Author Topic: Eliminate 7.5k student debt by end of July  (Read 25247 times)

peterpatch

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Eliminate 7.5k student debt by end of July
« on: March 03, 2013, 09:01:00 PM »
Hi Everyone,

I plan on eliminating my remaining 7.5k in Canadian student debt by the end of July 2013.

The loan principle was originally 20.8k in 2007 and I have been aggressively (although not mustashian level until now) paying it down.

Here are the loans pertinent stats now:

Current amount owing the national students loan centre: 7,455.90
Interest rate (7.5% fixed) 6.4% after tax credit
Remaining term: 61 months
Compounding rate: daily

I see the debt pay down as a bond that pays a guaranteed rate of interest of 6.4% after tax. Right now Canadian bonds of equal risk and duration are paying less then half of this after tax 6.4% yield (http://www.bankofcanada.ca/rates/interest-rates/canadian-bonds/).

I also hate being in debt, the idea of being beholden to somebody like this just bothers the hell out of me.

I can't wait until July when I can say that I am free of any major financial obligations for the first time in about a decade. The only real financial obligation I will have left are a return on service agreement for my accounting designation through my employer (1 year left) and my cell phone contract ($54.24 a month).

ALL extra discretionary income I can muster is going towards this goal. Here is the current schedule of payments:

payment schedule   
Mar-13   3000
Apr-13   1500
May-13   1500
Jun-13   1500
Jul - 13     Pay small left over amount to close out loan

Wish me luck!

Kaytee

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Re: Eliminate 7.5k student debt by end of July
« Reply #1 on: March 04, 2013, 11:18:33 AM »
I'm in.

This year I decided to embark on Operation Student Loan Annihilation 2013, but have been dragging my feet on posting the goal here. My total balance remaining is $55,913.53, split between 2 loans. One loan is a fixed interest rate of 3.25%, the other is a variable interest private student loan at 5.25%. The latter's balance is currently $17,454.78 and is the focus of annihilation. I net $38,480 annually and my husband (a SAHD) brings in about $3k annually (side jobs).  It started the year at $19,506.21, and I want to pay down the loan balance to $10k (or lower if possible).

Strategy:
-Halt contributions to 401k, RothIRA, and savings. Done.
-Monthly payments of $700. In progress.
-Two extra payments of $1400 each from "extra" paychecks from fortnightly pay schedule.
-Reduce monthly spending on gas, groceries, and cell phones. In progress.
-LS payment of $1500 from tax return. I effed up my withholdings last year by forgetting to take into effect lower wages from maternity leave, so I have a larger than expected tax return.

anastrophe

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Re: Eliminate 7.5k student debt by end of July
« Reply #2 on: March 04, 2013, 11:25:07 AM »
I'm in.

This year I decided to embark on Operation Student Loan Annihilation 2013, but have been dragging my feet on posting the goal here. My total balance remaining is $55,913.53, split between 2 loans. One loan is a fixed interest rate of 3.25%, the other is a variable interest private student loan at 5.25%. The latter's balance is currently $17,454.78 and is the focus of annihilation. I net $38,480 annually and my husband (a SAHD) brings in about $3k annually (side jobs).  It started the year at $19,506.21, and I want to pay down the loan balance to $10k (or lower if possible).

Strategy:
-Halt contributions to 401k, RothIRA, and savings. Done.
-Monthly payments of $700. In progress.
-Two extra payments of $1400 each from "extra" paychecks from fortnightly pay schedule.
-Reduce monthly spending on gas, groceries, and cell phones. In progress.
-LS payment of $1500 from tax return. I effed up my withholdings last year by forgetting to take into effect lower wages from maternity leave, so I have a larger than expected tax return.

Ambitious!

I am saving up for a wedding in late 2013 but other than that, am going to try to hammer ours. Not sure I'm brave enough to post here but will follow along for inspiration.

peterpatch

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Re: Eliminate 7.5k student debt by end of July
« Reply #3 on: March 04, 2013, 05:41:43 PM »
I'm in.

This year I decided to embark on Operation Student Loan Annihilation 2013, but have been dragging my feet on posting the goal here. My total balance remaining is $55,913.53, split between 2 loans. One loan is a fixed interest rate of 3.25%, the other is a variable interest private student loan at 5.25%. The latter's balance is currently $17,454.78 and is the focus of annihilation. I net $38,480 annually and my husband (a SAHD) brings in about $3k annually (side jobs).  It started the year at $19,506.21, and I want to pay down the loan balance to $10k (or lower if possible).

