UPDATE: In need of a Mustachian to kick my ass into gear :)

[huddlma]

Hello All:

Here's my original post from a little more than a year ago:

http://forum.mrmoneymustache.com/ask-a-mustachian/in-need-of-a-mustachian-to-kick-my-ass-into-gear-)/?topicseen

Here's the update:

I'm 29 with a great job in consulting making $91,000/year (received a raise in December 2015, up from 76.5K).
$70,000 in outstanding consolidated student loan debt @ 6.34% interest.
$1,500 in checking account.
$9,500 in savings account.

When I posted originally, I had $75,000 in outstanding student loan debt. While I'm not proud of the fact that I've only paid down $5,000 over the past 14 months (add $5,000 for interest accrual, so I've really paid 10K towards them), I have a good reason. I had a very expensive medical operation that prevented me from paying as much as I wanted, exhausted my out-of-pocket. Additionally, I've had to help out a family member who's having a really rough time. This year I plan to make a HUGE dent in it.

I'm contributing 6% to my 401K with a full company match. I'm also considering opening up an IRA as well.

After taxes, 401K, and Employee Stock Purchase Program, I bring home roughly $4,600/month.

Expenses:

Rent: $1050
Utilities: $250 (gas, power, water, internet/cable)
Car Insurance: $80/month
Dog Care: $140/month - I travel for work Monday through Thursday typically, and I'm not giving up my dog! $1,200/year to spend with her is worth it for me. It's one of my untouchables.
Gas: (Hard to tell, fluctuates each month, but probably $150-200/month. I drive home (2.5 hours away) 2 weekends a month to see sick family member and other family/friends).
Cell Phone: $80

In short, I think I have wayy too much money in savings that could potentially go to my student loans. I've read where you need at least a 6 month emergency fund, and $9,000 would cover me for 6 months. With that being said, I'm not sure how much to put towards my loans every month.

Someone mentioned SoFi student loan refinancing, and about a year ago I was denied despite my credit score being 714. The difference in interest wouldn't be all that much even if I refinanced...maybe a few thousand dollars over the course of 10 years.

How soon can I realistically pay this off? I've read No More Harvard Debt, and I'm thinking of getting a side job on the weekends (UBER or something).

[lbmustache]

You have $4600 a month and gave us less than $2000. Where is the rest of the money going? :)

I would leave the savings account alone at the moment, but I am a big advocate of emergency funds.

For reference, $1000 a month towards your loan means it will take about 7 years to pay off. With around $17k in interest if my math is right. :O

[diggingout]

You don't list groceries, and as lbmustache pointed out, you're not accounting for over $2600 in leftover cash flow. $1050 seems high for rent alone. Is there anyway to get a roommate to cut costs?

I'm the same age and have sliiiightly less debt. I also make much, much less than you. I'm going to pay down to $42k-ish of my $63k-ish debt this year. If I pick up a second job and settle a student loan for much less than owed, I might have all of it paid off. Here's my journal for a glance of the plan: http://forum.mrmoneymustache.com/journals/wish-me-luck!/msg945044/#msg945044

I definitely think you can pay it off in two years, three years max if you really want it out of your life.

[diggingout]

Going off of the fact that you said $9000 is 6 months of expenses for you, that means you spend around $1500 a month. If you bring home $4600 a month, you have $3100 leftover. If you throw all of that at your student loans for two years, they'll be gone! ($3100 x 24 month = $74,400)

[huddlma]

Forgot about groceries! At a max, maybe $$75-$100/week? There's honestly no reason I couldn't put at least $1,600-$1,700/month towards the loans...and this isn't something you all want to hear, but that just downright pisses me off :) once I get into the groove it won't be such a big deal. I know I got myself into this, but I can honestly say that I failed to understand the future implications of these loans when I took them out 8-10 years ago.

[huddlma]

But should I put ANY of my savings towards the principal?

[DebtFreeBy25]

But should I put ANY of my savings towards the principal?

How secure is your job? How easy would it be to find a comparable position if you needed to? Also is your consulting firm tech-related and hiring? (Kidding. Not kidding.)

Personally I don't feel that your emergency fund is that high. I would recommend holding back at least 3 months of real, what-you're-spending-now expenses. I also echo the previous posters who suggested that you try tracking your expenditures at bit more closely. I suspect there are leaks that could go along way towards paying down debt.

[huddlma]

@DebtFreeBy25

I'd say my job security if fairly high at the moment. I was rewarded with a nice raise, which I thought was more than generous, but what I really appreciated was the vote of confidence the raise represented. I have a great career path, and I'm lucky to work with great people. I've only been in the consulting field for a couple of years so I'm not sure how far my experience could carry me as far as finding a comparable position, but I think after the 3 year mark the chances would be good. If I had visibility into hiring practices, I'd let you know, but I'm a peon :) and I'm still just trying to learn the ropes.

