Getting Rid of my Debt, Part 7: Ding Dong, the Personal Loan is Dead!!

When I first took out my personal loan to cover the gap caused by the difference in the $ I owed on the loan vs. what I could get for it, I told myself it would be gone by the end of the year. I didn’t care if I would need to take money out of savings to do it. I just wanted it gone and now I can start the new year off with a clean slate. And I CAN!!!! (And yes, I did have to take some money out of savings, but I am all the more motivated to replace it in there now.)

Here’s what the total debt looked like at the beginning of this quarter (Sept. 3, 2013): $124,162.34 (student loans plus personal loan)

So here’s what the total debt looks like as of now: $119,448.07 (just student loans)

Difference of: $4,714.27

My financial advisor and I have (well, she did the calculations) determined that to get my private law access loan paid off in three years, I need to make payments of $600/month on it. This, I can and will do. I may also take a bit of the money I make from my freelance job and throw it at the balance too. It’s a loan with a variable interest rate, so right now it’s low.

As I scanned my loan documents over the last few weeks, I realized that at one point, it had even been in the 8% range, and wow, did that make a huge difference on my payment amounts. No wonder I was having so much trouble paying them and had to take deferments and forebearances! I graduated law school when interest rates were so much higher than they are today. It’s why my Masters in Library Science loans are so small in comparison (percentage wise, anyway.) For once, I went to school at the “right” time.

My ex-boyfriend didn’t go to college but chose another career path that has done well by him. To protect his privacy, that’s all I will say. He couldn’t understand why a school (or anyone for that matter) would be willing to lend so many thousands of dollars to someone who hadn’t even yet proven their earning capacity. I see his point.

I’ve been told that my generation will be one of, if not, the, last generation to go to school and come out with so many debt obligations as a result. That’s because we won’t even be able to help our kids (if we have them) by saving for their tuition because we’re still so busy paying off our own. I see this in my sister’s family. Her husband graduated law school the year before me. Even though they have lived in a cheaper part of the country, and have aggressively made payments, they STILL have a balance to pay and her oldest child (she has three) is now 12.

I recently found one of my promissory notes, for my federal consolidated loans from law school. Total amount loaned to me at that time was roughly $71K.  The promissory note detailed that interest on the loan would be about $116K.  So when it is all said and done, the amount I will ACTUALLY pay back on that loan is about $188K.  That’s about 1.5 times the balance. My ex was right – who the hell gives a 24 or 27 year old that amount of money???

Hindsight is always 20-20, as they say. I have beaten myself up so many times over the choice to go to law school, and then to continue on even when I realized I didn’t like it, just because I was afraid to make a different choice. I’m still afraid of things now, but I’m more willing to push through that fear with the faith that things will work out. I was online last night, looking at land sites (dreaming!) in the pacific northwest and it really gave me hope.

I wish all of you a safe and Happy New Year’s Eve celebration. I actually have plans tonight – shocker!! 🙂

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