Strategy:
-Halt contributions to 401k, RothIRA, and savings. Done.
-Monthly payments of $700. In progress.
-Two extra payments of $1400 each from "extra" paychecks from fortnightly pay schedule.
-Reduce monthly spending on gas, groceries, and cell phones. In progress.
-LS payment of $1500 from tax return. I effed up my withholdings last year by forgetting to take into effect lower wages from maternity leave, so I have a larger than expected tax return.

Glad to hear your in, your debt is an order of magnitude higher then mine but your household income is about half, you are 10x the mustachian then I am! I guess I need to step up my game.

Kaytee

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Re: Eliminate 7.5k student debt by end of July
« Reply #4 on: March 05, 2013, 10:55:25 AM »
Quote
Glad to hear your in, your debt is an order of magnitude higher then mine but your household income is about half, you are 10x the mustachian then I am! I guess I need to step up my game.

Heh! I think you may be paying off at a faster rate than I. July puts me at about $5k-$6k paid. I want to see if I can match your $7.5k. Currently, paying more in student loan payments than on rent - and that is saying something for my area. I am however, making the non-mustachian choice to not use my $8k emergency fund to aid this debt repayment. If the balance of the loan were equal to the balance of the emergency fund, then I might be tempted.

peterpatch

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Re: Eliminate 7.5k student debt by end of July
« Reply #5 on: March 05, 2013, 05:55:42 PM »

Heh! I think you may be paying off at a faster rate than I. July puts me at about $5k-$6k paid. I want to see if I can match your $7.5k.

Yes but as a percentage of my total gross household income (including the wife) This is only about 7.5%. Yours however is more like 12% at a minimum which is almost twice as much as me. If I was going at your rate I would have the loan paid off in May.

peterpatch

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Re: Eliminate 7.5k student debt by end of July
« Reply #6 on: March 05, 2013, 05:56:28 PM »
Here is an optional rule for this gauntlet

You have to provide proof that you paid down your goal amount of loan principle in time by posting a picture of the final loan paperwork (black out any any identifying information for privacy reasons ). I will be posting a pic from the Canadian national student loans service indicating my loan is paid in full (with identifying info removed). No BS here!

DebtDerp

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Re: Eliminate 7.5k student debt by end of July
« Reply #7 on: March 05, 2013, 09:56:51 PM »
I'm loving this challenge. I have a total of about 100k to go and have paid close to $9k so far this year. My goals actually line up to where I plan on paying about $8k more by July. So I will go along with this challenge. My total pay off goal is still about four years out. Good luck op!

sibamor

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Re: Eliminate 7.5k student debt by end of July
« Reply #8 on: March 05, 2013, 10:32:44 PM »
I'm in too.  Though I have been attacking it aggressively since OCT '12. Currently 16.8K @2% (was 21.4k before my tax return); making $1800/mo payments with any additional budget surplus getting applied. Should be done by NOV but may throw Savings at it in APR if I feel comfortable with our current situation to wait 1 month for a $1800 resurgence into savings.

imustachemystash

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Re: Eliminate 7.5k student debt by end of July
« Reply #9 on: March 08, 2013, 08:01:44 PM »
I'm in, but mine should be done by August.  I owe $24, 500 and started 7 years ago at 37,000.  Not too bad for a master's degree I think.  My husband challenged me to change our spending to save 4,000 a month for 6 months.  My interest is 1.65% and it's our last debt besides our mortgage.  We just paid off my husband's loan and now its my turn!  YAY!  I plan on sending in checks for 2,000 each month and putting the other 2,000 in our savings account until August.  Then I'll just send in the lump sum remaining using the 12,000 and some extra cash we have in our savings.  Good luck everyone!

Hotstreak

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Re: Eliminate 7.5k student debt by end of July
« Reply #10 on: March 08, 2013, 10:02:20 PM »
I'm on board 100% :).  I started this year with about 10.5k in student debt at ~6.5%, currently it is at about 7500.  I am paying down an extra principle of 810/m, which is about 40% of my take home pay (add in an extra $165 for my regular payment).  I also got a small tax return and am putting every extra dollar towards it.  My original plan of 810 extra would have made the last payment december, but with the extra's I'm hoping to finish by October! 

When I make it I plan to reward myself by saving the same rate in order to fund my Roth IRA for 2012 (initial deposit) before the deadline next April.  This is exciting and I'm having fun thinking about the future!

