Author Topic: Reader Case Study: $180,000 dollars in student debt  (Read 34304 times)

oloxo

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Reader Case Study: $180,000 dollars in student debt
« on: June 29, 2014, 10:42:46 PM »
Hello Mustachians!

I'm a freshly-minted graduate from a very nice university, currently living in Philadelphia while I look for a job. Despite my academic scholarships, I still had to borrow a considerable amount of money to go to school (about $180 grand to various parties) and now that I'm out and haven't begun my career yet, I'd love to get some input on how to overcome having a debt big enough to buy a house with.

Income:

I'm not making any formal income yet--I do make around $100/month freelancing, and am trying to ramp up my career. I'm trained as a product designer, and have some talents in graphic design, photography, writing, and farming/gardening, so I'm optimistic about that but not sure I'll be making much more money any time soon.
INCOME: $100/month

Current expenses:
Rent is $585/month until the lease is up in August. I'm making $25/month payments on loan interest (with the grace period running out in December of this year) and $3.99/month on Pandora One, since the ads drive me crazy and I refuse to pay for iTunes.
I spend about $43.00 a week on groceries and average $20.00 on transport and beer/entertainment per week. Having seen the wisdom of some of Mr. Mustache's principles regarding luxury spending, I estimate that I now spend $15/week on Miscellaneous Items, averaged out over the year (since some weeks I buy nothing, and some weeks I need to buy things like clothing and shoes without holes).
TOTAL EXPENSES: $922/month or $11064/year at the current rate

I don't have any assets, but I also don't have any debt aside from that $1600/month loan payment I can look forward to come December. The average starting salary in my field is about $36,000, so I do have that to look forward to. So:
TOTAL MONTHLY DEBT (outside expenses): $1600
ESTIMATED FUTURE SALARY: $36,000/yr

I hope that is sufficient--I'm not used to writing things out like this yet (or letting strangers review what there is of my finances, either). My parents have been muttering anxiously about me paying $20,000 of my gross income on student debt, and it makes me wonder if there's any hope of my becoming financially secure by age 35. I'd love to move into an apartment I don't have to share, too, which would raise my expenses past the nice slim $11,000/year that I'm currently coasting at.

Any suggestions for a junior Mustachian? Punches in the head for having eaten pizza with my potential savings during college? A glimmer of hope in the long, dark tunnel of significant student debt? A free lesson in Cohabitation for Introverts 101? Your attention is 100% appreciated.

iris lily

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #1 on: June 29, 2014, 11:00:13 PM »
Your debt is monumental, my dear. I can't wrap my head around that plus your desire to be financially secure at age 35 (does this mean retired?) plus you don't want to share an apartment, plus you have job prospects in-- what, exactly?

And you are prattling on about payment to Pandora? Your monthly expenses are $922 and you are making about $100/month?

This almost seems like a joke thread. I rather hope that it is.

Well, onto practical advice: You have advantage in that you are young and you don't have family responsibilities (wife, kid.) The only thing I can think of is something along the lines of doing what the guy who lived in his van did to knock off about $75,000 in student debt. He wrote a book about it, and mainly he spent a lot of time in Alaska, earning decent money, living VERY simply, and socking away money for the debt. He was disciplined and principled. Pandora didn't figure into his lifestyle.

Google his story: Ken Ilgunas, and the book is Walden on Wheels.

oloxo

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #2 on: June 29, 2014, 11:10:14 PM »
Oh no! I don't want to be a joke thread.

I'm not looking to be retired by 35 (I love what I do for a living)--just to be out of debt and have some nice savings built up so I don't have to worry constantly about money like my parents do.

I'm in an awkward stage right now with expenses and income--I'm still riding out the end of my lease and haven't secured a job yet. I do have a $3000 dollar stipend from winning an entrepreneurship fellowship, which is paying those expenses, thank goodness (but which I apparently forgot to mention. Silly me.) If I don't secure a job by September, I'll be moving home with my tail between my legs, and my expenses fall to about $80/month for things like gas.

I hope that clarifies things more? (Except for the Pandora subscription, which I accept with shame.)

Nudelkopf

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #3 on: June 29, 2014, 11:17:35 PM »
Any suggestions for a junior Mustachian?
Welcome.

1) Get a job that pays money, greater than $922/month.
2) Pay off your student loans.
3) Save.

Done.

thepokercab

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #4 on: June 29, 2014, 11:24:56 PM »
If I were you, i wouldn't think about moving back home as a bad thing.  Your debt is huge my friend, and if you can get some free rent from your parents while working; and can attack that student loan with gusto, i would do that.

Unless you plan on landing a 100K job, living in an apartment by yourself is a luxury you can't afford. 






MDM

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #5 on: June 29, 2014, 11:50:55 PM »
I'm not making any formal income
^ Everything else pales in comparison to this.

In brief, you can either "get a job" or "start your own business".

