My Debt Blog

My wife is in the process of getting her student loans on hold, or forbearance, until she can get a full time teaching position in order to pay them. The student loan companies capitalized the interest and rolled it into the loans, so the total as of today is $123,800 rounded to dollars. Her payment alone is over a grand per month, even though it’s on a graduated system that will increase over the years.

We need to figure a plan of action on what is going to happen with these loans. The payment alone isn’t even realistic right now, which makes me wonder how she was able to borrow so much money in the first place. A few articles I read on student loan debt, most averages are anywhere from 15-40k which are manageable to say the least. Her debt is many times that and so is the payment, so how can she pay?

What I think we’re going to probably do is live off of my income alone, and use her income to pay the student loans off. Depending on what she makes, such as throwing 30k a year at them, they could be gone in less than 5 years. That is better than the 30 year payment plan which would require us to pay twice the amount of the loan in interest alone.

I’m not an advocate of bankruptcy and believe we should take responsibility for our decisions. Student loans are typically not something that can be bankrupt, unless you are deceased, disabled, or can declare undue hardship. Undue hardship makes a case that a debtor has little chance of earning enough to pay off the loan. We are married and she probably couldn’t pull this excuse off.

A quote I recently heard and like at the moment: When faced with a challenge, look for a way not a way out. I hope she gets a salary job soon so she is on her way to getting these loans paid off. Our credit cards still have to go in order to focus 100% on these.

Comments(10)

For the last few months I have had a serious amount of dental work done. I’ve got really bad teeth and a few years ago some molars started to weaken and break down on me.

As you can see I had a lot of work primarily done on just two teeth. I will most likely have to get a crown on the tooth that had the root canal done next year. Right now I am very happy to have a full normal feeling tooth again. This tooth cracked in half and was rebuilt back in May. The pain from the tooth started to get worse and I guess the nerve was bad and root canal was the fix for it. In the middle of the root canal the tooth cracked in half again, the crown for the other tooth had to go in, and two more appointments later it was finished. My last appointment on this tooth was this past Saturday. I’m happy that I have no more planned until my regular cleaning later this year.

After 2.5k worth of work being done, 1k out of my pocket and 1.5k paid by insurance, I would do it all over again if I had to. These totals are only for the work I had done this year. I have had as much stuff done since 2005 when I first addressed my dental issues. In college I neglected going to the dentist for regular checkups and such and it caught up to me. I’m glad I have dental insurance to help me cover the costs as well as the money to pay my part of the bill. Never take your teeth for granted, (warning: totally intended pun coming) you might find yourself biting off more than you can chew.

Question for my readers: Has your dental insurance come through to help you cover a major procedure?

Comments(13)

Is it a bad thing to live paycheck to paycheck? I think it’s quite common that most people have a fixed income with variable expenses and debt. Lifestyle also needs to be a variable expense to balance out when expenses go up, plus income could feel tight for a bit. If there is a case where the expenses exceed the income after lifestyle has been cut down to nothing, I would consider that an emergency. An emergency fund can help get through the problem instead of doing what many people do, run it up on a credit card.

There are some priorities when it comes to what to do with the income. Our income at the beginning of the month handles the mortgage payment, which takes out half of it. The rest is allocated between fixed expenses like regular bills due before the 15th and the rest is for variable expenses. The mid-month paycheck goes towards the bulk of our monthly bills like utilities and payments towards debt. When the money comes in it is a good idea to have a plan of where it is going instead of wondering where it went.

I’ve also pondered what things will be like without having to pay for a single debt. If our income remained the same and we had absolutely no debt, outside of the mortgage, one pay period would cover expenses for the entire month. We would be able to save the entire second pay period in full. If there was no mortgage, we could save or invest the mortgage payment on top of the second pay period. There are people who live like this, and someday I want to be one of them. If we hit that point we would no longer be living from paycheck to paycheck, but rather focusing on living without worrying too much about the paycheck.

Comments(9)

My wife has been doing her student teaching this week and trying to get the whole teacher role down. At any rate, she stayed after school for awhile yesterday to go over plans of what she will be doing for the semester. She is only obligated to be a student teacher for the fall semester and then she is done in December. After that it’s time for her to start finding a job.

This is where it gets interesting. Apparently a science teacher in the same group as the teacher my wife is student teaching under will be going on maternity leave. They are going to need someone to put in their place and my wife has a biology degree already and will have her education masters completed in December. From what she told me it sounds like they want to transition her right into a teaching role as a science teacher when she is done. I’m trying not to get too excited or jump to conclusions about this, but I think this is a very positive thing.

What was funny was I held back my reaction as best I could. My response was along the lines of that I felt that sounds like a good opening. Then she comes out with a compromising statement that if we did stay in our house longer, she would like to replace our kitchen/foyer flooring with linoleum. I estimate the cost of this to be about $500-700 which I would be willing to commit to in the event we hold off selling the house for awhile. This type of stuff my Dad and I could install, as we have done before.

She went downtown this past weekend to go shopping with her friends, which is good because I think she needed some social time with other females. At the same time her friend takes the taxi to places because parking is expensive. Apartments in the area we can afford to live are much smaller and everything much more crowded. I’m not sure if she wants to live close to her friends and the city based only on the idea of making more money when things will cost more overall.