Great throwdown!

mobilisinmobili

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Re: Eliminate 7.5k student debt by end of July
« Reply #11 on: March 09, 2013, 10:41:38 AM »
I have more student loan debt, and can't do it by July, but I'm definitely wanting to tackle it more with a vengeance. Working on my BC student loan first which is about $6000 right now. The Fed loan.. I'll worry about that one after.


peterpatch

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Re: Eliminate 7.5k student debt by end of July
« Reply #12 on: March 13, 2013, 08:04:47 PM »
Showing regular progress helps with motivation, because it provides frequent feedback.

Progress report:

Original Balance                          $7,438.17
Payment made (03.04.2013)   -$1,500.00
Closing Balance                          $5,958.85


I know the following people said they were in:

What is the progress is so far?:

Kaytee
DebtDerp
sibamor
imustachemystash
RobbyJ
mobilisinmobili


Please don't feel bad if you aren't hitting the target I think any forward progress on accelerating the payoff is a win.






Kaytee

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Re: Eliminate 7.5k student debt by end of July
« Reply #13 on: March 14, 2013, 07:56:07 AM »
Starting balance (1/1/2013):       $19,506.31
Payments (3 so far this year):     -$2,925.00
Current Balance:                       $16,802.44

Goal Balance of $10k by 12/31/2013
Stretch Goal Balances of $12k by 7/31/2013 (& $7800 by 12/31/2013)

sibamor

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Re: Eliminate 7.5k student debt by end of July
« Reply #14 on: March 14, 2013, 07:56:50 AM »
Here's my ammortization table for the last 2 years and rest of this year
Loan   10/1/2010    -     -     -     $32,445.00
1   11/1/2010   250.00   81.11   168.89   32,276.11
2   12/1/2010   250.00   80.69   169.31   32,106.80
3   1/1/2011   250.00   80.27   169.73   31,937.07
4   2/1/2011   250.00   79.84   170.16   31,766.91
5   3/1/2011   250.00   79.42   170.58   31,596.33
6   4/1/2011   250.00   78.99   171.01   31,425.32
7   5/1/2011   250.00   78.56   171.44   31,253.88
8   6/1/2011   250.00   78.13   171.87   31,082.02
9   7/1/2011   250.00   77.71   172.29   30,909.72
10   8/1/2011   250.00   77.27   172.73   30,737.00
11   9/1/2011   250.00   76.84   173.16   30,563.84
12   10/1/2011   250.00   76.41   173.59   30,390.25
13   11/1/2011   250.00   75.98   174.02   30,216.23
14   12/1/2011   250.00   75.54   174.46   30,041.77
15   1/1/2012   250.00   75.10   174.90   29,866.87
16   2/1/2012   250.00   74.67   175.33   29,691.54
17   3/1/2012   400.00   74.23   325.77   29,365.77
18   4/1/2012   400.00   48.94   351.06   29,014.71
19   5/1/2012   400.00   48.36   351.64   28,663.07
20   6/1/2012   400.00   47.77   352.23   28,310.84
21   7/1/2012   400.00   47.18   352.82   27,958.02
22   8/1/2012   3,400.00   46.60   3,353.40   24,604.62
23   9/1/2012   400.00   41.01   358.99   24,245.63
24   10/1/2012   400.00   40.41   359.59   23,886.04
25   11/1/2012   400.00   39.81   360.19   23,525.85
26   12/1/2012   400.00   39.21   360.79   23,165.06
27   1/1/2013   1,800.00   38.61   1,761.39   21,403.67
28   2/1/2013   4,600.00   35.67   4,564.33   16,839.34
29   3/1/2013   1,800.00   28.07   1,771.93   15,067.40
30   4/1/2013   1,800.00   25.11   1,774.89   13,292.52
31   5/1/2013   1,800.00   22.15   1,777.85   11,514.67
32   6/1/2013   1,800.00   19.19   1,780.81   9,733.86
33   7/1/2013   1,800.00   16.22   1,783.78   7,950.09
34   8/1/2013   1,800.00   13.25   1,786.75   6,163.34
35   9/1/2013   1,800.00   10.27   1,789.73   4,373.61
36   10/1/2013   1,800.00   7.29   1,792.71   2,580.90
37   11/1/2013   1,800.00   4.30   1,795.70   785.20
38   12/1/2013   786.51   1.31   785.20   0.00

* 250 payments where simulatenous to another 250 payment on a 9k student loan that has was paid of Feb '12.
* Discovered MMM Septer '12 and tweeked my budget for the end of the year to save some more.
* I think I am going to run its full course till OCT because the interest difference is just $50 (to the parents) and the wife would not rather drain the savings this early in the year; but I am still ahead of the original DEC 2017 Payoff date so I'm happy.