Seems you should be spending more or less every waking moment on applying for jobs and/or developing your own business opportunities, whichever appeals more to you.  What things are you doing toward these ends?

surfhb

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #6 on: June 30, 2014, 12:13:29 AM »
Yeah you need to find work and move home with the parents to tackle this debt.    I don't see any other option. 

My entire college education cost $8000 only 20 years ago....how did this happen in this country?

What was your line of study?

bradleylsmith

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #7 on: June 30, 2014, 01:24:20 AM »
first off welcome to the forums. A lot of the people here are much more aggressive then most other forums, but you seem like you can handle it.

I graduated in 2010 with $130,000 in private student loan debt and a music degree with very little potential of making a lot of income. I married that summer, and was faced with the same prospect you are now. I decided to freelance programming before trying to get a job with my degree that doesn't apply to any field, and I made around $900 / month for the first few months, my wife, despite her pregnancy, worked and made around $1000 / month. I was determined to make it work and become "stable", and I spent every waking hour prospecting and working the freelancing gig to stave off a crappy job.

in 2011 my wife stopped working to be a stay at home mom. In 2012 we bought a house, and in 2013 we had our second kid. I now live right on the bay in California making six figures programming for a startup because one of my clients happened to like me.  Throughout the hardship of finding a job on top of that we had a minimum debt payment of $16,000 a year (why taxes don't take this into account I don't know.) and we were still fairly happy. Now that I have a decent income we are making headway on the debt, we have around $105,000 total $95,000 of which is the original student loans. I'm hoping to be debt free by 2020 regardless of whether or not this job is around for another 6 years.

Don't give up you can make it. My first year I made $25,000 freelancing. You just never know where your next big windfall will come from.

I am always looking for good techies, you should drop me a line and show me what you got - BradSpark.com

best of luck

little_owl

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #8 on: June 30, 2014, 03:19:18 AM »
Oh no! I don't want to be a joke thread.

I'm not looking to be retired by 35 (I love what I do for a living)--just to be out of debt and have some nice savings built up so I don't have to worry constantly about money like my parents do.

You love what you do....freelancing for $100 a month?  And you somehow racked up over $100k for a degree in....design?  Oh, my.

So you need to get a real job, yesterday.  And move in back with your parents if they will let you.  Until you start making real money (based on your debt, over $55k, ideally more.) What are you doing to fid a job???  This should be the focus of your every waking moment.  And possibly your dreams, too.

You are typing about things like roommates, Pandora....YOU HAVE NEGATIVE MONEY!  Good luck finding gainful employment.

boarder42

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #9 on: June 30, 2014, 05:04:54 AM »
i'm really curious how/why debt of 180k was run up to obtain a degree that you're hoping pays you 36k per year.  my mind is currently blown

Gray Matter

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #10 on: June 30, 2014, 05:58:19 AM »
How does this level of student debt happen?  I know MMM is all about personal responsibility, but I think the lenders have some culpability here as well.  It's ridiculous to lend someone with few job prospects $180K!

And are young people not told the "rule" that your total student debt when you graduate should not exceed your expected first year's salary?  Things would feel very different if you were facing $36K of debt right now instead of $180K.  Many people here have proved you can dig out from this hole you're in, but it's going to require lots of dedication and making this your number one priority for years to come.

As others have said, I would not even contemplate sharing an apartment right now, much less having your own apartment.  Move back home, put your nose to the grindstone and start digging!

totoro

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #11 on: June 30, 2014, 06:00:13 AM »
From the stranger on the internet perspective your choice to borrow $180,000 to get a degree for a job that pays $36,000 a year was not wise.   That said, you've done it and maybe it will all work out very well for you. 

However, in the meantime, if I was in your shoes I'd be trying to get a job.  I would have started applying in my last year of school  knowing that I would have to pay back the loans. 

I would also research the loan terms.  What are the rates - are some higher than others?  Maybe it makes sense to pay those first.  Some people have posted about loan forgiveness and reduced payments over time due to low income.  I'm Canadian so I'm not sure.  Here loan repayments are scaled to income.   In short, you need to understand the rules and knowing that you are paying $1600 a month come December is not enough. 

dude

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #12 on: June 30, 2014, 06:17:36 AM »
holy shit, I have no idea what the earning potential for someone trained in "product design" is*, but $180K?  Wow, just wow.

*and if it's not much more than $36K, I really can't imagine how anyone would be free of such debt in anything less than like 50 years . . .

Sorry, not helpful, I know.  It's just that, like others, I find it pretty mind-blowing.

But I wish you the best of luck.  Stay optimistic, is all I can say.

Neustache

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #13 on: June 30, 2014, 06:45:37 AM »
If I were you, I'd be looking for anything (AND ANYTHING MEANS NOT IN YOUR FIELD).  Entry level positions at big corps pay close to 30K a year, plus decent benefits, depending on your skillset, and then get a part time job on top of that.  Make sure you have a day off to shop and meal plan, though, otherwise you'll blow all the extra money you could have sent to debt.

Move to your parents house, STAT!

