My Debt Blog

I have been waiting for a payment to my private student loan to post for a couple of days now. It usually shows up within a few days after I make the payment. Since my bank wasn’t showing it posted, I wanted to make sure it posted on the loan side to keep it current. When I checked out the payment history, it posted but I also noticed out of the last 6 payments I have made, my principle balance hasn’t gone down a penny. Why in the world would I just pay interest?

Soon after that I decided to call the private student loan company to find out what was going on. After being on hold for quite some time, I finally got to someone. They of course didn’t have an answer to my question, so I sat on hold even longer for them to figure it out. As it turns out the index my interest rate is based on skyrocketed this summer up to from 7% to 13% and has now dropped back down to 8.23%. They kept my payment the same, which means my payment has been back paying old interest while my account stays current. I told them I find it absolutely appalling that this wasn’t communicated or even give me the option to see what the unpaid interest was on my billing statement. All I see on the statement is the loans principle balance, rate, amount due, past due and late fees. I made my regular payment as I always have.

This company has got me so frustrated right now because they want me to keep making this same payment for another 213 months, or over 17 years. I started to look for another place to do a private student loan consolidation. Most of them require over $7500 while mine is only $6950. I finally found one that has a $5000 minimum, no fees, and a good rate of 3 month LIBOR plus 4.5%. My other concern was whether or not they were accepting new loans given the current state of the lending industry. They will accept new loans as long as I meet their requirements and can process my application within 24 hours. This means the old lender would get paid off within a week and I would have a new loan with a shorter term and better rate with the payment staying about the same as the existing loan.

I’m getting all the information together for this application along with a copy of my last billing statement from the existing loan company. When I get this in the mail it should arrive and process within a week. My wife has a bunch of private loans with this current lender too, but they are on economic hardship deferment until November. We might make an attempt to move her loans to this other lender as well later in the year. It may be psychological to pay off old loans with a new loan, but I think it creates a feeling that it is easier to move forward.

Comments(5)

I know it’s been a bit since the last post, which I still haven’t taken much action on yet, we’re having a rough week. For this month we are fine and all the bills will get paid as usual. My wife has spent the past few months trying to find a full time teaching position. She has applied nearly everywhere within reasonable driving distance, even as far as 35 miles out. It’s frustrating when there are only a few interviews over that period of time.

Earlier this week she applied to a local middle school and missed the call, they left a voicemail though. The voicemail said that they would like to talk to her, so we were thinking she was being called to setup and interview. She calls back the next morning and as it turns out this position was filled last week and wasn’t available. He was willing to have her come in to talk to him though, we weren’t sure what would happen. I had a theory he might want to pull strings to move her into the position. As it turns out that school has no positions for her and it would have been better if the guy never called in the first place. I think it’s rude to call someone to call an applicant back to inform them a position no longer exists, and then insult them by saying they are a perfect fit for the position they don’t have anymore. She is emotionally drained right now from going through this, and I don’t know what to do.

In the time being I am trying to evaluate a way for us to get through the next month assuming she has no income. As sad as it may sound, it feels like deja vu from last year when she was a student teacher that didn’t get paid or even a stipend for her work. The last thing I want to do is resort to credit cards to get us through in the meantime. One of her student loans is only on economic hardship until September, so they will expect a payment come early October. She is going to need a job doing something to earn income, but right now she’s very depressed and I’m being as supportive as I can.

I am also starting to wonder if I should seriously consider a job that pays more to handle her student loan payments. We’re having a heck of a week already with the excitement on Monday completely gone Tuesday. That job would have paid her more than twice what she has made in the past, because the student loan payments will take one of her paychecks just like a mortgage. Schools start up next week and she is near out of time to get in somewhere.

Question for my readers: Have you gone through a period of unemployment, or spouse unemployment, and how did you get through it?

Comments(13)

I don’t think a payday couldn’t come closer than it has this time around. Yesterday our checking account got down to $8.16 and there’s absolutely no emergency fund. Our dog had an unexpected expense that ran $110, but that $140 check from overpaying the escrow saved us from charging it. Logging into my bank this morning and seeing that my paycheck posted was a huge sigh of relief. Granted we have around 1k worth of expenses coming out of this check, at least the money is there to do that now. My wife get’s paid this afternoon with a paper check, so I don’t know what that will be yet. Today is her last day at that job too.