Zaga

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Re: Eliminate 7.5k student debt by end of July
« Reply #15 on: March 14, 2013, 10:28:13 AM »
I'm most of the way through a home equity loan.  It's at about $7,740 right now and I want to have it paid off by the end of June.  So I'm right with you on this one!

lark

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Re: Eliminate 7.5k student debt by end of July
« Reply #16 on: March 15, 2013, 04:07:30 PM »
Hey, can I join in? My goal is to pay off 30k in student loans this year, so maybe 15-20k by the end of July.

imustachemystash

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Re: Eliminate 7.5k student debt by end of July
« Reply #17 on: March 15, 2013, 09:50:48 PM »
It's good to have the group for motivation.  My loan was $24,500 and I sent in a check today for 2,000.  I am close to to saving 2,000 more to put in my savings which I will use to pay off the remainder in August when the total reaches 12,000.  We cancelled our cleaning service, gym membership, lowered our insurance by increasing the deductable, and changed phone plans.  That combined with paying off my husband's student loan gives us an extra $418 per month to save!  I can't believe we didn't do that earlier.  Good luck everyone and stay focused!  This time next year our student loans will be a distant memory!

peterpatch

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Re: Eliminate 7.5k student debt by end of July
« Reply #18 on: March 16, 2013, 12:19:51 PM »
Hi Everyone here is my latest update

Original Balance                             7,438
Payment made (03.04.2013)            -1,500
Payment made (03.16.2013)            -1,500
Closing Balance                    4,438

I will only be making monthly payments and will contribute any overtime towards the goal as well.

Using Stoic Jedi mind tricks I keep my tranquility by thinking about how cool the stuff I already have is. My ancestors would have been thrilled to own the stuff I own and be able to do the things I do with the technology and wealth available to today's average 1st world person.

@Lark, yes anyone can join in at anytime! glad to have you in the gauntlet.

@Zaga welcome!

@Sibamor: Very ambitious!, I bet it will feel very good to have that debt shackle off!

@imustachemystash: Good work , glad to hear you dropped the cleaning service and gym membership. I still have my gym membership but my employer subsidizes 90% of it as long as I go on a regular basis making it very cheap (~$100 per year).

@Kaytee: you're a machine, what is your budget like for your major expenses (housing, transportation, food)?


« Last Edit: March 16, 2013, 12:22:36 PM by peterpatch »

Kaytee

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Re: Eliminate 7.5k student debt by end of July
« Reply #19 on: March 17, 2013, 09:50:53 AM »
Here's the whole thing, with notes for context.

Net monthly income:
     Me: $2960
     DH: $376 (max, sometimes less)

Expenses:
     Housing: $1,100.74
          Rent: $825
          Gas: $75 (monthly average, we use a slush fund so it's always the same)
          Electricity: $55 (used to be $35-$40, but we run the dryer a lot more these days... cloth diapers)
          Phones: $105 (we're pulling the trigger in april to break our contract with AT&T & sign up with airvoice wireless)
          Internet: $30.99
          Renter's Insurance: $9.75 (to slush fund for annual payment)
     Loans: $875.67
          Fed Loan: $175.67
          Private Loan: $700
     Cars: $255.75
          Insurance: $105.75 (2 vehicles)
          Fuel: $150 (max) - (going to start biking to work when the snow melts & i'm not pumping milk 2-3x per day)
          Repairs: $0 (only while in debt annihilation mode, use emergency fund or reduce monthly private loan payment if critical repair needed. Our lease forbids us from working on our vehicles in the parking lot)
     Food: $600 (includes people food, cat food, litter, toiletries, etc.)
     Medical: $85 (diabetes supplies for DH copayments, Type 1)
     Fun Money: $100 ($50 to each of us for guiltfree spending. Usually on alcohol)
     Savings: None at this time, for debt annihilation period only.
     Misc: $318.84 (NTE) - for as needed items such as gifts, registration renewals, uncovered dr's visits, gardening stuff, etc.)

I get paid fornightly and January was an extra paycheck month, so that's why my progress looks higher than it should based on my budget.

peterpatch

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Re: Eliminate 7.5k student debt by end of July
« Reply #20 on: March 17, 2013, 07:25:33 PM »
Thanks for posting the full income statement. I guess I should also post mine.

This is basically averaged out from Mint.com and adjusted to my current expense pattern.

Take home pay   3,533
Student Loan   1,500
Rent   625
Food and dining   376
Travel budget   357
Shopping (books, clothing etc.)   270
Transportation (Gas, Public Transit, Parking)   200
Cash   100
Car insurance sinking fund (1,000 a year ( I live in Toronto) / 12 months)   83


That is how it looks on average. I am planning on reducing the shopping category by about $200 by using the library and Internet for almost all my entertainment needs.