You can do it.  But you are going to have to act like this is an emergency.  You could, easily, make 40K working two jobs assuming you can get the jobs in the first place.  If you do this while living with your parents, and with minimal expenses, you could have this mess cleaned up in 5 or 6 years.  Because...wow.  Alternately, start looking for a doctor/lawyer who has already paid their loans back and marry!  That's seriously the only way I see you getting out of this before 6 years, while living with your family that entire time. 

Good luck to ya!  Hope to see you've accepted a job, any job, by the end of next week. 

oloxo

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #14 on: June 30, 2014, 07:09:24 AM »
Thank you everyone!

Anyone who knows me knows I'm not afraid of work, so in a macabre sort of way I'm pleased to see that the biggest chorus in the thread has been to (keep) applying for jobs.

In response to some of the consternation about my low level of freelancing income: being aware that I was spending altogether too much money for university, I was determined to get the most I could out of the place, and spent the last four years doing 17-19 credit hours per term in a rigorous program based on ten-week cycles (which, if you aren't familiar, attempts to squeeze entire 15-week semesters into less than two months. This was a heart-pumping education, my friends.) on top of working at the local library for pocket money. I just graduated about a week ago, so I'm still on my wobbly first legs as a freelancer, if you will.

Since I'm tied to Philadelphia for the aforementioned entrepreneurship fellowship until August (and hopefully launching my first product this year, fingers crossed) I do have the opportunity to expand my client list and hone myself as a freelancer. I understand at least some of you are probably pros at self-employment by now, so if you have any tips on getting yourself out there (and PAID!) I would be delighted to hear them. I have a broad range of skills, having done everything from becoming bilingual English/German to getting woodshop certified during my time at university, and it's been interesting at best trying to describe "what I do".

horsepoor

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #15 on: June 30, 2014, 07:54:41 AM »
You need to develop a side hustle if you can't ramp up the freelancing and/or if it's not something you'll be able to continue to do once you get a job.

With a $36K job and that amount of debt, you need to be working evenings/weekends to bring in more cash flow.  Plain and simple.  Work at Starbuck's, mow lawns or anything else you can think of.  I do hope that your earnings potential ramps up substantially from that starting salary, otherwise, you've got a long row to hoe.

And yeah, move home now if you can.

nereo

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #16 on: June 30, 2014, 07:56:15 AM »
oloxo

welcome.  your debt freaks me out, but I've also seen worse.
Two points. 
First point: Your debt from your SL will be $19k/year.  If you add on a very mustachian budget for the next decade, you'll likely need another $12k-15k to live on.  THat means your after-tax expenses will be a bit north of $30k.  A $36k/yr job will have you just treading water after taxes.  Consider moving back home, living with (many) roomates, etc.    Anything to keep expenses down. And of course you need to find a way of earning a lot MORE than $36k if you hope to do more than tread water. Which leads us to...

Second point: Make sure you know and understand the income-based repayment options.  These may apply to you.  But beware that it can be a double-edged sword - you may lower your monthly SL payments and get debt forgiveness after 15 or 20 years, but the equation can flip on you if you suddenly get a well-paying job several years after you've payed just the minimum (and accumulated lots more interest).

If you'd like some further advice (and if you'd like to give several readers of this forum heart palpitations) list out what loans you have, what their interest rates are, and any special circumstances (e.g. Stafford loans or Parent loan).
Cheers and good luck
N

AH013

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #17 on: June 30, 2014, 08:15:45 AM »
I'll echo some of the statements previously cited

You need a job.  Regardless of how much you cut your expenses down to, your net will always be negative when your income is $0 (or $100/month).

$180k for an education in a field that pays $36k IF YOU CAN FIND A JOB, with seemingly not great job prospects (seeing as you're unemployed working what I'm hoping amounts to less than 2 hours / week of work if you are only pulling $100/month)...regardless of how hard you worked in school, this was not a smart move.  You'll be paying half your salary towards just that debt alone for the next 15 years before you're finally out from under it.

Move back home.  As embarrassing as this may be, you won't survive on $100/month freelancing or even the tiny amount leftover from $36k gross after $19.2k net is paid to Uncle Sam.  Pay your parents rent.  Pray to god your earnings capacity accelerates quickly, because you could have earned $31k in certain parts of this country flipping burgers and it wouldn't have required you to spend $180k learning a little bit of everything.  Sorry if this pops your bubble, but moving into your own apartment or how annoying ads are is the last thing you should be thinking about.

 

randymarsh

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #18 on: June 30, 2014, 08:28:05 AM »
Reality check:
  • Your student loans are accruing interest at $24.65 per day (if they're at 5%).
  • You need to get a job ASAP. Every month, you are adding $739 to your debt. 
  • You need to develop a side hustle because it sounds like a full-time job isn't going to be enough
  • I think you're going to have to live at home
  • You're probably not going to FIRE at 35.
  • Pandora ads are the least of your problems.

