Note – none of these photos relate to the title of the blog. That’s because student loans are ugly. And well, my surroundings are anything but. So, enjoy.
Some of you long time readers (I hope you’re still out there and I haven’t lost you with my dearth of posts over the last two months) might remember a series of posts I wrote about getting out of debt. I think I had gotten up to “Post # umpteen + 1.” Anyway. That was when I was going gangbusters on paying down one of my student loans. And then suddenly my focus shifted to saving. And saving. And saving. And saving. It’s good that I saved, because moving was not cheap. I had to buy a car, and an RV to live in, due to the lack of rental units in my town, and also just general moving costs that come along with a cross country road trip. Even a gas-sipping kind of car like mine took about $350 in gas for the entire trip.
So, as you know if you read my most recent post other than this one, I finally found out what my pay will be after taxes, at my new job. This is a good thing, because I wasn’t sure at what tax rate I would find myself with the new salary. It turns out to be just under 14% so for planning purposes, I’m just rounding up to 14%. A dramatic change from the 28-29% rate I used to find myself in.
Of course I’m not yet eligible for health insurance benefits at my new job, so the amount will change, but I can figure out by how much and do the calculations. I think that if I live frugally, I can make this work, and still put some extra money down every month to be applied to either my RV or my car payment and get those taken care of in the next few years. Or, the pesky LAL loan that I was annihilating there for about a year. That LAL loan, as some of you may remember, comes with a variable interest rate. Right now the rate is low, so I would like to take advantage of that and get as much of my payments applied to the principal as I can. If the LIBOR rate starts to go up, then I need to watch out, because then the rate of my loan can go up, up to as high as 9%. I don’t foresee that happening with this economy, but you never know.
And oh yes, the Big Daddy Loan. How can I forget that rat bastard? The one that totals up to something like $97K and which I have easily paid at least that much back over the years, yet the balance never seems to go down by any noticeable measure. Well, here’s the thing.
The Big Daddy Loan is actually two consolidated federal loans. With federal loans, there is a repayment plan that can be based on your income, and it’s called (yes, very originally), Income Based Repayment Plan (or IBR, for short.) With this plan, you have to keep reapplying for it every year. As your income goes up (or down), your payment can adjust accordingly. After 25 years, whatever the amount of your unpaid balance is, is forgiven. I believe it gets counted as income to you for that year, but have to double check on that. So, by switching to this payment plan, yes, I am signing up for another 25 years of payments, but at a HEAVILY reduced amount from what I had been paying with my job back east.
Remember how I used to pay $538/month and that was just interest? That was just to keep it from growing?? Well, now I will start to pay $91.31/month. Quite the difference. Yes, the loan will continue to grow. No, I don’t think I will ever make nearly the kind of money I used to make as a reference librarian back east. And yes, I am totally fine with that. I plan to treat it as a utility bill, in my mind, i.e. something that always sticks with you, no matter where you go. For the next 25 years, anyway.
This is not to say that it hasn’t been frustrating to get the payment amount adjusted. To apply for the new repayment plan, I had to send proof of my new salary, but they also asked for my AGI (Adjusted Gross Income) from last year. I knew that this would cause problems, because as some of you may remember, last year, I worked like a crazy person. On top of my full time job, I also worked at the gym part time, and then had the 1099 work doing research for that book. So all together, I actually made more money than I had ever made in my life. I had a feeling that the folks at Navient would not look at all the paperwork together, and “get” the whole situation, even though I had checked off the box saying that my financial circumstances had majorly changed. Yep, as you can imagine, they didn’t disappoint. They sent me paperwork saying “congratulations, your new payment plan will have you paying a total of $1,038/month!! YAY!!!!! (This is where I started to bang my head against the RV table, at least figuratively.)
So, the other night I found myself on the phone, talking to someone who was clearly not a native English speaker, and I was losing my patience. I was told that had looked at my AGI from last year and that’s how they arrived at the new number. He said the paperwork I had sent from my new employer was not sufficient to tell them the salary I would be making. (The letter gave them my hourly rate and told them how many hours per week I would work and I had been told previously it was enough.) I finally said to the guy, “I want to talk to a supervisor and I want to talk to someone based in the US. I am not sending paperwork a third time because someone can’t take the time to multiply my hourly rate times 40 hours times 52 weeks to get my gross salary.” I was then placed on hold for a long time, but everytime he would come back and apologize, saying they were manually processing my application, I just said, in a resigned voice, “I want it taken care of, I’ll hold.” And finally it was. Sigh…..
“Why, and how, Terri, would you do this to yourself?” is what you are probably thinking. I know. To many people, my choices sound insane. But to many others, they look at me, and go “wow. I can’t believe you’re doing this.” Well, I am. It’s a choice you make. Either stay in a city where you don’t want to be (although I have some awesome friends back there that I want to come visit me NOW!!!) and work at a job that pays well, but doesn’t lift your spirit the same way it used to. Or move to someplace where you can make a positive change in the world of animals, and the days go by quickly, and you get to meet new people every day and have an impact on their experience. You just don’t get paid as well. But, as a coworker of mine and I said to some visitors yesterday, you go into a line of work dealing with animals because you love it, not because you want to get rich. And that’s what I have decided to do.
Life is short, people, really short. You never know what tomorrow will bring. For all I know, I could get hit by a tractor trailer tomorrow and then I would have lived my life and not lived out my dreams. If you have even the slightest inkling that you are not where you want to be in life, then start working with that inkling. Take baby steps, every day, to work with it and not against it. Trust me, your gut and heart will both thank you.
So, here are my three big debts I want to concentrate on, in no special order.
LAL Loan = $12,802.84 (2.665% interest rate)
Car Loan = roughly $7000
RV loan = roughly $7300
Both the car loan and RV loan have very low interest rates- the exact numbers just escape me at the moment. I’ll write a post on my budget later.