The travel budget is pre-set. I promised my wife a trip and this is how I am financing it.

Once the loan is paid off that will be $1,500 in extra money per month (18k per year) being invested into stocks, REIT's, index funds etc. If I can find another $300 in savings then I will be saving 50% of my take home pay which I believe is the minimum threshold to be considered 'badass'. If I can somehow wrestle out another $500 then I will be saving 75% of all my take home pay which will I think be a real challenge but I am up to it. I think I will need to swing a new job or get a raise at the current one to get to this level. I also have a pension and RRSP (like a 401k) matching from my employer that I can't touch until I hit very old retirement age.



Expenses:
     Housing: $1,100.74
          Rent: $825
   

What is the difference (in meaning) between 'housing' and 'rent'?

Kaytee

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Re: Eliminate 7.5k student debt by end of July
« Reply #21 on: March 18, 2013, 08:27:32 AM »
Oh, I consider "housing" to be a spending category consisting of rent, electricity, gas, insurance, internet, and phone. A more appropriate title would be "housing & utilities." I'm the only one that ever looks at my spreadsheet, so I've never bothered with changing it.

DebtDerp

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Re: Eliminate 7.5k student debt by end of July
« Reply #22 on: March 18, 2013, 10:30:07 AM »
Great work everyone! Keep it up!

Here is my progress so far this month:

Starting Balance (3/1/13): $62,690.29
Extra Payment (3/12/13): $600.00
Regular Payment (3/14/13): $728.46
Extra Payment (3/15/13): $3,170.00
Current Balance (3/18/13): $58,562.07
Total principal pay-off to date: $4,128.22/$7,500

I made a big extra payment on Friday with my tax return. I have to be honest, I almost didnít do it. I really want to buy a new computer and I could get a really nice one with how much I am putting towards my student loans. In the end I pulled the trigger and made the payment. I think without the community here that would hold me responsible for a boneheaded spending decision like buying a new computer I would have done it. So thank you! Right now I am projecting that I will hit the $7.5k goal sometime in June.

I should also note that I have about another $17k of federal loans that I am just making regular payments on while I focus on these private loans. So, I still have a long way to go. It does feel good though as the balance of my private loans was over $71k at the beginning of January.

Kaytee

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Re: Eliminate 7.5k student debt by end of July
« Reply #23 on: March 18, 2013, 10:48:27 AM »
Fistbump to you, DebtDerp! Look at those numbers melt away.

feistygg

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Re: Eliminate 7.5k student debt by end of July
« Reply #24 on: March 18, 2013, 11:06:35 AM »
Good job DebtDerp!
I'm trying to keep my student loan balance from going up (still in school) so I'm paying as I go. Damn if I don't like those $2400 classes every 7 weeks! I've been able to keep it holding steady, and only 4 classes to go!

DebtDerp

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Re: Eliminate 7.5k student debt by end of July
« Reply #25 on: March 18, 2013, 11:17:49 AM »
Good job DebtDerp!
I'm trying to keep my student loan balance from going up (still in school) so I'm paying as I go. Damn if I don't like those $2400 classes every 7 weeks! I've been able to keep it holding steady, and only 4 classes to go!

This is extremely smart. I wish I had at least paid the interest that was accruing on my loans while I was still in school. Instead I spent all of my money on beer. Once I graduated about $15k worth of interest capitalized on my loans. That was pretty painful.


peterpatch

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Re: Eliminate 7.5k student debt by end of July
« Reply #26 on: March 23, 2013, 11:24:30 AM »
Hi Everyone,

I hope the loan paydown is going well for all of you.

I got this chart from Mint.com today, and thought it was funny because of the large proportion represented by debt pay down:




Zaga

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Re: Eliminate 7.5k student debt by end of July
« Reply #27 on: March 23, 2013, 03:03:29 PM »
Going fairly well, we're down to $6,871.  Next month property taxes are due so it'll be slow until after they are paid.

mobilisinmobili

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Re: Eliminate 7.5k student debt by end of July
« Reply #28 on: March 23, 2013, 03:19:11 PM »
I'm at 5700. Might be a bit less.. I only get the remaining balance via paper statements.. there's no way to check it online. (barbarism!)

I've also lowered the % of my pay going towards company stock so that I can pay down the debt more aggressively.

Buttercup

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Re: Eliminate 7.5k student debt by end of July
« Reply #29 on: March 23, 2013, 05:06:06 PM »
Challenge accepted!