36K per year is about $1,100 every 2 weeks. Most months you'd have $2,200 to work with. After your SL payment, you have $600 to live off of. Even with roommates, I don't see how you can survive. Rent, health insurance, cell phone, car insurance, gas, groceries, etc. Even if you could, you wouldn't be saving anything and your debt wouldn't be paid off until 2027. If you're 22 now, you'll be starting to save/invest when you're 35.
« Last Edit: June 30, 2014, 08:42:40 AM by thefinancialstudent »

rmendpara

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #19 on: June 30, 2014, 08:30:59 AM »
Yikes. That's terrifying.

First priority is to start working. Don't be picky (it seems you are). We need more entrepreneurs, but most entrepreneurs are working 2-3 different jobs in the beginning while building their business(es). You may have to work away for 1, 2, or 5 years until you find a product that sticks and you can grow... but in that time you still have to eat, sleep, and pay your loans.

Get used to the fact that you'll be working 55+ hours/week for the next decade (whether working on your business, part-time work to pay the bills, whatever).

I'll resist the facepunches for taking on $180k in debt for a degree that won't help you. Do you need a degree to be an entrepreneur? Anyway, I hope you make smarter decisions in the future. Own your mistake(s), and more importantly, learn from them. That is what a successful entrepreneur does.

Good luck!

Malaysia41

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #20 on: June 30, 2014, 08:51:25 AM »
Enough people have been stating the obvious on what to do here so I'll skip to my question:

Did that $180k buy you a BA degree?  A masters?  A PhD? 

Frugal Father

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #21 on: June 30, 2014, 09:17:57 AM »
Just remember to resist the temptation to spend windfalls. If you have a good month/year/bonus/whatever, put it straight towards the debt.

big_owl

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #22 on: June 30, 2014, 10:05:06 AM »

In response to some of the consternation about my low level of freelancing income: being aware that I was spending altogether too much money for university, I was determined to get the most I could out of the place, and spent the last four years doing 17-19 credit hours per term in a rigorous program based on ten-week cycles (which, if you aren't familiar, attempts to squeeze entire 15-week semesters into less than two months. This was a heart-pumping education, my friends.) on top of working at the local library for pocket money.

 I have a broad range of skills, having done everything from becoming bilingual English/German to getting woodshop certified during my time at university, and it's been interesting at best trying to describe "what I do".

Not to pile on, but I am very interested in what school program you ended up in and how it worked out to be $180k!?  I went to a private engineering college with a similar program - 12 weeks on/12 weeks off (co-op'ing) and the credit load was usually 20-24 credit hours per 12wk term.  The lowest number I ever had was 18 in a term and the max was 24.  I graduated with a BSEE, over 190 credit hours total, and 6 credit hours short of a minor in applied mathematics.  All that for about $60k in a private school...plus the co-oping at $12-16/hr during the off periods! 

I could have gone to college three times and had BS-engineering degrees in mechanical, electrical, industrial, chemical, and computer science for what you ended up paying.  Woodshop certified!?  Are college costs really this out of control now?  Something just isn't adding up to me on this one.

Jack

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #23 on: June 30, 2014, 10:33:32 AM »
Current expenses:
Rent is $585/month until the lease is up in August. I'm making $25/month payments on loan interest (with the grace period running out in December of this year) and $3.99/month on Pandora One, since the ads drive me crazy and I refuse to pay for iTunes.
I spend about $43.00 a week on groceries and average $20.00 on transport and beer/entertainment per week. Having seen the wisdom of some of Mr. Mustache's principles regarding luxury spending, I estimate that I now spend $15/week on Miscellaneous Items, averaged out over the year (since some weeks I buy nothing, and some weeks I need to buy things like clothing and shoes without holes).
TOTAL EXPENSES: $922/month or $11064/year at the current rate

If I don't secure a job by September, I'll be moving home with my tail between my legs, and my expenses fall to about $80/month for things like gas.

Your expenses are not $922/month (or $80/month if you moved back home)!

Your expenses are $2522/month (or $1680/month if you moved back home).

And that's (almost) bare-minimum, without including anything that actually provides enjoyment to your life!

I don't care if your loans are currently in deferral; it still means that you are currently operating at a $2422/month deficit!

It is clear from your posts that you are in denial about this. (You may not think you are, but you are.) You need to go think about the situation long and hard, and only when you feel a sense of panic wash over you and say to yourself "holy shit, what have I done?!" will you fully understand the situation you are in.

You need to move home ASAP, regardless of any other circumstances. You need to drop your Pandora,  beer/entertainment, and miscellaneous items budgets to $0. You need to spend as many hours per week as possible working (and by "working" I mean "doing things that cause people to pay you," not putting uncompensated effort into your freelancing -- if you want to be entrepreneurial, do that instead of leisure activities). You need to find the highest-paying jobs you can, regardless of whether they have anything to do with your degree (and certainly regardless of whether you like them or not).

