughts:

- Children's clothes shouldn't cost much regardless of where you are.  Once you move to the North, you'll find consignment stores with location-appropriate clothing.  Your own winter-items will probably be more expensive, but if you focus on quality, classic items and add a few pieces at a time, you'll accumulate what you need in short order.  I don't know snow boots, but I know I've bought gently used hiking boots in the $10-20 range from eBay over the years. 

- Day care is a daunting cost, but you're past the super-expensive newborn care phase.  As for finding it, just go interview a few places and see what's available.  I may have been particularly lucky, but I seemed to luck into really great places.  Don't feel that you need to make a decision that will work until your child begins school -- pick what's good right now, and feel free to alter that plan at anytime in the future.  My first couple years, a huge percentage of my paycheck did go to day care (but I'm a teacher, which pays much less than an engineer job), but that wasn't true for long; if I hadn't put in those years, I wouldn't be higher up the salary scale and close to my pension now.  No matter what your job or salary scale, you have to put in those first difficult years. 

- That's a crazy high student loan, but you two will have a good salary.  Pay it off ASAP.

- The biggest concern I have about your post is that you seem to be allowing other people to control your choices.  No, you aren't obligated to go visit family in Europe.  No, you aren't obligated to give expensive gifts.  While you're moving is a perfect time for you to establish your own family habits -- and stick to them!  Invite family to come visit you; especially while your baby is young, that's very reasonable.  Anytime you feel pushed to do something, step back and ask yourself, "Do I really have to do this?"  I have a feeling this is going to be tough for you, but if you don't do it now, you're going to be jumping at everyone's command for the rest of your life. 


kimmarg

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Re: Reader Case Study - $144k Student Loan & Starting New Life
« Reply #10 on: September 08, 2014, 08:21:53 AM »


Does it snow a lot in Delaware? If so, you'll both need snow boots. It IS hard to get a deal on those. Expect to pay $100 each for good pairs.


Look into overshoes. I have some from a company called northeast overshoes. They fit right over your work shoes and you can just take them off when you get to the office. That way you don't need summer and winter work shoes.

Scnrn

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Re: Reader Case Study - $144k Student Loan & Starting New Life
« Reply #11 on: September 08, 2014, 10:09:47 AM »
Hi,
I am from the Wilm. DE area ,although a job transfer took us away a year ago.I would suggest that you look at living in the Fairfax area not in the city. The city just doesn't have the everyday things you need like a grocery store for example. Your husband might be able to walk/ride to work but you will be driving everywhere else.There are some really nice parts to live in in the city limits,but they are pricey.He could actually probably still ride from Fairfax pretty easily and there should be bus service as a back up,although I would confirm this.You can walk to many stores from Fairfax or take the bus up the Concord Pike to the mall,more grocery stores,Target ,Trader Joe's etc.A huge library is near by,although not sure about walking/riding accessibility but it is open most evenings and all weekends.In De you have free interlibrary loan from the whole state.There are apartments to be rented there,the one problem is the huge expansion of the children's hospital which is quite close so there may be a lot of rental competition.
This past winter was really quite crazy with snow,but you can have years where there is basically no snow.Apparently there are some phenomenal consignment sales for children's clothes so find out how to get on those lists.
You are fortunate your husband got a job in Wilmington because you really should not have a problem finding work as an engineer (Dupont,Gore ,the colleges etc)or if you are more IT the "banking" industry.
Good luck!


WIJG

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Re: Reader Case Study - $144k Student Loan & Starting New Life
« Reply #12 on: September 08, 2014, 11:46:13 AM »

I'm not clear on whether you're giving up the car or not and whether the rent amount you quoted is an actual amount in a location where you've decided to live. Which car would you give up -- the one with the loan, I hope? I'm not a city dweller, and even less so since having a child, so I wouldn't move to the city simply to avoid paying for gas. We drive a Prius and it's treated us really well so far in terms of gas expenses and maintenance (knock on wood!)

As for the gift expenses, you could annualize that and save for it throughout the year, too. I live in the northeast, though, and I don't think we got more than a handful of $250 checks at our wedding. Our go-to cash gift is $75. For baby showers, I have been couponing to get baby supplies and wrapping them up creatively (diaper cake). Or, if you have a particular talent, you could offer that as your gift. A friend of ours made our wedding cake, and that was her gift. It was priceless, because we couldn't find someone who would bake the flavor we wanted!

First of all, thank you for your support about the daycare situation.