I have a lot of student loan debt to pay off, so hold on while I summarize...

Federal Loans:  $14,451.32 @ ~6% fixed (averaged out)
Perkins:  $6,480.92 @5.5% fixed
Private:  $60,453.39 @ 2.95% variable
Private: $4,614.64 - my parents decided to pay this one off for me (but I would like to be able to take it on myself)

Total:  $86,000.27

I just paid off another federal loan for about $2100 (tax return!) this month. Felt really good! It had the highest interest rate, so now I'm moving on to the 14K federal loans. Right now, if I still pay my original payment amount, which is higher than the minimum, I wouldn't pay this one off until April 2018. Scary.

I also contribute 20% of my income to my 401k now.

My goal is to pay the federal loan off by end of 2013, with 7.5k in July being a good midway goal. That's an extra $1560 per month I need to find somewhere!

peterpatch

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Re: Eliminate 7.5k student debt by end of July
« Reply #30 on: March 24, 2013, 07:31:44 AM »
Welcome to the gauntlet Buttercup!

The size of some of these American student loans take my breath away. In Canada, in most cases, 40-60% of higher education is paid upfront by government which makes our student loans much lower. We pay for that as a society by having higher (progressive style) taxes. In the US you get to graduate into a lower tax environment (hopefully) which gives you more choices and take home pay. The extra pay makes it easier to pay off the massive loans but I know there are some people who are going to spend it on "penny whistles and moon pies" no matter what and go bankrupt as a result.

Zaga

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Re: Eliminate 7.5k student debt by end of July
« Reply #31 on: March 24, 2013, 08:18:31 AM »
Welcome to the gauntlet Buttercup!

The size of some of these American student loans take my breath away. In Canada, in most cases, 40-60% of higher education is paid upfront by government which makes our student loans much lower. We pay for that as a society by having higher (progressive style) taxes. In the US you get to graduate into a lower tax environment (hopefully) which gives you more choices and take home pay. The extra pay makes it easier to pay off the massive loans but I know there are some people who are going to spend it on "penny whistles and moon pies" no matter what and go bankrupt as a result.
But in the US you can't bankrupt student loans, they follow you for life in almost all situations.  Total disability or death is the only thing (other than paying them off) that will make them go away.

peterpatch

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Re: Eliminate 7.5k student debt by end of July
« Reply #32 on: March 24, 2013, 09:27:23 AM »
in the US you can't bankrupt student loans, they follow you for life in almost all situations.  Total disability or death is the only thing (other than paying them off) that will make them go away.

The Canadian system is similar, it is extremely difficult to discharge student debt through bankruptcy these days. However from what I understand back when we had the socialist NDP running the show in Ontario people could declare bankruptcy on their student loans to the same effect as other types of loans. I have met at least two people who did just that, took out the maximum Ontario student loans and then upon graduating promptly declared bankrupty and just lived life on a cash basis for however long it took before they were eligible to get credit again. I think that is why they no longer allow bankruptcy to discharge student loans so quickly, the government is counting on the present value of your future earning stream as collateral so normal loan rules like having hard assets as collateral (like a home) don't work for student loans. This makes the bad debt reserve for student loans unacceptably high and forces the tax payer to shoulder the burden through the lower economic output of a bankrupt person and having to pay the bad debt off through taxes. I don't know if it is really a good policy or not but my loan has an 'interest relief' safety valve where the government will pay my interest and hold principle payments if I am out of work or otherwise unable to pay the loan. I don't know if the US has a similar system but again student loans here are treated differently then say bank loans, the government wants their money back but they don't want to kill your credit or come and seize assets to get it.

Buttercup

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Re: Eliminate 7.5k student debt by end of July
« Reply #33 on: March 24, 2013, 10:09:22 AM »
Welcome to the gauntlet Buttercup!

The size of some of these American student loans take my breath away. In Canada, in most cases, 40-60% of higher education is paid upfront by government which makes our student loans much lower. We pay for that as a society by having higher (progressive style) taxes. In the US you get to graduate into a lower tax environment (hopefully) which gives you more choices and take home pay. The extra pay makes it easier to pay off the massive loans but I know there are some people who are going to spend it on "penny whistles and moon pies" no matter what and go bankrupt as a result.
But in the US you can't bankrupt student loans, they follow you for life in almost all situations.  Total disability or death is the only thing (other than paying them off) that will make them go away.

Very true. You can also get them discharged if you show extreme financial hardship, but I'm pretty sure it has to be very extreme and the only way you could get to that is through longterm disability.
I don't think I would ever try to discharge my student loan debt through bankruptcy anyways though. I got myself into this by being a jaded 18 year old with big dreams and now I just changed my big dream to make them gone! And I would like to avoid a slap in the face from my sister if I tried to discharge them.