Chrissy

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #24 on: June 30, 2014, 10:52:04 AM »
Live with your parents, cut every expense and luxury, get as many jobs as you can.  Look for house-sit/pet-sit gigs, which sometimes pay a little money, require no real giant commitment, and put a roof over your head.

Your college advisor, professors, and career office should help you land a job, but you should be persistent.  Like in their faces.  You paid them a ton of money, and, until you have a job, they're not done working for you.

Mustachians, did you notice that 180k in SLs is on top of scholarships???  Doesn't it seem like someone scammed this student?  I'm interested to hear other posters' thoughts about oloxo attempting to declare bankruptcy.  I've heard that SL debt can be discharged in extreme situations, and oloxo's situation is bonkers. 

neophyte

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #25 on: June 30, 2014, 11:13:23 AM »
UPenn?  I think 4 years there is approaching $250,000 now....

Basically echoing other posters.  Drop the Pandora. Use Jango if you can't take the ads; if you login through Facebook, I think you only get 1 ad per day. Strike alcohol/entertainment/eating out from your budget. Walk/bike as much a possible to cut transportation costs. You don't say how many hours per week your unpaid work is, but you should try to find work, any work, that you can do outside of that. Waiter, cashier, etc. whatever brings in any money. Bonus if it is in your field, but you don't have the luxury to wait for that. Do you have things you don't need or don't use much?  Can you sell them on craigslist/yardsale to make a few bucks to throw at the loans? You have roommates, will they pay you a couple dollars to wash and fold their laundry? Walk their dog? Another idea to consider is teaching English in a foreign country, if you find a gig that provides an apartment, you can be pretty frugal and throw most of your salary at your loans.
« Last Edit: June 30, 2014, 11:52:11 AM by neophyte »

rmendpara

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #26 on: June 30, 2014, 11:14:49 AM »
Live with your parents, cut every expense and luxury, get as many jobs as you can.  Look for house-sit/pet-sit gigs, which sometimes pay a little money, require no real giant commitment, and put a roof over your head.

Your college advisor, professors, and career office should help you land a job, but you should be persistent.  Like in their faces.  You paid them a ton of money, and, until you have a job, they're not done working for you.

Mustachians, did you notice that 180k in SLs is on top of scholarships???  Doesn't it seem like someone scammed this student?  I'm interested to hear other posters' thoughts about oloxo attempting to declare bankruptcy.  I've heard that SL debt can be discharged in extreme situations, and oloxo's situation is bonkers.

The barrier to getting student loans discharged is VERY high.

It typically involves personal injury or health issues which prevent you from working full time, or getting employed in your field. At some point, the judge/mediator/whoever has to believe you are unable to repay your loans due to extreme circumstances.

$180k in loans, while alarmingly high, is not yet approaching impossible to pay back over a lifetime.

Not to put more salt on the wound, but it doesn't work for people who made dumb decisions and want out.

totoro

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #27 on: June 30, 2014, 11:24:47 AM »
Thank you everyone!

Since I'm tied to Philadelphia for the aforementioned entrepreneurship fellowship until August (and hopefully launching my first product this year, fingers crossed) I do have the opportunity to expand my client list and hone myself as a freelancer. I understand at least some of you are probably pros at self-employment by now, so if you have any tips on getting yourself out there (and PAID!) I would be delighted to hear them. I have a broad range of skills, having done everything from becoming bilingual English/German to getting woodshop certified during my time at university, and it's been interesting at best trying to describe "what I do".

Sorry to come back and be so direct but did you apply for any and every job you could get?  Is no-one willing to give you PT employment in any field? 

Why are you not working right now?  You are talking about expanding your client list and becoming a freelancer.  That me be well and good but you need to find work in any field asap.  You can keep going with the freelance work at the same time.

We are all alarmed about your situation.  Your level of alarm is not reflective of an awareness of the difficulties you are facing with this level of debt.  It is not about trying to describe "what I do", it is about getting a paying job.  Identify where these jobs are and get one.

Numbers Man

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #28 on: June 30, 2014, 12:08:22 PM »
The key is to get a job in the $36k range. You need to live with your parents for awhile. I'm assuming that they didn't pay any of the college costs so you borrowed everything. I'm not going to judge regarding the amount of the loan. You'll be able to make your monthly loan nut. It would also help to work another part time job to whittle that loan down. In ten years your loan will be paid off if you borrowed from the government. But with your income rising over the years, you'll eventually be able to move out of your parent's home.

It will never be paid off if you don't start paying when it comes due. This is the trap that most people get into, deferring the loan or the income based payments while the loan balance balloons with unpaid interest.

LibrarIan

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #29 on: June 30, 2014, 12:10:13 PM »
...On top of working at the local library for pocket money.

