Anatomy of my monthly budget as I conquer massive student loans debt.

[Fuperw84]

Hello everyone. I graduated from Pharmacy school with $190,000 in debt. Able to pay down to $153k so far. I have a goal of paying off $153k in 3 years by 2020. I am posting my monthly budget to show that with hard work, staying focus and adhering to a strict budget we can conquer any amount of debts. I hope this will provide some motivation to anyone looking to conquer their debts.

[aceyou]

Good for you, you're killing it. 

I think if people can take this supercharged type of action towards debt repayment, it really is a multi-fold win.  While paying down debt you are constantly learning that you can be happy on a small budget.  You are optimizing everything.  Then, one month the debt is just all gone, and you can just redirect the firehose that's already blasting away towards your investments. 

[inline five]

Good for you, you're killing it. 

I think if people can take this supercharged type of action towards debt repayment, it really is a multi-fold win.  While paying down debt you are constantly learning that you can be happy on a small budget.  You are optimizing everything.  Then, one month the debt is just all gone, and you can just redirect the firehose that's already blasting away towards your investments.

It works great for those on high incomes. Tell someone able to save $500/month that they'll be debt free in eight years and you'll likely get a FU look and a "what's the point".

[Bucksandreds]

Good for you, you're killing it. 

I think if people can take this supercharged type of action towards debt repayment, it really is a multi-fold win.  While paying down debt you are constantly learning that you can be happy on a small budget.  You are optimizing everything.  Then, one month the debt is just all gone, and you can just redirect the firehose that's already blasting away towards your investments.

It works great for those on high incomes. Tell someone able to save $500/month that they'll be debt free in eight years and you'll likely get a FU look and a "what's the point".

I agree. If I were earning $40,000 per year and you told me that if I cut out tv, phone,moved into a crappy place, never ate anything other than basics, quit drinking, word older clothes, etc, etc, etc and then I’d be able to retire 20-25 years from then I wouldn’t do it. I’m able to set myself up for that ER while taking 2 vacations per year, driving a cheaper but newer car, living in a new 2850 sq ft house in one of the best neighborhoods in my state, etc, etc,etc. I have gained lots of value from this site and cut cable for Netflix, cut my phone bill in half, quit going out to eat so much, started buying clothes at TJ Maxx, purchase essentials in bulk discounts. I basically used this site for painless benefit. Not doing it if I barely make ends meet and I lose everything that I like.

[Greenback Reproduction Specialist]

Lol, well I'm proud of the fact that we cut out tv, phone, moved into a crappy place, never ate anything other than basics, quit drinking, wore older clothes, etc, etc, etc.... Because if we didn't start doing that 7 years ago, we wouldn't be looking at FIRE in the next 4 years (really we could FIRE today). We treat ourselves a little more than we did back then, but one thing I've come to realize is that most of that "stuff" is just "stuff" and doesn't really make me happy anyway. I'm a sucker for good food though, and we have learned to make REALLY GOOD food with just the basics.

[jlcnuke]

Good for you, you're killing it. 

I think if people can take this supercharged type of action towards debt repayment, it really is a multi-fold win.  While paying down debt you are constantly learning that you can be happy on a small budget.  You are optimizing everything.  Then, one month the debt is just all gone, and you can just redirect the firehose that's already blasting away towards your investments.

It works great for those on high incomes. Tell someone able to save $500/month that they'll be debt free in eight years and you'll likely get a FU look and a "what's the point".

If a person's education is only going to afford them a job that pays low enough that they can only afford to put $500/month towards student loans then it would be irresponsible of them to take out large student loans to get that education.

[tinylittlemonkey]

If a person's education is only going to afford them a job that pays low enough that they can only afford to put $500/month towards student loans then it would be irresponsible of them to take out large student loans to get that education.

Yeah, I'm glad I learned that before taking out student loans. Wait...

[TexasRunner]

If a person's education is only going to afford them a job that pays low enough that they can only afford to put $500/month towards student loans then it would be irresponsible of them to take out large student loans to get that education.

Tell that to our current University system... :/  lol


OP, What is the rate on the student debt?...  1400$ a months is a TON that could be towards the market. 

See here:  https://forum.mrmoneymustache.com/investor-alley/investment-order/

General consensus is "2. Pay off any debts with interest rates ~5% or more above the 10-year Treasury note yield."