Kaytee

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Re: Eliminate 7.5k student debt by end of July
« Reply #34 on: March 26, 2013, 10:42:53 AM »
Quote
But in the US you can't bankrupt student loans, they follow you for life in almost all situations.  Total disability or death is the only thing (other than paying them off) that will make them go away.

The exception being private loans. Private lendors are not required to forgive a loan in the event of the borrower's death, so your family can inherit your private student loans if you die. Highly recommend knowing the death-related policies of your lender. I'm not sure if that is the same for every country. Awesome, eh?

Welcome, Buttercup!
« Last Edit: March 26, 2013, 10:46:28 AM by Kaytee »

peterpatch

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Re: Eliminate 7.5k student debt by end of July
« Reply #35 on: April 10, 2013, 04:52:59 PM »
I hope everybody is still onboard this gauntlet and are hitting their student debt objectives.

I have been a bit of a bad boy recently ordering a few pizzas and not bringing my lunch to work for a couple of days. It won't affect my debt pay down but I need to cut that stuff out. In 5 days another 1.5k of student debt will be wiped off my balance sheet.

I also had to spend some money on changing the back brakes on the family vehicle. I built in a budgetary miscellaneous buffer for that kind of thing but I would have rather said that I made a bigger debt payment then planned. Maybe next month will yield a surplus.




jrhampt

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Re: Eliminate 7.5k student debt by end of July
« Reply #36 on: April 11, 2013, 08:53:17 AM »
I don't know if this is motivating or not, but in December 2010 I calculated my net worth for the first time and it was negative due to student loan debt, which I had been paying off in a half-hearted sort of way for some time.  I paid off my loans in a big push by June 2011, and since then my net worth has increased in a quite lovely way...just clocked in at $162k, not including home equity or my spouse's investments, just my own personal savings.  In less than two years since paying them off!  So once you ditch that millstone, good times are ahead.

Kaytee

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Re: Eliminate 7.5k student debt by end of July
« Reply #37 on: April 12, 2013, 01:18:56 PM »
April standing:
Starting balance :       $16,802.44
Payment:                    -$700.00
Current Balance:        $16,162.99

This was a spendy month for us also. The baby got her first and second colds within a few days of each other, and DH also got two colds, which left me to take care of both of them and keep the house running. We're in the middle of a diet change to dairy free in additional to gluten free (increasing our food budget), that plus CST and chiro for the baby to correct chronic constipation. Bottom line is that we spent more than I budgeted, so the next month will be lean spending month. The good news is that both baby and husband on are on the mend. (the bad news being that the first molar appeared this week. Not awesome.)

peterpatch

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Re: Eliminate 7.5k student debt by end of July
« Reply #38 on: April 12, 2013, 04:19:54 PM »
I don't know if this is motivating or not, but in December 2010 I calculated my net worth for the first time and it was negative due to student loan debt, which I had been paying off in a half-hearted sort of way for some time.  I paid off my loans in a big push by June 2011, and since then my net worth has increased in a quite lovely way...just clocked in at $162k, not including home equity or my spouse's investments, just my own personal savings.  In less than two years since paying them off!  So once you ditch that millstone, good times are ahead.

going from a negative net worth to a 162k positive net worth in 3 years  is incredible! Sounds like you are well on your way to buying a yacht or perhaps early retirement :-)

peterpatch

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Re: Eliminate 7.5k student debt by end of July
« Reply #39 on: April 12, 2013, 04:31:01 PM »
April standing:
Starting balance :       $16,802.44
Payment:                    -$700.00
Current Balance:        $16,162.99

This was a spendy month for us also. The baby got her first and second colds within a few days of each other, and DH also got two colds, which left me to take care of both of them and keep the house running. We're in the middle of a diet change to dairy free in additional to gluten free (increasing our food budget), that plus CST and chiro for the baby to correct chronic constipation. Bottom line is that we spent more than I budgeted, so the next month will be lean spending month. The good news is that both baby and husband on are on the mend. (the bad news being that the first molar appeared this week. Not awesome.)

Most people would have gone into more debt in your situation, but you managed to make a dent in the debt while dealing with your family's health issues. If you know in your "heart of hearts" that you made an improvement from where you were before then you should feel good about that. Don't feel down because you didn't hit an ideal state but at the same time I personally believe you could get a little closer to the target next month.