Being a librarian this caught my eye. During your schooling (which apparently cost a boat load) you were working for pocket money?! What in the literal fuck? What happened to that job? Get it back! Now! They pay real money. It might not be ton, but it's better than nothing until you find a higher paying one. Plus, with some experience you can get a higher paying job in libraries as well. I know Philly isn't the friendliest place on Earth to libraries right now, but dude, you need a job.

shotgunwilly

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #30 on: June 30, 2014, 12:20:44 PM »
I too cannot fathom how in the world someone racks up $180k in debt on a (I'm assuming since job prospects are 36k/year) bachelors degree.  This is the kind of debt doctors have when they get out of school.  You had to have been blowing money on stuff other than tuition, books, and housing.  Blowing ALOT of it.  Sorry to be blunt, but this is the type of debt that people get stuck with the rest of their lives.  It's very possible to get rid of it, you are just going to have to suck it up and sacrifice alot and hustle.

Neustache

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #31 on: June 30, 2014, 12:24:00 PM »
I too cannot fathom how in the world someone racks up $180k in debt on a (I'm assuming since job prospects are 36k/year) bachelors degree.  This is the kind of debt doctors have when they get out of school.  You had to have been blowing money on stuff other than tuition, books, and housing.  Blowing ALOT of it.  Sorry to be blunt, but this is the type of debt that people get stuck with the rest of their lives.  It's very possible to get rid of it, you are just going to have to suck it up and sacrifice alot and hustle.


Probably should be another topic, but I went to community college, then lived at home while I finished up at the local university.  I had some scholarships, and the whole degree cost maybe 15K.  This wasn't that long ago, I graduated in 2007.  I mean....wow.  Sorry, OP, we are just all a little shocked.  I hope you are, too. 

cbgg

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #32 on: June 30, 2014, 01:12:30 PM »
Wow....

You need to work work work and you need to make a hell of a lot more than $36k/year.  If I were you I'd move to a city that has disproportionately high incomes (San Fran/New York/etc), get the best job you can, work on the side, and continue with a hardcore student lifestyle (that you maybe did not live in uni?).  Roommates, beans and rice, etc.  This is an extreme situation and you don't seem to realize that your hair is on fire...

Seriously though, how did you get this much debt?  And since you knew you were spending this kind of cash, why on earth would you spend your extra time piling on extra credits instead of working part time to reduce the amount of debt you needed to get by?  Education is a good thing, but there is a limit to it's usefulness.  It's highly unlikely that anyone will care that you graduated having taken 20 more credits than the next guy.

I'm sorry, but wow. 

4alpacas

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #33 on: June 30, 2014, 01:22:33 PM »
I'm going to try to stay positive.  Right now, you need to make money.  Try Taskrabbit.  Look for retail positions.  Scour Craigslist for positions or start selling your stuff.  Also, you could start donating plasma. 


sleepyguy

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #34 on: June 30, 2014, 01:41:12 PM »
WOW, close to 200k with zero job prospects... wow.  I'm all for university and higher level thinking or whatever IF you got the funds.  You clearly didn't do your research (or math) but i guess that's all in the past now and you gotta deal with what's in front.

I'll be blunt... if your field sucks... get something in SALES.  Why?  You can get a very high salary in a short time period... obviously you'll need the social skills and a bit of snakeoil (lol).  Go get your real estate license (wait do you even have a car?).  You need something with some earning potential right away.

Not sure what else to say, read the $50k+ jobs that MMM posted awhile back in a 2 part series.  $100/mth is doing you no favors.

Good luck!

I too cannot fathom how in the world someone racks up $180k in debt on a (I'm assuming since job prospects are 36k/year) bachelors degree.  This is the kind of debt doctors have when they get out of school.  You had to have been blowing money on stuff other than tuition, books, and housing.  Blowing ALOT of it.  Sorry to be blunt, but this is the type of debt that people get stuck with the rest of their lives.  It's very possible to get rid of it, you are just going to have to suck it up and sacrifice alot and hustle.

frugaliknowit

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #35 on: June 30, 2014, 02:06:38 PM »
Sorry for all of the facepunches you've received.  What's done is done, so let's move on.

Reality check:  At 36k, my back of the envelope says you'll be bringing home about $2250. 

Paying rent (as in your own/shared place):  Fagetaboudit!  (sorry!).

You need to be freaking awesome in attacking this debt via multiple sources of income.  Travel, partying, going out to eat, is on hold.  Think of yourself as a warrior who has been drafted to go to war until his $180k is paid off.  The sooner you pay it off, the less overall pain you will experience.  You need to eat, sleep, and work (that's pretty much it).

Instead of working for someone else, can you somehow leverage living at home by starting a business that has good prospects of you earning more than you would as an employee?   Freelancing on the side?

Jennifer in Ottawa

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #36 on: June 30, 2014, 02:12:28 PM »
... I'm optimistic about that but not sure I'll be making much more money any time soon.

Tough love incoming.  Dreamtime is over.  Fantasyland has faded away, and you have been deposited on the cold hard shores of Adult-land.  Time to wake the hell up.

Yes you will be making more money soon, and you will almost certainly not like it, but that's too damn bad.  You have a grownups debt.  You have borrowed other people's money and not paying it back is not even remotely an option, so you will be making more than 100/month in the near future.

