Student loans….student loans….student loans….remember those??!!

I believe this is called a "steeple" formation - over time, it erodes away into an "island."
I believe this is called a “steeple” formation – over time, it erodes away into an “island.”

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.

Yes, those are bison. Yes, that is a cute little baby bison! And yes, they were THAT close to my car!
Yes, those are bison. Yes, that is a cute little baby bison! And yes, they were THAT close to my car!

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.

The view from my walk the other day. Absolutely amazing!!!
The view from my walk the other day. Absolutely amazing!!!

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.)

The view from my town's city park - can you believe it??
The view from my town’s city park – can you believe it??

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.

Grand Canyon, North Rim. I love taking pics with trees in the foreground for scale. The clouds were gorgeous.
Grand Canyon, North Rim. I love taking pics with trees in the foreground for scale. The clouds were gorgeous.

Getting Rid of My Debt: FINALLY some good news (I think)

I called up Navient today – they are the company that has recently taken over my loans from that EVIL BEE-ATCH, Sallie Mae. Have to say, it was nice talking to someone who didn’t sound like she was reading from a script and could actually answer questions. When she heard that I had already been paying my loans for 17 years (and she could see my balances), she said “oh, that makes me feel sick.” I said “trust me, if it makes you feel sick, you have NO IDEA how sad it makes me feel.”

Someone commented last week that they know about “student loans” and they hear about “student loans” but it’s another story to see them. So I need to put down some cold, hard numbers here. In addition to my LAL loan (which is private) and has a current balance of $13,390.70, this is what is sitting there for my federal loans:

BIG DADDY (consists of my federal law school loans):

Loan 1-09: $44,347.24, interest rate of 7.5% (fixed), unsubsidized
Loan 1-10: $30,821.51, interest rate of 7.5% (fixed), subsidized

TOTAL: $75,168.75

SIMMONS (consists of my library science school loans)

Loan 1-07: $9,106.26, interest rate of 1.62% (fixed), subsidized
Loan 1-08: $14,081.79, interest rate of 1.62% (fixed), unsubsidized

TOTAL: $23,188.05

GRAND TOTAL of FEDERAL LOANS: $98,356.80

GRAND TOTAL of ALL LOANS: $111,747.50 (including my LAL of $13,390.70)
Anyone depressed yet?? This is what the loan system has turned into! This is after 17 years of paying on the $75K portion of Big Daddy and the LAL loans, and paying for 10 years of paying on Simmons Loans!!  Ok, I digress and will stop ranting.

So, the good news: next year, when I change my living situation and move (probably south, but definitely someplace warmer), I will apply for what is called and Income Based Repayment or IBR plan. With this plan, I will never have to pay more than 15% of my AGI as long as I keep reapplying for renewal of the status every 12 months.  I know that as a veterinary assistant, my salary might be somewhere in the 20-30K range (and the 30K range is kinda pushing it.) So I asked the Navient person to run some numbers, if I had an AGI of $25K and 20K, respectively. Whereas right now I am paying $538 a month just to keep my loan from growing, my payments would go down to about $93/month and $33/month, respectively.

What’s the catch? You know there had to be one, right? Of course there is. The catch is that the IBR plan will last for 25 years. At the end of the 25 years, whatever amount is not paid off will be forgiven. (There is some question as to whether that amount would then be imputed to you as taxable income for that year or not.)  So if I were to do something like that, it could be conceivable that I could be paying off law school (and Simmons) loans for 42 years. You read that right. 42 years. And that’s if I changed to that plan right now. However, changing to that plan right now would actually raise my monthly payments, likely to something around $700, so if I do switch repayment plans, it’s not going to happen right now. I’d be paying something like $1800 to save myself somewhere around $360 or $1080 (depending on how low my salary is) to end the loan 25 years from today instead of 25 years from next fall.

So here’s where I am at. I don’t love the idea of paying loans for another 25 years, obviously. I’m already 42. Who wants to pay until they are almost entitled to social security and are almost three times the age they were when they first got out of law school? (I was 24.)  However, since I feel like I have paid for these loans already at least twice, I don’t feel too badly about making the government wait and wait and wait to be paid these amounts, and to then be paying  smaller amount overall. I know as a vet assistant, it’s not like my salary is going to drastically change over the years. It’s not like I could ever make it back to the salary I am making right now, I know that for sure. And, since I have learned to live simply, I could maybe afford to save a bit at the same time too, so I’m not living hand to mouth. I still want to be able to save for retirement, even if it’s at a smaller rate per year. And keep away from the credit cards, because those can bury you. Luckily, I don’t have any of that debt right now. And I would hope that working as a vet assistant, I could maybe get a break on vet care for my herd. 🙂

Unfortunately, society just doesn’t place such a huge monetary value on those who care for animals. It’s not like I’d be running a huge investment bank or anything important like that, right? (Don’t even get me started on that kind of rant about executive compensation getting out of hand…again, I digress. Sorry.)

I do still plan on paying off that LAL loan by the time I move. I could pay it off right now – I have enough in savings, but it would definitely put a damper on what I have saved. And it feels good for  me to mentally keep looking at the savings balance I do have and know I’m getting somewhere. Right now, so much of my payment on that loan goes to principal, that my financial advisor suggested I keep hoarding cash and then take a look at things in the spring or summer and decide to pay it off then. That way if anything else happens in the meantime, expected or not, I’m prepared and have some liquidity.

I find it somewhat sad, but this actually seems like good news to me right now.  Any thoughts from any of you? If so, please drop me a note below.

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