If that student debt (which rate is set by Congress) is below ~7.24%, better to max out the tax-deferred options to artificially reduce income before knocking out the debt.

Double-true if we have the opportunity to invest in a 30%-50% market correction soon.

[jlcnuke]

If a person's education is only going to afford them a job that pays low enough that they can only afford to put $500/month towards student loans then it would be irresponsible of them to take out large student loans to get that education.

Yeah, I'm glad I learned that before taking out student loans. Wait...

You didn't? It's not hard information to come across... normal incomes are readily available for pretty much every career path and what degrees are applicable for what career paths isn't exactly "top secret information". My parents and guidance counselors 20+ years ago were smart enough to tell me to look at what I'd "get" for what it would cost... and the millions of articles over the past 20 years about student loan debts should make that information even more obvious to students today one would think.  If not, the phrase "caveat emptor" comes to mind...

[specialkayme]

You didn't? It's not hard information to come across...

Actually, it is. And the information changes.

When I finished undergrad, I did a lengthy analysis of the benefits of going to law school. Statistical information put out by the Bureau of Labor and Statistics and the American Bar Association put a high probability of employment with a median starting salary of $87,600, and an overall median salary of $157,000 based on my geographic location. Tuition, fees, and books ran at ~$31k per year. You could get a job working 15-20 hours a week during the school year that paid $14/hr your first year, up to $25/hr your last year. Increasing hours to 40 hours during the summer. When I did the math, I could leave law school with approximately $70k in debt with a salary of $87k. Not a bad trade off. All numbers put out by 3 competing law schools and backed up by the ABA and the BLS. I had an offer at the time to become a police officer. Starting salary of $29k. Law school put a difference of $58k pre-tax on the table. Over a 20 year working career, that's $1.16M (not counting for raises on either career path). Less loans of $70k, there's a benefit of $1.09M to going to law school. Or at least that's the math.

Then 2008 happened. Big law fired a third of their associates. They flooded the marketplace, took all the entry level jobs. Pushed median starting salary down. Pushed employment rates down. Some couldn't find jobs and took unpaid internships to fill resume gaps.

What did that mean? No paid jobs during law school. No paid jobs (and not many unpaid internships) during summer. Rent still became due. You still had to eat. If you backed out, you still had $30k+ in debt and no degree to pay for it. Then the school decides to jump tuition from $27k to $34k to $38k. Not like you can back out now. Push through the end and hope the time you spend in school gives you time for the economy to bounce back.

Only it didn't. When I graduated, starting salaries in the $40k range were not uncommon. 3% of my graduating class had job offers at graduation. I was one of the lucky few.

Average tuition, fees, books, expenses at $34k per year, plus $15k to live off in loans per year, leaves $147k in debt. Not counting undergrad. Paying for it off a $40k salary.

Yeah, you could cut that $15k annual living expense number down, but not too far.

Real easy to point a finger of blame. But life happens along the way.

[Bucksandreds]

You didn't? It's not hard information to come across...

Actually, it is. And the information changes.

When I finished undergrad, I did a lengthy analysis of the benefits of going to law school. Statistical information put out by the Bureau of Labor and Statistics and the American Bar Association put a high probability of employment with a median starting salary of $87,600, and an overall median salary of $157,000 based on my geographic location. Tuition, fees, and books ran at ~$31k per year. You could get a job working 15-20 hours a week during the school year that paid $14/hr your first year, up to $25/hr your last year. Increasing hours to 40 hours during the summer. When I did the math, I could leave law school with approximately $70k in debt with a salary of $87k. Not a bad trade off. All numbers put out by 3 competing law schools and backed up by the ABA and the BLS. I had an offer at the time to become a police officer. Starting salary of $29k. Law school put a difference of $58k pre-tax on the table. Over a 20 year working career, that's $1.16M (not counting for raises on either career path). Less loans of $70k, there's a benefit of $1.09M to going to law school. Or at least that's the math.

Then 2008 happened. Big law fired a third of their associates. They flooded the marketplace, took all the entry level jobs. Pushed median starting salary down. Pushed employment rates down. Some couldn't find jobs and took unpaid internships to fill resume gaps.

What did that mean? No paid jobs during law school. No paid jobs (and not many unpaid internships) during summer. Rent still became due. You still had to eat. If you backed out, you still had $30k+ in debt and no degree to pay for it. Then the school decides to jump tuition from $27k to $34k to $38k. Not like you can back out now. Push through the end and hope the time you spend in school gives you time for the economy to bounce back.