You are going to have to set aside your dreams which other people have foolishly been entertaining for the past few years, and you are going to have to sell your time to other people.

Once you have established some level of work experience and credibility, you can feel free to become an entrepreneur.

In the interim, take any job that requires a breathing human being, at any wage.  You are not "too good", "too educated" or "too special" to flip burgers, sweep floors or guard warehouses at night.

While you are doing these things, keep applying to firms who would employ someone with your degree.  Working at the other jobs, while keeping body and soul together, you will be demonstrating many other things of value to employers: work ethic, ability to show up on time, initiative, problem solving, diligence, team work, maturity.

Once you are employed in your field, take college courses to expand your knowledge, skills and credentials.  If your expensive degree is valued so little that the average salary is below the American average, then you need to bust your ass to get the credentials that people will actually pay for.

Above and beyond adopting a mustachian way of life, you NEED to increase your earning capacity.  People will pay you to fill their needs.  If your aspirations are aligned with meeting those needs, fantastic.  But it seems that they aren't.  So bust your butt to change that.  I can dream of a life as a Wheel-wright all I want, but I've no-one to blame but myself when the wagons that need wheels fail to appear at my door.

You CAN repay this debt.  You CAN establish a life, own a home, own a car, save for retirement, have a family if you so choose, and retire earlier than most people.  But this requires you to get your head out of the clouds, roll up your sleeves and get dirty.

iampatriciag

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #37 on: June 30, 2014, 02:33:47 PM »
Listen, I moved from Canada to America a few years ago (in my late twenties) and spent six months as a 'freelancer' while I waited for call-backs on the multitudes of applications I submitted for work in my field.  I have a Master's degree and for a while there, I thought I would never find "real" work and so I worked really hard to make freelancing my permanent, profitable, "real" job.  My average earnings during that time were $1200/mo.  Freelancing is simply not as profitable as a traditional job.  I know there are exceptions, I know, but you don't have the time to build credibility, a professional network, and experience in freelancing as your primary income right now.  Do it as your side-hussle, your 2nd, 3rd, or 4th job, but get a steady paycheck in a traditional job your top priority.

You've borrowed more for your education than I did for my first house, and I have 30 years to pay it off!  This is a serious, serious debt load.

Do not despair, but by all means, do not take this as lightly as it seems you are.


Mr Mark

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #38 on: June 30, 2014, 04:01:32 PM »
http://demotivators.despair.com/demotivational/mistakesdemotivator.jpg

Get cracking. You can't even bankrupt your way out of that. Maximise income and minimise expenses. Fast.

Neustache

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #39 on: June 30, 2014, 04:31:55 PM »
I think there'd be less face punches for the past mistake if there was an indication that the OP realized the seriousness of the situation. 

MarciaB

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #40 on: June 30, 2014, 04:44:59 PM »
And we still don't know what the degree is in, right?

Around here $36,000 is the starting salary for a public school teacher. So my first thought was something along the lines of an art degree that was going to be put to use by a high school teacher.

cbgg

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #41 on: June 30, 2014, 04:58:12 PM »
Everyone here is trying to give you a great big wake up call, which I think is good, but I also wanted to give some positive encouragement.

On a salary of $45,000 I was able to save up $75,000 in 3 years.  Your debt load IS doable if you put your mind to it.  I don't think of myself as being too extreme, but I did things such as lived with roommates, was frugal with grocery shopping and going out, and continued to drive the (purchased with cash) car I had in uni.  There were many things I could have done to be more frugal (such as not owning a car) or to have earned more money (second job, job hopping).  I also had some advantages that you don't - since I was working to build my positive net worth, not climb out of debt, I was able to take advantage of some significant tax shelters that brought my taxable income percentage way down.

Anyway, I just wanted to tell you that while all the advice you are getting here is correct, if you dedicate yourself to this seriously you CAN and WILL eliminate this debt.  Get out there and get hustling.

daverobev

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #42 on: June 30, 2014, 05:29:07 PM »
OP, along with everyone else, I'm sorry to say it reads like a troll thread. Good on you, if it's not, that you're asking for advice. Hopefully you can work your way out of it. You've probably had enough of everyone going 'OMG' at you.

Still, the US is nothing if not the land of opportunity. Rags to riches, and all that. Just... yeah don't kill yourself. (Both literally and metaphorically). There is more to life than money, and if you have dedication you can dig yourself out of what sounds like a huge hole.

Malaysia41

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #43 on: June 30, 2014, 05:32:34 PM »
http://demotivators.despair.com/demotivational/mistakesdemotivator.jpg

Get cracking. You can't even bankrupt your way out of that. Maximise income and minimise expenses. Fast.

Goodness.  I think we may be driving OP'er away.  He can recover (but dear GOD that is a lot of student loan debt).

mozar

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #44 on: June 30, 2014, 05:50:20 PM »
I don't think it's a big deal if he is a troll.
« Last Edit: May 10, 2018, 11:48:33 AM by mozar »

neophyte

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #45 on: June 30, 2014, 06:31:35 PM »
I'm not sure if it's a troll or not.  But I think it's entirely possible it's not. The top (priced) schools are now running about a quarter of a million for a 4 year bachelor's.

