I pretty much spent the last 3.5 years working tirelessly to straighten out my career. This included next to no social life, stress, weight gain, 15 hour days, burnout and working on weekends. I earned an MS degree while working in my field and am currently in the practicum portion of my program. I finish in August and can take my professional exam in early October (hence everything will be done….finally). At this point I will be 28 years old and should earn around $50,000 per year before taxes (once I get a job, prospects are very good). When this happens, I will owe about $70,000 in student loans and an additional $8,000 on my car. I also religiously max out my roth IRA every year which costs $5,500.
Projected Monthly Bills
***$330 = Car payment (prepaid through Jan 2015, loan finishes March 2018) -2012 car I expect to last though 2024
***$90 = Car insurance
***$700 = 10 year repayment plan (25 year = $500) ***$460 = Roth IRA
***$1580 = Total Bills
***$3,800-$4,200 = Take Home Pay (estimated, monthly)
I plan to move back home for my August – October layover period. Beyond that I feel unsure. My rational side really wants to suck it up for one more year and take a chunk out of my student loans. I don't know how I can get ahead with a $700 student loan payment every month for 10 years. Unfortunately my home situation is far from stable. My parents fight constantly and my mom has alcohol issues and cannot make it though the day without screaming for an hour. Also my younger brother who is in graduate school will be home. My parents are helping him out financially a lot more than they helped me, which is a sore spot. I want to have my own place, start dating again, maybe travel a little bit. I want to be able to enjoy what is left of my 20s but do not want to be burdened with debt forever. I'm leaning towards moving out but getting a second job to make a bit more money.
I was wondering if anyone who dealt with similar issues has any input. Thanks!
You're very determined, whatever you choose to do I can see you will be out of debt in 10yrs and you'll be fine. Carrying debt is hard work and you've a good head on your shoulders.
So the question is, do you want to live at home with your parents while you sort out your financials for a year? It sounds like you don't want to, it's hard living with people when you're not always getting along. You have to make a decision based on your quality of life, not just your financial future. If you stay at home you may have to endure strife with the family. If you move out you'll carry a heavier financial burden. Whichever you choose you must make accommodations for your mental health. That means when you live with your parents you will have to learn to not fight with them, and judging as to how much you work that shouldn't be too difficult. Stay out of their way, don't get involved in the home politics and let things go. If you're not shouting back they've got nobody to fight with.
First I want to congratulate you for earning your MS degree. Despite the debt you now have, your education is something that you will be grateful to have for the rest of your life. And you should be proud of yourself for working so hard to accomplish this.
On the subject of debt. While I am typically a logical person that would say you should just suck it up and move home, I think the reasons you give for not feeling 100% on board with the choice are valid reason for maybe choosing not to go back home. I think it is very different for someone to say they don't want to move back home because they "just don't want to". I've heard people say they have very loving supportive parents, but they just want to play grown up and live on their own, meanwhile they are financially strapping themselves.
But you sound as though moving home might create a lot of stress, to say the least.
After high school, my mother moved in with her prescription drug abusing boyfriend. He and I had a lot of fights, namely when he was high. I could have stayed there, and I did, until he physically attacked me one day. That day I back a bag and left. I stayed with friends until I found a room to rent.
Leaving home put a huge financial burden on my life, and slowed my schooling because I had to work fulltime to live on my own. But the peace of not living in such an environment was worth it....I also had a brother living at my mom's house. He's a high school drop out, and got busted years ago for breaking into a liquor store. I think in recent years he tried to be less of a loser, but my mom takes care of him and bails him out (literally!) of everything. That is a soar spot for me too. My brother can do no wrong, even though he is such a bum.
I'm not saying you are in physical danger, but mental stress is serious too. I am an advocate for people getting out of toxic situations and relationships at any cost. In your case, you are considering going back into one. I wouldn't recommend it.
Cal your loan companies, and try to consolidate. You can make payment deals that they will lower your payments but stretch them out over longer time. That is what my hubby and I did. We will be paying our loans off forever. But I wouldn't go back home for all the money in the world.
One thing I will say is that I think your estimate of your monthly income is a little off. the IRS estimates you will pay 6000 in taxes but you also have social security, healthcare plan payments, and also state tax. For your own purposes, I'd try estimating a take home amount of 3k per month.
Depending where you live or plan to live, it sounds like a roommate situation may be a much better option for you. Now living with roommates itself can be stressful but it doesn't have the ties your family stuff will have.
Money will be tight for a while, especially until you pay off your car, but it will probably be worth it. Also, a second job is definitely a viable option of money is too tight.
First, I would look into income-based repayment. My payment is now under $300 for my $80,000 school loan. Second, what field are you in? I am in education/public service, I qualify for the 10 Year Forgiveness Program. I just have to submit paper work each year. Another awesome part of the forgiveness loan program is that I will not have to pay taxes on the left over amount. In the end I will only have to pay back like a third of my loan.