In regards to the car, I didn't write any details because we are still talking about it.  The $244/month is a lease that ends November 2015. There is a possibility that we might be able to break the lease once my husband gets orders. If that is indeed true, we would sell the truck for $5k and buy a used vehicle for about $10k. Keeping the truck is not an option since there is just a bench seat so no room for a a car seat.

I'm not saying that $75 is not enough for a wedding gift but according to my friends, the social etiquette on Long Island is to give whatever the cost per meal is for the particular wedding. $300/couple was the norm at a recent wedding. To top that off, most of them are black tie which means a gown for me and a tux for my husband. It's outrageous and the reason I haven't been attending events...or wanting to move back there...ever :) Would you confront your friend and say "hey, I simply can't afford it"? Or is that just the price I have to pay to be a part of my friend's special day?

MDM

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Re: Reader Case Study - $144k Student Loan & Starting New Life
« Reply #13 on: September 08, 2014, 12:27:22 PM »
I'm not saying that $75 is not enough for a wedding gift but according to my friends, the social etiquette on Long Island is to give whatever the cost per meal is for the particular wedding.
Do the bride and groom publicize the cost per meal?  Doubtful, as "the cost per meal is _____" doesn't appear in any social-register-approved wedding announcement form of which I'm aware.  If you think you must pay for a reasonable meal, then $50/person should be more than sufficient (again, for a reasonable meal).  It is not your responsibility to finance others' profligate spending.

Catbert

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Re: Reader Case Study - $144k Student Loan & Starting New Life
« Reply #14 on: September 08, 2014, 03:22:22 PM »

- The biggest concern I have about your post is that you seem to be allowing other people to control your choices.  No, you aren't obligated to go visit family in Europe.  No, you aren't obligated to give expensive gifts.  While you're moving is a perfect time for you to establish your own family habits -- and stick to them!  Invite family to come visit you; especially while your baby is young, that's very reasonable.  Anytime you feel pushed to do something, step back and ask yourself, "Do I really have to do this?"  I have a feeling this is going to be tough for you, but if you don't do it now, you're going to be jumping at everyone's command for the rest of your life.

^ This is exactly what I was thinking.

You now live in Delaware, not New York and not Europe.  Your European relatives who can't afford to visit the US should certainly understand that a young family can't afford to come to Europe on a regular basis.  Your New York friends may/should slowly fade away for day-to-day contact as you focus on your nuclear family an make new friends in you new home.

minimustache1985

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Re: Reader Case Study - $144k Student Loan & Starting New Life
« Reply #15 on: September 08, 2014, 04:10:55 PM »
Quote
I'm not saying that $75 is not enough for a wedding gift but according to my friends, the social etiquette on Long Island is to give whatever the cost per meal is for the particular wedding. $300/couple was the norm at a recent wedding. To top that off, most of them are black tie which means a gown for me and a tux for my husband. It's outrageous and the reason I haven't been attending events...or wanting to move back there...ever :) Would you confront your friend and say "hey, I simply can't afford it"? Or is that just the price I have to pay to be a part of my friend's special day?

Wedding gifts are meant to congratulate the couple and help them start their life together, not pay for the reception, and etiquette is about making others comfortable, not covering the cost of a plate.  I wouldn't confront a friend directly about it, but I'd give less (maybe $100) and if they were ever rude enough to bring up that it "didn't cover your plate", THEN I'd get a little snippy.  And probably offer to lend them a Miss Manners book, because I'm subtle like that.

FWIW, we had some very generous guests, others who didn't give a gift, and other than tracking my list for thank-you notes, it wasn't something that concerned me.  We invited people to share the day with us, not to write checks, so while what we received was very much appreciated, I would hate to think someone wanted to come and declined because they didn't think they could "cover their plate", and I hope your friends value the effort of your traveling to witness their wedding day over your checkbook.

On the travel- I would try and keep the New York visits to twice a year.  Like you said it's only a few hours- which means they can come to you just as easily (if not more so, they aren't traveling with a toddler!), and possibly cut Europe to every other year if for no other reason than when you enter the workforce your vacation time will likely be more limited and could make every year extremely difficult cost aside.