I’m debating what the best route would be as far as paying on debt. My wife has some cards that have extremely bad APRs and the principle balance very rarely goes down. As of today there’s a Capital One balance of $2586, and two store cards EXPRESS $187 and Victoria Secret $300. This all totals a little over 3k and the minimum payments total $98. At roughly an average of 21% interest it would take 45 months to pay this off making a fixed payment of $98 a month. This is where it got me thinking about how to get rid of it other than just chunking away payments.

I have a 0% balance transfer option on another card paid off awhile back (funny how they offer these things AFTER you pay them off) and have been tempted to use 3k of the available credit. This doesn’t pay off the other 3 accounts, it just shifts the debt into a 0% for 12 months with no balance transfer fees. Simple math here now, 3k over 12 months is $250 a month exactly. Take the $98 being normally paid, I’m canceling a gym membership $52, then come up with throwing an extra $100 and I can pull off the $250 a month.

The other debt that is a pain in the backside is my Bank of America account. Awhile back I debated the idea of cashing out an IRA in order to pay that off. I can’t bring myself to make this move because I’m going to lose 25% of it to the government. Is it really worth it to zero that out in order to zero out this other card? The Bank of America card is around 16% interest, so the 25% penalty would still result in a 9% loss or roughly a bit over $400. The reason I bring this up is it frees up an $80 payment that could be contributed towards the plan I’m thinking about. By doing the balance transfer I avoid around $650 in interest, so actual difference is $250 in savings as long as everything goes according to plan.

Nothing has been done yet because I’m still thinking it over. At the same time we also need to get our emergency fund back to the 1k safety net we used to have. I’m just trying to figure out the most efficient way to remove debt from our lives and survive. As the payments go away the stress I am under also eases and that is empowering. On the other hand I have no plan on how to handle the student loan payments that will come in a few months. It’s a sleeping bear right now and we’re watching our steps for when it wakes up.

Comments(6)

We are all aware of Murphy and as the saying goes, if it could go wrong it will. He also has friends like broke, desperate, and stupid that follow in his footsteps. I started thinking about the possible situations that we’re currently looking at.

First major one is my wife will be done with her summer job this Friday. Temporary employment has a known end date unlike being a regular employee and receiving a pink slip or some other random job ending factor. Job loss can be a Murphy but we have known the end was coming and she is doing everything she can to find another source of income. I’m hoping someone, anyone, calls this week wanting her to come in for an interview. It would relieve a huge amount of stress that has been building on both of us.

My current place of employment is feeling the summer slump. I was curious the other day and looked around job sites online. One of the places I found is very close to my home and pays at least 10k more up to 50k more per year. Even being somewhere in the middle of the two could result in around 2k more per month. The downside is it is a dot com startup so I don’t know what kind of future a place like that has unlike where I am currently. Even with that said I might feel it out and see if it could work for me.

The private student loans my wife has breathing down her neck are only deferred on economic hardship until September and October. They expect payments on those because she has reached a time limit on how long a loan can be on deferment. This is where the first two things I mention can come into play. If she got a good regular job then she could pay these on her own. Otherwise I could get a hopefully higher paying job to handle them for her until her income picks up.

I guess it is better to have some sort of plan on how to deal with a situation rather than hiding from it. It was known before we got married that our student loans are primarily our own responsibility. At the same time being married I don’t want her credit to be trashed just because of not making payments to the student loans. Right now I don’t make enough money to handle household expenses as well as taking on the burden of her student loan payments. I already handle making her credit card payments for her otherwise they wouldn’t get paid on time. If only she realized back in college the problem excessive student loans cause.