As for the OP's attitude, well, as my mother says "Sometimes you have to laugh so you don't cry."  So hopefully they keep laughing, but get to attacking that debt.  They're going to need a good attitude to get through the next few years.

zenandtheart

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #46 on: June 30, 2014, 07:37:07 PM »
So... I'm new to this forum, and after reading MMM's positive blog posts, I'm surprised to see the level of cynicism repeated over and over in this thread. Over half the posts are a riff on "OMG you're screwed how did you rack up that much debt?!?". If oloxo is earnestly asking for advice, the point has likely sunk in. Are regular posters always this helpful?

First, let's reframe things a little bit. For anyone who hasn't been to college in the last 10 years, or hasn't been exposed to the world of private universities, $180K in loans is not uncommon if you weren't able to put up money yourself. Heck, places like George Washington U. charge $40K a year in tuition, and that's not even an "elite" school (cue angry alumni). Try any Ivy League or equivalent, and you're in the same ballpark. You can question the wisdom of taking on such loans (valid), or argue we're in an education bubble or that XYZ Community College taught you underwater basketweaving better than Harvard ever could. However, hundreds of thousands of people choose this path every year.

Now, for a way out: oloxo, it sounds like you need to change your expectations. You say your degree is in product design, from a good school. Yet the average starting salary for your position is $36K? Something is off here. Good product designers are in high demand, and a good education should open doors for you that aren't available to the "average" applicant. A cursory Google search tells me that the median for PD is closer to $50K, and some sites have an average of $75K. That's more like it.

Are you looking at design jobs that pay well? Find niches that do. Do you have a portfolio? If not, make ends meet until you get one. Have you practiced interviews? Do it. Finally, the most important thing: confidence. You'll never get a $75K position if you're only expecting a $36K one. You have the education and skills, so go out and use them. Even with no work experience, I'm guessing you can find a job that pays above average if you put in the work.
« Last Edit: June 30, 2014, 07:44:21 PM by zenandtheart »

plantingourpennies

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #47 on: June 30, 2014, 07:49:13 PM »
She isn't a troll.

OP-good luck.

Best,
Mr. PoP

randymarsh

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #48 on: June 30, 2014, 08:28:17 PM »
So... I'm new to this forum, and after reading MMM's positive blog posts, I'm surprised to see the level of cynicism repeated over and over in this thread. Over half the posts are a riff on "OMG you're screwed how did you rack up that much debt?!?". If oloxo is earnestly asking for advice, the point has likely sunk in. Are regular posters always this helpful?

First, let's reframe things a little bit. For anyone who hasn't been to college in the last 10 years, or hasn't been exposed to the world of private universities, $180K in loans is not uncommon if you weren't able to put up money yourself. Heck, places like George Washington U. charge $40K a year in tuition, and that's not even an "elite" school (cue angry alumni). Try any Ivy League or equivalent, and you're in the same ballpark. You can question the wisdom of taking on such loans (valid), or argue we're in an education bubble or that XYZ Community College taught you underwater basketweaving better than Harvard ever could. However, hundreds of thousands of people choose this path every year.

Many posters have provided great advice. It's clear that the OP doesn't really get how massive their debt is and how badly they need income.

I graduated 2 months ago. It's EXTREMELY rare to have 180K in loans from undergrad. Period. Something like 3% of total borrowers have loans over 100K and that includes grad school. A large chunk of those are also doctors and lawyers who have much better income projections.

You're right that some do choose this path. And because of that choice, they need to fully realize what sacrifices will need to be made.

MrsPete

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Re: Reader Case Study: $180,000 dollars in student debt
« Reply #49 on: June 30, 2014, 09:12:26 PM »
Okay, you're saying that you're $180,000 in debt and are hoping to score a $36,000 job -- I'm guessing you're an art school graduate?  AND at the same time you're hoping to upsize your lifestyle by getting your own place AND are hoping to retire in what will probably be about 15 years. 

You are in denial. 

The reality is that if you pay 50% of your salary towards your debt (including raises), you will need more than a decade to rid yourself of these loans, and every minute you wait the interest is piling up higher.  The reality is that you have already spent a decade of earnings. You are very much like an indentured servant. 

Other people have already suggested your best course of action:
- Move in with your parents NOW.
- Whatever money you have NOW, send it to the loan company TODAY.  It will forestall a small amount of interest from growing. 
- Spend 100% of your time searching for jobs (yes, jobs plural).  You need a full-time job AND sometime part-time. 
- Search for ways to cut back on . . . everything.  Search out free/low cost transportation, clothing, food. 
- Ditch all luxury spending.  Your hair is on fire, and this is not the time for luxuries.   
- Chart your loan payments.  Seeing your debt paid off can be rewarding, and it'll remind you of WHY you are doing this.