MrsPete

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Re: Reader Case Study - $144k Student Loan & Starting New Life
« Reply #16 on: September 08, 2014, 05:55:47 PM »
Would you confront your friend and say "hey, I simply can't afford it"?
Truthfully?  Yes.  I probably couldn't have done it when I was younger, but now I'd be perfectly comfortable doing it.  I'd say it in a very, very nice way that'd leave a real friend understanding -- and I'd still give a gift, but it would be smaller. 

ambimammular

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Re: Reader Case Study - $144k Student Loan & Starting New Life
« Reply #17 on: September 08, 2014, 06:34:25 PM »
You say that the relatives don't have the means to visit you, but with 145K of debt I'd argue that you don't have the means to do any visiting yourself.

Make those trips when the kidlet is old enough to form memories.

WIJG

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Re: Reader Case Study - $144k Student Loan & Starting New Life
« Reply #18 on: September 09, 2014, 07:36:55 AM »
You say that the relatives don't have the means to visit you, but with 145K of debt I'd argue that you don't have the means to do any visiting yourself.

Make those trips when the kidlet is old enough to form memories.

I'm not sure my grandparents will be around when my daughter is old enough to form memories :( Since my parents make the yearly trip to our hometown, I'm considering sending my tot with them. Do you think that is a good compromise? It all sounds simple when written on paper but this is an emotional topic for me as I am very close with my family. I'm trying to find a good balance. I think it may come down to not going to weddings and putting my family first by putting some money aside every month for the plane ticket.

WIJG

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Re: Reader Case Study - $144k Student Loan & Starting New Life
« Reply #19 on: September 09, 2014, 07:53:21 AM »
WIJG, welcome to the forums and best wishes on navigating the new life.

Took a quick look at the numbers in your post and couldn't reconcile some of them.  See attached spreadsheet (and brief documentation) for back-of-the-envelope numbers mentioned below.
  - Take home pay: OP says $5500 but back-of-the-envelope gets $6600
  - Student loan payments: OP has $50+$606+$663, but back-of-the-envelope needs low interest rates to get those payments from $144K.
Don't know if there are typos in the OP or, more likely, some assumptions in the spreadsheet are incorrect.  Hesitant to give specific advice without being able to reproduce situation described in OP.

Generic thoughts:
  - Use as much of your cash as you can to pay off the highest percentage student loans.  Guaranteed returns >8% should be captured ASAP.
  - The HR department at your husband's company should have a list of "things to do around Wilmington".  Or you can google "whatever-hobbies-you-have in Wilmington" to find groups with similar interests.  And yes, a baby will reduce your social life at least somewhat - that's part of being responsible parents.
  - HR dept. should also be able to provide daycare contacts.

Good luck!

Thank you so much for the detailed tax information! To be completely honest, we weren't sure how to calculate take home salary so this is really helpful. In regards to loan payments, I copied the numbers directly from our Sallie Mae accounts. Hmm...

Do you suggest taking $9,300 out of our current cash savings right away to pay the 9.5% interest loan? My husband accepted the job offer a few days ago.  We were waiting to secure employment before taking a large chunk out of our savings account. Also, should we use all of the $25k bonus towards the loans?

Thanks again!

MDM

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Re: Reader Case Study - $144k Student Loan & Starting New Life
« Reply #20 on: September 09, 2014, 12:15:19 PM »
Thank you so much for the detailed tax information! To be completely honest, we weren't sure how to calculate take home salary so this is really helpful. In regards to loan payments, I copied the numbers directly from our Sallie Mae accounts. Hmm...

Do you suggest taking $9,300 out of our current cash savings right away to pay the 9.5% interest loan? My husband accepted the job offer a few days ago.  We were waiting to secure employment before taking a large chunk out of our savings account. Also, should we use all of the $25k bonus towards the loans?

Thanks again!
There are a variety of ways to calculate "take home" pay (gross minus taxes, or gross minus taxes minus 401k, or...etc.) so simply starting with gross and listing all other cash flows (tax, insurance, investment, groceries, etc.) is the least ambiguous, and eliminates the need to define "take home" at all.

Various reasons why the Excel PMT calculations could be different from Sallie Mae: typos in Excel entry, typos in the OP, 144K is the current balance but original amounts (on which payments are based) was much higher, etc.  Worth looking into, because math is math and loan payment calculations should be straightforward.  How student loan payments are credited is different from typical home mortgage loan payments (see http://forum.mrmoneymustache.com/investor-alley/calculating-return-on-loan-prepayment/msg287739/#msg287739), but you should be able to put numbers into Excel and get something within a dollar or so of what Sallie Mae shows.