Only it didn't. When I graduated, starting salaries in the $40k range were not uncommon. 3% of my graduating class had job offers at graduation. I was one of the lucky few.

Average tuition, fees, books, expenses at $34k per year, plus $15k to live off in loans per year, leaves $147k in debt. Not counting undergrad. Paying for it off a $40k salary.

Yeah, you could cut that $15k annual living expense number down, but not too far.

Real easy to point a finger of blame. But life happens along the way.

It’s the conservative way. If you’re not rich, it’s because you’re dumb and or lazy. That’s why the rich deserve a tax break. They’re morally superior. I’m dumbfounded by the forty something percent of Americans who vote for them but it’s our own fault.

[tinylittlemonkey]

If a person's education is only going to afford them a job that pays low enough that they can only afford to put $500/month towards student loans then it would be irresponsible of them to take out large student loans to get that education.

Yeah, I'm glad I learned that before taking out student loans. Wait...

You didn't? It's not hard information to come across... normal incomes are readily available for pretty much every career path and what degrees are applicable for what career paths isn't exactly "top secret information". My parents and guidance counselors 20+ years ago were smart enough to tell me to look at what I'd "get" for what it would cost... and the millions of articles over the past 20 years about student loan debts should make that information even more obvious to students today one would think.  If not, the phrase "caveat emptor" comes to mind...

No, I didn’t learn it. That’s why I said that. I was the first person in my family to go to college. Ever. No one taught me shit about it. I graduated in ‘05 and the info wasn’t put in front of me and explained. I was a kid. I didn’t even know what a college credit hour was. Then when I graduated the economy took a dump so now I’m making up for it. Shrug.

[Fuperw84]

Good for you, you're killing it. 

I think if people can take this supercharged type of action towards debt repayment, it really is a multi-fold win.  While paying down debt you are constantly learning that you can be happy on a small budget.  You are optimizing everything.  Then, one month the debt is just all gone, and you can just redirect the firehose that's already blasting away towards your investments.

Reason I'm posting is because I used to be skeptical about stories of people paying off massive debts in short time until I fell into the same debt amount. Found the motivation to pay down as soon as possible and i'm experiencing first hand what it feels like to do it. Living off a strict budget is very difficult but it feels so rewarding to see my debt balance go down every month.

[Fuperw84]

Good for you, you're killing it. 

I think if people can take this supercharged type of action towards debt repayment, it really is a multi-fold win.  While paying down debt you are constantly learning that you can be happy on a small budget.  You are optimizing everything.  Then, one month the debt is just all gone, and you can just redirect the firehose that's already blasting away towards your investments.

It works great for those on high incomes. Tell someone able to save $500/month that they'll be debt free in eight years and you'll likely get a FU look and a "what's the point".

I am fortunate to earn $120k annually is salary which makes this task a lot easier. But even if I was earning only $50k, what I have learn from researching is that the opportunity to earn additional income are limitless. It is really up to how motivated you are.

[Fuperw84]

If a person's education is only going to afford them a job that pays low enough that they can only afford to put $500/month towards student loans then it would be irresponsible of them to take out large student loans to get that education.

Tell that to our current University system... :/  lol


OP, What is the rate on the student debt?...  1400$ a months is a TON that could be towards the market. 

See here:  https://forum.mrmoneymustache.com/investor-alley/investment-order/

General consensus is "2. Pay off any debts with interest rates ~5% or more above the 10-year Treasury note yield."

If that student debt (which rate is set by Congress) is below ~7.24%, better to max out the tax-deferred options to artificially reduce income before knocking out the debt.

Double-true if we have the opportunity to invest in a 30%-50% market correction soon.

What current interest rate is 4.85%. Of course, I would love to invest some money. I'm in my early 30's and decided to promise myself to only invest again after paying off my student loans. I'm paying $2,900 automatic monthly and additional $1,400. So total monthly payment towards student loans is $4,300. My goal is to find a second job to increase to $5,000 monthly payment.

[Fuperw84]

*I was able to refinance my student loans down to 4.85% through SoFi. I chose to refinance with private bank because it took all financial flexibility away. Much harder to negotiate monthly payment through a bank. It was much easier for me to defer payments or pay only minimum through government. I purpose wanted to lose payment options to force myself to payoff ASAP.