[dragoncar]

no, keep the savings and pay down the debt aggressively with your excess cash.  I'd even consider foregoing the 401k/ESPP ... not sure if you considered the numbers in the other thread

[mountainstache7]

Stop employee stock and savings as you have enough for an emergency fund for now. Keep contributing enough for 401k match from employer and keep the IRA on hold for now. Take the extra you have each month and pay off student loans. Since you weren't able to refinance loans through Sofi, read the debt snowball process from Dave Ramsey to pay off your student loans in order of smallest loan first. You're making enough as it is it probably won't matter, but the debt snowball is nice as you feel like you're making progress by eliminating line items from monthly bills in the fastest order possible. You can also read the baby steps by Dave Ramsey as a potential guide, I don't agree with all of it, but it was a good first guide when I started climbing out of debt. Good luck but I don't think you'll need any, you've got this! Let us know how it goes or if you need more face punches :)

[former player]

Your monthly expenses including groceries are $2,000.  That leaves you $2,600 a month to pay towards student loans.  Give yourself $100 a month for entertainment and you've paid $30,000 towards your loans by the end of this year.  Another raise like the one you've just had at the end of the year and they are gone within 2 years.  Then you'll be 30/31 with no debt, a high income, low expenses and a decent start to your retirement fund.  All set!

[tj]

@DebtFreeBy25

I'd say my job security if fairly high at the moment. I was rewarded with a nice raise, which I thought was more than generous, but what I really appreciated was the vote of confidence the raise represented. I have a great career path, and I'm lucky to work with great people. I've only been in the consulting field for a couple of years so I'm not sure how far my experience could carry me as far as finding a comparable position, but I think after the 3 year mark the chances would be good. If I had visibility into hiring practices, I'd let you know, but I'm a peon :) and I'm still just trying to learn the ropes.

How did you become an expert in whatever your area is? I've never understood how people just convince employers to pay them to consult rather than hire them exclusively as an employee.

[huddlma]

Thank you all for your advice. There is no reason why I couldn't pay $2,000/month towards my loans for 3 years, the hard part is making the sacrifices. The hard part is throwing any sort of tax refund or bonus towards them too! But being debt free by age 32 sounds lovely! :)

I'll be updating as I go along and encouraging others along the way!

[dragoncar]

Thank you all for your advice. There is no reason why I couldn't pay $2,000/month towards my loans for 3 years, the hard part is making the sacrifices. The hard part is throwing any sort of tax refund or bonus towards them too! But being debt free by age 32 sounds lovely! :)

I'll be updating as I go along and encouraging others along the way!

Great!  I already suggested that at least 6mo emergency fund is needed, but I'll add that although your job may be secure now, the economy is starting to look rocky.  So don't get tempted to use the efund for debt payoff just yet

[huddlma]

@DebtFreeBy25

I'd say my job security if fairly high at the moment. I was rewarded with a nice raise, which I thought was more than generous, but what I really appreciated was the vote of confidence the raise represented. I have a great career path, and I'm lucky to work with great people. I've only been in the consulting field for a couple of years so I'm not sure how far my experience could carry me as far as finding a comparable position, but I think after the 3 year mark the chances would be good. If I had visibility into hiring practices, I'd let you know, but I'm a peon :) and I'm still just trying to learn the ropes.

How did you become an expert in whatever your area is? I've never understood how people just convince employers to pay them to consult rather than hire them exclusively as an employee.

I got extremely lucky by finding the right recruiter at the right time who put me in front of right hiring managers for interviews. I used LinkedIn and personal contacts to my advantage. I work for a large consulting firm that has most of the Fortune 100 companies as clients. It's not like I convinced an employer (a telecom company or a cable company or a financial firm) to individually hire me for my consulting expertise, but I work for a consulting firm that already has relationships established with these corporations who desperately need various types of advice, help, and expertise on a wide range of topics, particularly the strategy and IT aspects of their business.

I'm no expert yet, but I'm using the skills acquired through my work and extra curricular reading to become one..through scheduled training and on-the-job training.

[huddlma]

$80/month for a cell phone seems high. Are you on a contract? Consider a MVNO - I LOVE Ting (my referral code, if you're so inclined, gives you $25 credit: https://znf21s30lna.ting.com/), switched six months ago and my husband and I pay $35/month (total, not each) for 1000 minutes and 1000 texts (use free WiFi at work/home/coffee shops). Great service (in our area, I think they use the Sprint network, they use other networks in other areas), great customer service, pay for what you use (so our bill is really low during months that we're out of the country.)

That would only be $29/month if you're just a single device - bam, $50/month extra towards those debts.

I'll check that out! Thanks.