I wouldn't take your savings account down to $0.01, but taking $9,300 out of $17,680 and leaving $8,380 - that I would do today.  If you wanted to wait until the $25K bonus (or maybe only ~$15K after federal/state/SS/Medicare come out?) gets deposited, that's also defensible. 

As for which loans to pay aggressively, and which to pay at the minimum rate - there is no "right" answer.  My gut feel, sitting here today, is to pay the ones in red ASAP, the ones in green at minimum rate, and flip a coin on what you do with the ones in between.  If you could predict what the market will do in the next few years you could get much more certain advice on the loans....

Principal   Interest Rate
$9,379.78    9.50%
$13,989.10    8.12%
$1,600.00    6.80%
$14,751.68    6.25%
$22,341.33    5.25%
$16,077.42    4.75%
$18,967.21    3.25%
$11,473.88    3%
$25,943.76    2.50%
$10,381.84    2.50%

elaine amj

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Re: Reader Case Study - $144k Student Loan & Starting New Life
« Reply #21 on: September 09, 2014, 01:24:46 PM »
I got all my babies' clothes from consignment sales. After a little while, I started organizing them and made some spare cash that way (awesome on my resume too). Around here they are called Mom2mom sales and are basically giant indoor garage sales focused just on kid stuff. I definitely indulged my consumerist side in those days - the amount of clothes and toys I had were ridiculous. too easy to justify when they cost "next to nothing", especially since I would turn around and resell everything for similar/more than what I paid.

Most of our clothes (incl my fave work clothes) come from thrift stores. love just paying a few dollars for stuff. I'm slowly sliding back to buying new (started shopping with friends as a social thing UGH) so I need to get back to spending more time in thrift stores.

for the travel thing - my family lives across the world. When we first started out, I expected to visit annually. Well, let's just say the first trip home with a 3 yr old and a 1.5 yr old was absolute torture. Travelling was horrible. We arrived to a heatwave and my kids were miserable. My toddler refused to eat anything and survived the first week on doritoes and gatorade. Everything else (incl. 4 different brands of milk) tasted too different. My DH and I immediately said my family would have to wait another 4-5 years for us to brave it again.

of course, life happens and 3 yrs later we were back for my brother's wedding. The next 3 years we continued travelling back for one reason after another. It was compounded by the fact that none of my family were able to come visit me. After that, we were drained and said we would take a break. It was rather amazing to be able to travel elsewhere for a couple of years. We did cruises,Disney, etc. About 2 years later, I started panicking that my kids were growing older fast and that my family really needed to see them before they turned into awkward teens. So we did a super last minute trip back (planned just 3 months out). Our next trip will be about 4 years later, which seems a long time. But this year, we flew to Europe to see my brother (and meet my new niece) and my mom met us there. So it's not that bad although it has been a long time since I saw my dad and it would be wonderful to see all my uncles and aunts.

Anyway, that whole lengthy thing was to say - I understand. It's hard when you have close family so far away who all want to be a part of your life, and especially - your kid's life.

The reality for us was limited vacation time (although I usually manage to wrangle enough time off) as well as the sheer cost of the travel. For us, it helped that my parents are generous and would typically subsidize the cost of either my ticket or the kids' tickets. Just make sure you learn early to maximize those airmiles and hotel points. Learn how to look for cheap fares and figure out the best way to get the most bang for your buck.

As for your trips to NY - really hard not to when it's only 2 hours away. I imagine that with 3 of you plus baby supplies, it's not so easy to find a free place to stay? Accommodations in NY is pricey. Maybe get accustomed to managing day trips? I imagine the costs of transportation and accommodation will add up quickly. Is it cheaper for folks to visit you where you are? Do you have sleeping space to offer? you could even buy family tickets to come visit you and offer them a free place to stay.


ambimammular

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Re: Reader Case Study - $144k Student Loan & Starting New Life
« Reply #22 on: September 09, 2014, 02:09:36 PM »

I'm not sure my grandparents will be around when my daughter is old enough to form memories :( Since my parents make the yearly trip to our hometown, I'm considering sending my tot with them. Do you think that is a good compromise? It all sounds simple when written on paper but this is an emotional topic for me as I am very close with my family. I'm trying to find a good balance.

I empathize with your family situation, but there's just so little wiggle room in your budget. Couldn't they skype? If they knew you owed 145K would they still be putting this kind of pressure on you? Would they want you to stay so far in debt for their sake?

Perhaps if you visit without your spouse, to keep it down to only one plane ticket.

(I feel like I should expect a face punch for letting you off the hook!)