You can also lower your interest rate by signing up for automated payment.
Now, if you don't qualify for the Forgiveness Loan the Income Based Repayment isn't necessarily good because if you pay that low amount you end paying more because it takes you longer to pay off the loan, like 20 years and could add like $10,000 just in interest maybe more.
But my friend decided to apply for the income based repayment and she pays the $900 she was originally going to have pay when she can and when she can't she just pays the minimum which is $350.
Thanks for the input everyone. Now that the end is near, I’ve been feeling really stressed out about these loans. I appreciate everyone taking the time to read my Friday night panic attack. Some other thoughts to add. I am probably going to sign up for the 25 year plan ($500 a month) and try to pay at least $700 anyway. There is no penalty for paying it off early reguardless of what plan you sign up for, so I’ll take the lower requirement incase life gets hairy. I might just make the lower payment for the first year until I get more settled. Also to a large extent my decision will be based on what I get offered where. I’m hoping to ultimately earn an advanced credential which would bump my salary up considerably. Certain jobs make it much easier to get enough specialized hours to get there. If I got offered a “juicy” job close to home I would probably be more open to living at home a little longer.
Another plus I forgot to add is I have a recently divorced bestie who lives a block away from my parents. I can crash a night or 2 here and there to take some of the edge off. I lived at home during graduate school and learned how to hang out coffee shops and stay out of the house, which helps to an extent. My concern is that 6 months may turn into 3 years. I will owe $70,000 but should have 3-4 grand in my pocket when I move back in August, I also have a job back home (not a good one, but enough to stash a few bucks during “layover”) and will likely get some money from family when I finish up. My grandmother has hinted that she’s going to start giving away her money but I’m not holding my breath. In general this is just a frustrating deflating feeling. My slightly older college friends who (unlike me) finished school before the economy tanked are all going to Ireland in August. After working so hard it’s tough to realize that it may be 5 years before I can afford a vacation. Sure I assume most of them are not investing in retirement like I am. That $5,500 could easily be a trip to Ireland, but I don’t want to do that. I know there will be other trips. I’m sure all the hard work and smart decisions will pay off eventually, I just get tierd of waiting.
Nelie thanks for the correction. I was looking around trying to get an idea of taxes but couldn't come up with much. I previously always made so little that I got most of the tax money back. This also reminds me that I should get one more nice tax refund next year before I have to start paying
PatLib I’m aware of income based repayment, I just don’t want to hang on to these loans forever and pay a small fortune in interest. I also don't qualify for loan forgiveness. Thanks for the input though.
There is something about organizing your thoughts and then seeing them on the screen that helps things “click”. Since I started this thread a few days ago I really started thinking long and hard about where I want to be a year from now in a bunch of areas and put some ideas together (some of which I wont share).
I have a 6 month grace period from when I finish up in August. I want to throw every dollar I have from this point on into my student loans and hopefully have them down to $58,000 by the time repayment starts. I then want to consolidate the loans and sign up for the 25 year plan. That would be a monthly payment of about $400. This seems like a realistic goal. I then want to spend the first year making the minimum payments and work on putting together an 8 month emergency fund. Following the first year, I’ll get more serious about paying them down.
My field is especially known for flexible hours and being easy go part time. Therefore it is super realistic that I could work 55-60 hours a week and make $75,000 - $80,000 per year in 2015. After these long grad school/work hours this would be a something of a step down. I can look for work before I get certified in October. I think it is realistic to land my first job in October and then find something part time/supplemental by the end of 2014.
I chose the area I want to live in and decided I that I initially want to sublet and then get an apartment of my own. The goal is to have my own apartment by early/mid 2015. I have great credit due to paying off my car for the past 2 years. If I log a few months at this higher salary, I could easily sign a lease by myself. Then 2-3 years into my career I should earn a credential that would bump up my salary. I then wouldn't need the second job.
Looks like you are figuring things out! You seem much more level headed than was when I started having to pay.
Is there any way you can live without a car? I got rid of my car save about $500 a month with that. I just found an apartment that is within a mile of a grocery store and work (also added benefit of forced exercise!) and I am near the downtown of the city. Obviously, most cities in the US this isn't really possible but there are some inexpensive cities that are totally walk-able and have good transportation. I spend maybe $25 a month in taxis and buses if need it.
I'm not sure what field your degree is in, but if it's in high enough demand, some companies will include student loan forgiveness as a hiring bonus. It certainly would not hurt to ask once you're entertaining offers.
Unfortunately I believe you may be overestimating your take home pay as well. For example, 75k with no medical insurance and 5% for 401k will net about 4200/mo.
Regarding your Roth - hopefully wherever you end up will offer a 401k with some sort of match. It might be an idea that for while you pay your student loans that you only do the 401k and pause the Roth deposits.
I definitely applaud you for thinking ahead financially...if only everyone else would do so.
Student Loans and Adult Decisions