[huddlma]

Thank you all for your advice. There is no reason why I couldn't pay $2,000/month towards my loans for 3 years, the hard part is making the sacrifices. The hard part is throwing any sort of tax refund or bonus towards them too! But being debt free by age 32 sounds lovely! :)

I'll be updating as I go along and encouraging others along the way!

Great!  I already suggested that at least 6mo emergency fund is needed, but I'll add that although your job may be secure now, the economy is starting to look rocky.  So don't get tempted to use the efund for debt payoff just yet

Thanks for the tips, but I don't believe the economy is starting to look rocky, though. The US Labor Market is on fire right now. The economy has added 5.8 million jobs since the beginning of 2014. Maybe you're referring to the stock market, not the labor market :)

Sure, the news in recent months from China isn't boding well for the global economy as they begin to switch from a manufacturing/industrial based economy to a more service-oriented economy, but I'm not seeing a lot of alarming economic trends here in the states. Oil prices are at record lows (and will continue due to Iran flooding the market with their crude oil now that sanctions have been lifted), and whether or not that translates to more consumer spending is up for debate, but overall, the US economy is holding at a nice, steady pace.

So I'm not sure what you're talking about :)

[Gin1984]

You spend $960/year on car insurance?  For one car?  I'd check for better deals, also do you have renter's insurance?
ETA:  Where is clothes/haircuts/car repair/pet supplies/vet?

[dragoncar]

Thank you all for your advice. There is no reason why I couldn't pay $2,000/month towards my loans for 3 years, the hard part is making the sacrifices. The hard part is throwing any sort of tax refund or bonus towards them too! But being debt free by age 32 sounds lovely! :)

I'll be updating as I go along and encouraging others along the way!

Great!  I already suggested that at least 6mo emergency fund is needed, but I'll add that although your job may be secure now, the economy is starting to look rocky.  So don't get tempted to use the efund for debt payoff just yet

Thanks for the tips, but I don't believe the economy is starting to look rocky, though. The US Labor Market is on fire right now. The economy has added 5.8 million jobs since the beginning of 2014. Maybe you're referring to the stock market, not the labor market :)

Sure, the news in recent months from China isn't boding well for the global economy as they begin to switch from a manufacturing/industrial based economy to a more service-oriented economy, but I'm not seeing a lot of alarming economic trends here in the states. Oil prices are at record lows (and will continue due to Iran flooding the market with their crude oil now that sanctions have been lifted), and whether or not that translates to more consumer spending is up for debate, but overall, the US economy is holding at a nice, steady pace.

So I'm not sure what you're talking about :)

The markets might just know something you don't.  Hey, you may be fine, but the unemployment rate was lower in 2007 than it is today.  How'd that turn out?

Employment numbers are a lagging indicator:

[JLee]

If you're paying car insurance monthly, look into paying 6 months at a time. The savings is usually substantial.

[tj]

If you're paying car insurance monthly, look into paying 6 months at a time. The savings is usually substantial.

Depends on insurer. USAA is exactly the same regardless of if paying monthly or semi-annually.

[JLee]

If you're paying car insurance monthly, look into paying 6 months at a time. The savings is usually substantial.

Depends on insurer. USAA is exactly the same.

Usually. ;)

My Progressive policy in AZ is $277.50 paid in full for 6 months, vs a total of $322.51 if paid monthly via automatic payment withdrawal or $351.50 made in installment payments.

[hownowbrowncow]

I'm surprised no one's touched on this yet...

I travel for work Monday through Thursday typically

I drive home (2.5 hours away) 2 weekends a month

Rent: $1050
Utilities: $250 (gas, power, water, internet/cable)

Do you live alone? If so you're paying $1,300/month for a place you're in ~8 days a months!! (4 Fridays + 2 non-travel weekends).  Wtf

If your job is the typical consulting job, you're overlooking some awesome tax-free perks in free housing and food 4 days/week.  Frankly I think a big problem is you've really gotten used to pampering yourself. I get it - life on the road is tough, after all that traveling, you don't want to come home to roommates, you just want to pick up convenience foods.  I say if you are really serious about killing this debt - suck it up!

I speak from past experience.  I only lasted a year in that kind of job but I paid $0 in rent. I sublet my room to a friend and slept the couch the rare days I was in town.  At that point my SL was down to $5.5k so it evaporated quickly.  Then I watched my $$$ sky rocket. No rent may be extreme for you but what's stopping you from moving into a house or apt with others?  Potentially slash that $1300 in half.  That's ~$8k more to throw at your loans over the next 12 months.

