My Debt Blog

I survived the vacation and had to come back to reality. Our spending on vacation was pretty close to where I thought things would be, so that’s a positive. On the other hand my wife’s car was being repaired over the week we were gone, so that expense has wiped out our EF. We also have a bill coming from the kennel that took care of our dog while we were gone that has to be paid. Everything is current except for one thing: my wife’s student loans.

We are having a really rough time getting a forbearance on her private student loans. They are expecting a large payment next week and we have no way to pay it. When she called them to explain that there’s no way to make this payment, they act like they could care less. I’m glad her other student loans are on a deferment, although the interest on them is building each month, these private loans have blindsided us. I am at a complete loss on what we’re going to do about that payment.

She is still interviewing for various schools to find a full time teaching job with decent income. Right now she has one offer for a school an hour and a half away, in a really bad area and for the lowest pay I’ve seen so far. I don’t want her to have to take that job and feel like she mad a bad choice to become a teacher. We need her to have a good first teaching job with a decent income so a large chunk of it can get rid of her student loan debt quickly. I’m confident something good will come for us, it just takes time.

August is soon coming and we have to really watch where the money is going. My wife doesn’t get paid for the week she took off for vacation, or any other day she has off like holidays, so her paycheck is going to be reduced for the first half of the month. The two weeks to the middle of the month will be a struggle but I think we’ll make it. We just have to watch where the money is going instead of wondering where it went.

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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.

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I’m not having a very good July even though it’s only been a week. We can’t pay down debt and on top of that it has gone up because the student loans are growing. My wife got in a car accident, she’s okay but the repairs to the car will clear our EF. I am financially and emotionally drained right now and not sure when I’m going to bounce back.

So where do we go from here? I looked at her student loan statements the other day, she refuses to even bother with them, and the payments make me feel defeated. They can go into a forbearance or possibly economic hardship but we still need to find a way to pay them at some point. I guess for now I will put that issue aside since we have so many other fish to fry.

I know I don’t mention it too much but I still contribute to my 401k plan. I’m down probably 1.5k which is a huge chunk of money. At the same time while it’s down at the moment it will eventually go back up. It is still depressing to see the numbers go down so far and quickly, but that is the risk of the market. I’ve also debated the idea of stopping my contribution in order to increase cash flow to pay down debt.

Our vacation is planned here in the coming weeks and I doubt we can afford to go. My parents are picking up the bulk of our cost but the $600 intended to cover our expense may not cut it. With no EF to fall back on I hope the damage to the credit card will be minimal if we have to resort to it at all. If my parents were not involved in paying for this trip, it would be canceled.

Sorry I haven’t posted as frequently lately but I’m trying to keep the funk to a minimum. I’ll come up with a strategy at some point but right now I’m tired. The stress of the situation could very well be leading to depression. It makes me wonder how much more crap I have to do before things will get better.

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A lot of students, not all students, graduate college with student loan debt, and I knew my wife took out a lot of loans to pay for her school. Since she is done with college, those student loans are going to require regular payments starting in July. When I started my career it was nice to have a decent income, until I realized I had to pay all my own bills with it leaving not so much money. I started making payments on my student loans in December of 2005 and have made some progress from their original principle balances since. Now we have to consider my wife’s student loans.

Rather than sugar coat it and give the run around, I’ll use numbers because it is a lot. Check out this table:

From what I calculated out, her monthly payment will be around $700 and mine is only $175 so it wasn’t a huge impact. I want to get my credit cards paid off so I can focus the roughly $300 I pay on them per month to help destroy my student loans with larger payments.

I realize that there is no way she will quickly (less than 30 years) pay off these loans on her income alone. The big issue I have is she needs to at least cover her minimum payment and contribute to our household income to pay those normal bills the mortgage and utilities. Teachers do not make a whole lot of money either, so the road is going to take some time. It’s going to take additional income and bigger payments to get rid of these loans.

Student loans cannot be bankrupt no matter what happens, the principle must be paid. Sometimes lenders can reduce the fees and interest on them, but the original principle must be satisfied. Credit cards have to get paid off too while we’re at it because those balances are lower and the APR is higher. It feels like we have two houses, one in debt and the one we live in.

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Back in July I had came across a show called Secret Lives of Women: Shopaholic and found it very interesting. There was not a future episode of this coming up any time soon. This weekend I happen to come across this show and on Tuesday, November 6th at noon (Central time) on WE this particular episode will be on again. So if you’re curious about the three women and their spending habits, be sure to catch or record this show.

I want my wife to watch this too without being too obvious about it. The whole point of this particular episode is that these women spend money they don’t have. Some resort to going deeply into credit card debt to continue the habit. Its sad how quickly some people consider bankruptcy to get out of the mess they created. My wife once thought bankruptcy was a credit reset button until I explained that her student loan debt not even considered and must be paid at some point. That put an end to that idea quickly.

When my wife is done with school here in December, the whole college thing will be behind us. I have no desire to go back to school right now mainly because I want to clear the debt first. Her student loans are on deferment right now and I am concerned as to what the payments will be come July next year. We may try to sell the house again in the spring depending on how the market is trending. That is all stuff to worry about next year though. Christmas is coming soon.

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College is a wonderful thing to go through before going full force into the real world. The issue with a college degree is it never guarantees income. I knew exactly what I wanted to do at the end of high school and went to college to help open the employment doors for me. There are a lot of things I learned in college far beyond what the degree is worth. When you’re done and have that paper in hand, it doesn’t mean you’ll get a job either.

My wife wasn’t sure what she wanted to do in college and switched paths a few times. Then after she graduated there was an opportunity for her to do an internship. Based on the field she was going into, I thought this was a good idea, except it didn’t pay anything. I got a job right out of school and made plenty of income to support the both of us, so it wasn’t a huge problem. After the internship was over, she was not interested in doing that as a career for various reasons. Great, so now what do you want to do with your life?

She ended up getting into a graduate school program in the education field to become a teacher. I was not really involved much in her going to graduate school to pursue this, but I wanted her to find something she would enjoy doing. Now that things are getting to the end of the rope, the amount of student loan debt scares me.

I didn’t know how much exactly she was borrowing, and as it turns out it’s quite a bit. When doctors and lawyers have to take out massive loans, most of the time they can eventually reach an income that will let them manage it. My wife will not be making a huge income, at the most half of what she borrowed, which would make it very difficult to pay off her student loans. Since we are married, income and debt is combined, so we will be paying off these for hopefully only several years. My focus regarding paying off debt is to try and get rid of the credit card debt completely. Once we no longer have those credit card payments to deal with, it will free up extra money to pay down student loans. It will be nice when she gets a salary so we can focus on a mutual goal together.

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