Zaga

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Re: Eliminate 7.5k student debt by end of July
« Reply #40 on: April 12, 2013, 06:53:52 PM »
No recent progress, but that's because DH got a new job and until we know the timing of his new paycheck we're holding onto the money.  Plus there's another chunk of money being held onto for a potential expense that looks like it will pass us by (yay!) 

So once the dust settles there should be a significant payment to the loan, probably over 1/3 of what's left ($6,871).

Kaytee

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Re: Eliminate 7.5k student debt by end of July
« Reply #41 on: April 15, 2013, 10:23:23 AM »
Thanks, Peterpatch. Medical bills are the bane of my existence. I've tried planning for them in my budget, but they vary so wildly every year that it drives me crazy. Our insurance makes it's coverage stupidly difficult to understand, there are hidden rules all over the place, and they often contradict their own policies. I am fortunate enough that we have been able to cover these surprise costs every year and haven't had medical debt since I was in grad school. I know I can (WILL) do better next month. If we continue to be diligent for the rest of this month, we should be fine.

peterpatch

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Re: Eliminate 7.5k student debt by end of July
« Reply #42 on: April 16, 2013, 08:14:30 PM »
Today I made a payment of $1,500 towards my student loan. The loan balance is now as follows:

Beg Bal    4,475
payment    1,500
End Bal    2,975

I feel like I am within striking distance of debt freedom because the 2.9k ending balance is below my monthly take home pay. At this level I am starting to think of ways to pay the balance off immediately. I am tempted to wipe out the debt with some emergency cash and investments. It would have virtually zero effect on my net worth but could create some short term liquidity problems if I were to suddenly find myself out of work. Therefore I will just let things unfold as planned this month and maybe next month I will pay it off completely.

No matter what within three months I am going to have the enviable problem of having $1,500 of extra income a month that I will need to manage.

imustachemystash

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Re: Eliminate 7.5k student debt by end of July
« Reply #43 on: April 17, 2013, 09:21:19 PM »
So far I'm on track with saving enough money to have my loan payed off in August.  I have started shopping at Grocery Outlet, getting my hair cut at a training school, and buying second hand for my kids.  It's really fun to be more creative about how to save money.  I can't wait for August and I will be free of this loan!

Kaytee

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Re: Eliminate 7.5k student debt by end of July
« Reply #44 on: April 19, 2013, 07:35:13 AM »
Just when I thought I was done with this month's payments and minimal progress, a larger than expected tax return appears and is immediately applied towards this challenge. Evidently, not only does one receive a deduction for having a dependent child, but there is also a child tax credit that is applied whether you want it or not.

April 2.0 payment:
Balance: $16,162.99
              -$2000
Balance: $14,190.88

Net change since beginning of challenge: -$5,315.43

With 3 payments left in the challenge, this seems doable. The loan provider keeps lowering my monthly payment to match the loan term. It's heartening to watch that number retreating, especially when I reminisce about what that number looked like when I first starting repaying the loan in 2006 with it's 10% interest rate and capitialized interest. Good times.

peterpatch

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Re: Eliminate 7.5k student debt by end of July
« Reply #45 on: April 19, 2013, 10:50:58 PM »
Good job Kaytee, you won't find a much better , risk adjusted, investment then paying down student loan debt.

Zaga

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Re: Eliminate 7.5k student debt by end of July
« Reply #46 on: April 20, 2013, 07:14:05 AM »
I'm most of the way through a home equity loan.  It's at about $7,740 right now and I want to have it paid off by the end of June.  So I'm right with you on this one!
We got some things sorted out, so the money we were holding onto was able to go to the student loan.  Made a huge payment that will go through next week of $3,493.07, bringing the total owed down to $3,377.93.  Whee!  Half of the remainder gone in one swoop!

From here on out we'll slow down to half of what's left each month, because of a fallen retaining wall that really needs to be fixed.

Kaytee

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Re: Eliminate 7.5k student debt by end of July
« Reply #47 on: April 22, 2013, 08:32:49 AM »
Looks like there has been some excellent progress posted this month! Looking forward to seeing those screen captures in a few months.... or possibly earlier.

tomatoprincess

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Re: Eliminate 7.5k student debt by end of July
« Reply #48 on: April 22, 2013, 02:33:54 PM »
Reading through these, what kind of education did you pursue, was it worth it and would you do it again?

peterpatch

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Re: Eliminate 7.5k student debt by end of July
« Reply #49 on: April 22, 2013, 03:59:09 PM »
Reading through these, what kind of education did you pursue, was it worth it and would you do it again?

Business degree.

I would have taken a much broader sample of subjects before deciding on a major.