We still have to make it through these next couple months on a tight budget. This is going to be a real challenge to be able to swing all of our expenses and still be able to do anything. What is going to be difficult is not going out to eat and forcing us to eat at home. We need to make it through these final months of her finishing school without an income. If this job is waiting for her when she is done, I think that is her finish line she needs to cross.

Comments(0)

There is so much scare out there about the sub prime mortgage lending damaging the economy. What confuses me is why so much blame is being put on the sub prime loans when it should also be shared by the consumer who signed up for that loan. For anyone who has ever bought a house, there is so much paperwork involved and it is a process to get the financing in order. At closing it can be exciting to just get through that paperwork so you can get the house. Did you have a real estate attorney at closing explaining and showing you exactly what you were signing? I did and know exactly what I am dealing with regarding my loans.

If someone buys a house they simply cannot afford, should it become a problem for the government to bale out people using taxpayer dollars? Our government will bale out corporations due to limited liability, sends money overseas as aide for other countries, but can’t help the average Joe save their home? The government is not going to make a person more responsible by helping them save their home. Regulation isn’t going to fix the existing problems of people trying to borrow 500k and pay 1k a month. It all seems fine until the payments adjust out of control and there is no way to handle the new payment.

When I got my house a year and a half ago, my credit was good and the time seemed right because I was getting married. Instead of doing one lump loan for 30 years, I did 100% financing through 2 separate loans. My first is a 80% 7 year ARM at a much lower rate than the fixed loan, lower payment, and no PMI. The second is a 20% HELOC which made up for the difference and structured the loans so I would not have to pay closing costs. This seems stupid to me now to have done it this way when I had 10k sitting in the bank. I did end up paying off my car and going on a completely paid for honeymoon, so what’s done is done.
(Read the article)

Comments(2)

We’re almost through this month of August and I think the money is going to get tight. Pretty much what my wife made for the summer has also been used as regular income. She is going into student teaching now and they (her teachers, advisors, etc) suggest that she not try to work while doing this. It is going to be almost like an unpaid internship where the gain is learning experience. I’m a little bit frustrated because we were having problems before, but now we’re going to have some serious problems if the spending isn’t controlled next month.

Priorities need to really be taken into consideration next month and the months that follow. I have that 1k sitting in an EF for emergencies, not for other things. There are two tires on my car I’m not sure how long they will last but will need to be replaced here soon. I am trying to plan $100 a tire for this month and next month so there will be some money there to fix that situation. What is going to be difficult next month until November or December is not running to the EF to fix a problem.

The other solution is for me to work more to make up for what my wife used to bring in. I can get a second job in my sleep, but the reason for a second job must be justified first. In the meantime I am going to resort to a pastime of doing website design/maintenance services that I did in high school and college. These jobs are small and random as I find them on Craigslist and knock them out quickly because I know what I’m doing.

I don’t think there’s going to be much in the terms of debt repayment for the next few months other than just holding the ship steady. The only positive thing right now is my wife is in her final stage for her masters degree. After that it means no more borrowing money for school through student loans. We could finally put an end to both of us using credit cards for any reason. I hope she lands a job quickly when she is done so that the household income bumps way up over what it has always been. My income has gone up over the two year period I have worked and expect it to increase even more. This time next year we should be on a better path to really focus on getting rid of debt.

My plastic pinch update will be coming shortly.

Comments(2)

One of my little hobbies that really isn’t necessarily productive or anything like that is gaming. I know some people cannot understand why someone would be willing to sit in front of a TV for hours at a time, drinking Mt. Dew, and trying to keep their fingers from not cramping up. Walking through Target the other day and there it was, the Halo 3 preorders are available to reserve a copy for the 9/25 release at midnight. I want this game very badly.

What could I do with $60 though? My Zales credit card could get paid off that much faster if I added $60 to the payment, and I would kill that account maybe a little bit quicker. I could save that $60 for Christmas and just hope a copy is available later. The last one that came out around the same timeframe was Halo 2 and my wife held it hostage from me because it was for Christmas. I can’t go through that again, it’s not a healthy or normal behavior and puts me in a really bad mood.

This sucks so much. My wife has no problem with me buying it since she has a tendency to buy things she is after. She knows better than to go and buy a car or something stupid like that, but I have come home to certain purchases that ran us a few hundred in the past. That is the past though and we have both bought stupid expensive things that I would like to actually pay for now. Not all expensive things are stupid. I’m referring to the Zales account. I still don’t own my wife’s engagement ring and we’ve been married for over a year and engaged a little more than a year prior to that. All the other rings and earrings and jewelry she wears are completely paid for, but not the engagement ring! It feels selfish to actually want something but know that money could be used for another goal.

I got the Xbox 360 system for Christmas last year. It was probably paid for with my wife’s credit card too, so we don’t really own the stupid thing. Sometimes I look at the things in my house and try to figure out whether or not we own it or if we’re still paying for it. All of our furniture is completely paid for which is really nice because it’s nice furniture and the couch feels comfortable to sit in. My basement so much crap in it I can’t completely know for certain what is and isn’t paid for yet. Either way that file box I have with the copies of the statements for the credit cards still have balances on them. Those balances were built up buying something.

This is really hard for me. I try to sacrifice so much and am now plagued by my own want. Now I don’t really know what to do.

Comments(3)