I assume you are getting a per diem/expense account for food, Mon -Thur. If so, your groceries are not $75-100/week, they are $25-33/day!   When I was living that life I had corporate apts or at least a room with a kitchenette.  I would stock up on groceries at $25/week (granted my clients were in LCOL areas) for less than one day's worth of per diem. Even with a few fast food lunches or dinners out, I still came out way ahead and banked quite a bit of cash tax-free. You could easily find another $2k there
 
Finally potential bonus if you get the right roommate(s), you might reduce that $140/month expense as well. Not to $0 of course - don't be a mooch. But you may be able to get away with a few thank you meals/six packs/bottles of wine in exchange for dog care.  My bro-in-law lucked out like this.  He and my nephew dog moved into a house with a guy who had his own dog. BiL traveled heavily for work.  Roommate would easily bring nephew dog along for walks, hikes, etc he was going with his dog anyway.  He didn't want anything in return but happily accepted beer :) Let's say that's $840 to put towards your loans in the next year

You can cut living expenses to the bone and live way more comfortably than most.  As a matter of fact, it will probably never be easier to reduce spending than it is right NOW with your (assumed) employer-subsidized expenses.  You can make excuses or you can make changes...

[huddlma]

I'm surprised no one's touched on this yet...

I travel for work Monday through Thursday typically

I drive home (2.5 hours away) 2 weekends a month

Rent: $1050
Utilities: $250 (gas, power, water, internet/cable)

Do you live alone? If so you're paying $1,300/month for a place you're in ~8 days a months!! (4 Fridays + 2 non-travel weekends).  Wtf

If your job is the typical consulting job, you're overlooking some awesome tax-free perks in free housing and food 4 days/week.  Frankly I think a big problem is you've really gotten used to pampering yourself. I get it - life on the road is tough, after all that traveling, you don't want to come home to roommates, you just want to pick up convenience foods.  I say if you are really serious about killing this debt - suck it up!

I speak from past experience.  I only lasted a year in that kind of job but I paid $0 in rent. I sublet my room to a friend and slept the couch the rare days I was in town.  At that point my SL was down to $5.5k so it evaporated quickly.  Then I watched my $$$ sky rocket. No rent may be extreme for you but what's stopping you from moving into a house or apt with others?  Potentially slash that $1300 in half.  That's ~$8k more to throw at your loans over the next 12 months.

I assume you are getting a per diem/expense account for food, Mon -Thur. If so, your groceries are not $75-100/week, they are $25-33/day!   When I was living that life I had corporate apts or at least a room with a kitchenette.  I would stock up on groceries at $25/week (granted my clients were in LCOL areas) for less than one day's worth of per diem. Even with a few fast food lunches or dinners out, I still came out way ahead and banked quite a bit of cash tax-free. You could easily find another $2k there
 
Finally potential bonus if you get the right roommate(s), you might reduce that $140/month expense as well. Not to $0 of course - don't be a mooch. But you may be able to get away with a few thank you meals/six packs/bottles of wine in exchange for dog care.  My bro-in-law lucked out like this.  He and my nephew dog moved into a house with a guy who had his own dog. BiL traveled heavily for work.  Roommate would easily bring nephew dog along for walks, hikes, etc he was going with his dog anyway.  He didn't want anything in return but happily accepted beer :) Let's say that's $840 to put towards your loans in the next year

You can cut living expenses to the bone and live way more comfortably than most.  As a matter of fact, it will probably never be easier to reduce spending than it is right NOW with your (assumed) employer-subsidized expenses.  You can make excuses or you can make changes...

You're absolutely right. At the time I was going home two weekends/month, now that's more like a weekend every couple of months. But either way, I typically spend 3.5 days/week in my apt...4 nights, 3 days. I get your point though, it's a waste of money.

I've located a person on CL to live with...$500/month + utilities...if utilities are at most $150/month (which isn't likely), then I'll be saving roughly $700-$800/month that will go to the loans...or ~$8,000 or $9,000. HUGE savings.

Hope it works out. The person might be able to care for my dog too a couple weeks a month while I'm gone for work.

[dragoncar]

When you say "go home" you mean to your parents house?  Cause otherwise the above numbers don't seem to add up

[huddlma]

UPDATE******

It's 5/11/16, and I've since moved out of my 1BR apt and into a house with someone I met from CL.

My student loan balance is 65K, down from 74K and change in early January. I'm putting $2,000/month on them so by Christmas I should be down to 50K.

Yay!

[onlykelsey]

UPDATE******

It's 5/11/16, and I've since moved out of my 1BR apt and into a house with someone I met from CL.

My student loan balance is 65K, down from 74K and change in early January. I'm putting $2,000/month on them so by Christmas I should be down to 50K.

Yay!

Congrats!

[patchyfacialhair]

Keep going bruh. Both the wife and I had substantial student/stupidity debts from college, and now we're at the point where our cash exceeds our debt.

It takes a mentality shift and lots of patience; eating out is a treat, not a reprieve from feeling lazy from cooking. Entertainment is budgeted, and discussed, you get the picture.

Hell, you're a consultant, you probably know how to use Excel. Create a cash flow spreadsheet and stretch that shit out so you can see how close to being debt free you really are. You're doing fine, especially after some major hurdles.