Comments(11)

Even when money isn’t tight who wouldn’t want to stick to a set amount for food each month? I personally like to get the best buy for the money. Here are some things I do to save money on groceries:

1. Eat before going - It is never a good idea to go to a grocery store hungry. At least have a snack or eat something to calm your stomach yourself down and focus on the task on hand.
2. Have a shopping list - When you write down exactly what you’re after, it makes it easier to shop for just those items. No list usually ends up costing you a lot more before you even know it because of impluses.
3. Coupons - I am a coupon clipper and only have a newspaper subscription so I can get these things. It costs me a $1 a week to save a lot of money on groceries. Coupons also give you a bonus by reducing the amount you would normally spend.
4. Bigger not always better - Grocery stores are really crafty in putting the larger item on sale while the smaller one isn’t. They want you to buy the larger item, but depending on the price per ounce it may not be a good deal. I use the calculator on my cell phone all the time in the grocery store to make decisions like this.
5. Same goes for buying in bulk - Do you really need the baseball team family size of an item? I think stores like CosCo and Sams Club are great, but not everything in there is a great deal just because it’s bulk.
6. Create a menu for the week - This goes along the same line as having a shopping list prior to going grocery shopping. If you develop a menu prior to making the list, you can assess your pantry to see what you need to put down on your list.
7. Fewer trips - I have found through personal experience that it is better to go grocery shopping once or twice a month instead of going every week. As long as you have the space in the fridge and pantry, reducing the trips can actually reduce the monthly spending.
8. Wish/forget list - Sometimes we get cravings, forget, or just run out of something between shopping trips, it’s better to write that thing down for the next trip rather than running to the store for it.
9. Organic food - I feel that organic food is overpriced and there isn’t a whole lot of benefit from paying more. Some people feel the need to buy organic produce and such, just be sure to pad the budget to handle it.
10. Overpriced items - There are some stores I know that I can buy particular items cheaper than at just one store. Sometimes getting caught up in convenience of shopping at one store can actually cost more than shopping at multiple places.

This is just a short list of ideas that have been working for me. I’m always looking for ways to save money, and simple things like the ones I mention have really helped me out.

Comments(6)

In the Land of Lincoln (Illinois) we pay our property taxes a year behind. The tax bill for 2007 came in back in May and has two payment due dates. The first installment is typically due at the start of June, and the second is due at the start of September. I have an escrow for my property taxes, which is basically an extra chunk of money I pay along with my mortgage payment to be set aside in an account to pay this bill. The first payment was made back in May, and the second payment will be made this month. As it turns out though when they recalculated my escrow account, I have actually overpaid my escrow. The bank sent me a refund check for overpayment.

In addition to this bit of positive news, because I have overpaid in the past, I have a new mortgage payment going forward. I will pay about $23 less per month that can go towards other things, this saves around $276 a year. This new payment will come effective next month as I have already paid my mortgage this month.

It’s been a concern of mine this month regarding running out of money before 8/15. After the bills get paid there was very little remaining for food and gas. Even though $140 doesn’t make a huge difference, it will make it easier. At the same time with the EF gone, I’m considering putting this $140 into the EF since it wasn’t something that we planned on having.

As sad as it sounds my stress level went way down after reading the mortgage paperwork and receiving this check. It might be psychological but I have a strong need to make sure my ducks are in a row or I get really stressed out. Another thing that reduces my stress level and gets me fired up is paying off a credit card.

Comments(3)

It feels like we hit a fork in the road of life’s decisions. We eliminated a bunch of balances on cards earlier this year, but two small ones have returned. The EF was wiped out by my wife’s car repair and she charged up the debt on these store cards. Does it make more sense to build up the EF again or make these new debts go away quickly? It’s been on my mind all weekend.

The problem with paying off debt and not having an EF is when there’s another emergency. The odds are what they are, so it’s taking a chance to dump debt and postpone the EF until it’s gone first. I know that one of these cards can be taken out this month, but the other I’m not sure. Instead of doing that I could just make the minimum and build up the EF a little bit this month. It just sucks to be in a situation where the debt has gone up and there’s no EF, we have no choice but to continue going into debt if something happens.

My other major stress is the income situation this month. She is working at her current job up to 8/15 and then after that, I don’t know what she will be doing. I can tell this is starting to stress her out because she’s very worried about finding a job right now. The last thing I want to do is harp on the situation to make it even worse than it currently is. So I try to be as supportive and encouraging as I can, but stressing the importance of having to do something to earn income.

Even though my wife’s income runs out 8/15, it’s still the place I would rather be at this time. We have about 10 days yet to get to Friday which has another weekend smack in the middle. Living paycheck to paycheck isn’t exactly a fun thing to do, but it’s what we have to do this month. Hopefully the week goes by quickly and we keep our spending to an absolute minimum.

Comments(8)