Tag Archives: student loan

Student Loan Debt: 5 Things I’d tell my Pre-Graduate Self

According to a study conducted by The Project on Student Debt, 7 out of 10 college seniors who graduated last year left with more than a new degree–they also acquired an average of $29,400 in student loan debt. That means 70% of college graduates enter the workforce with a net worth that is in the negative because of their student loans. That. Is. Crazy. I was lucky enough to complete four years of college without acquiring any student loan debt thanks to an athletic scholarship and super amazing parents that were able to chip in to cover the rest. Then came graduate school a few states away from my home and with that–unfortunately–I hopped on the student loan debt bandwagon and found myself with a Master’s Degree and $60,000 student loan debt!

Obviously I can’t (and wouldn’t) want to go back and change everything. I LOVED moving to a different part of the country and exploring an environment outside of the one I had lived in for the past 22 years. I LOVED the people I met, the graduate program I went through, and the experience I had. After living it, I can’t say that I would hop in a time machine and make a drastically different grad school decision if the option was there–even to get $60,000 of student loan debt off my chest (gol’ darn emotions and memories). However, looking back with my wise and student loan debt ridden eyes, I can say that there are definitely a few things I wish I would have done a little bit differently…

1. “Budget”: I have always been pretty good about money. I’ve never been a frivolous spender or someone who had no concept of spending less than what you earn, but I didn’t completely understand what a “budget” was. I thought I was on a budget because I KEPT TRACK of what I was spending AFTER I had already spent it. For example, one month (during football season) I spend over $400 on going out to eat, bars, and beer and didn’t know it until AFTER I had already spent it. My thought process was, “Well next month I’ll spend less”. I didn’t always stick to the plan to “spend less” because I was missing the key concept of a “budget”…I didn’t dictate HOW MUCH I was actually going to spend. Keeping track of what I was spending was a starting point, but it didn’t stop my money from disappearing without me knowing where it went.

Tailgating pics

Tailgating could have been my second major ;-)

2. Get a Job. I go back and forth about this one all the time. I was in a program that was more than a full-time job commitment between classes and clinicals, not to mention homework and studying. I had actually applied to 17 jobs during my first semester (and got calls back from a few), but I was living in a college town and just didn’t have the connections I needed to work in the bar and restaurant industry. I felt like bars and restaurants were the way to go since you take home cash that night and can easily make more than minimum wage. Scheduling was a problem because I wasn’t finished with work or clinic until 5pm or later most nights and restaurants wanted me there earlier to begin the dinner service. All excuses aside, between my schedule and my mindset at the time, I should have gotten some sort of job to create some sort of income.

3. Find another way. This is controversial. Dave Ramsey says, “Don’t loan money to family. Give it as a gift or don’t give it at all”. I definitely know that philosophy is completely correct, but I wish I would have tried asking grandparents and parents for some sort of “loan”, even if it was loaning me the money to buy my books each semester or helping me pay my rent each month. I don’t know if this actually would have happened, but if you have family members that have extra money and want to “invest” in your education, ask if they want to loan you some money (you can both sign a written agreement if it makes you feel better) while you’re in school and start paying it back after you graduate at a low interest rate. That way, they’re investing their money wisely (because we know you’re responsible and would pay them back quickly ;-)) AND you don’t have to eat 7% interest from DAY ONE! It’s worth a try!

Beach Pics

I couldn’t believe I lived so close to “the sea”!

4. State Schools. This one is SO hard for me to put on here, because I didn’t do it, and wouldn’t do it if I had to do it all over again. I loved the experience that I had, but if you’re someone who’s looking to go back home or stay near home (or in the same state), a state school is the way to go. Most of the time they are great schools and cost way less per month than most others (aka a great value).

5. Work/Study & Internships. This is an easy way to “make money” or get cheaper tuition without a scheduling conflict. Most work/study programs are within your program or will work with your program to make sure your hours don’t conflict with academics. Internships are usually within your program and can range from simple to very involved. Not only are these great ways to make extra money, but it’s a great way to make connection and meet awesome people!

Graduation School Pic

Celebrating the end of an amazing (and extremely difficult) two years!

Have you learned any lessons about finance recently?! Follow the “Reply” link at the top of this post to share your thoughts with me and Brittany! If you could reach out to your pre-graduate self to give advice about student loan debt, what would you say?

Student Loan Debt: 5 Things I’d tell my Pre-Graduate Self can also be found on the Financially Savvy Saturday Link up happening over at BrokeGirlrich. Be sure to click on the button below to head on over and check out all the other savvy posts!

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Brittany’s August Debt Progress Report

The graph below summarizes my short term debt progress across all of my individual loans. The blue column represents my debt totals for individual loans as of August 1, 2014, and the green columns represent my debt totals for individual loans as of August 31, 2014. Looking at the debt progress in this format really emphasizes how paying more than the minimum has a HUGE impact on your debt decrease. My ACS Student Loan was my focal loan, and I completely paid it off by the end of August because I paid as much as I could above the minimum requirement. In contrast, loans I am currently paying only minimums on decreased by an average of just 1.4%.

Next month there will only be three loans to report on!!!

Next month there will only be three loans to report on!!!

The bar graph below represents the long term and short term progress I have made on my overall debt. The grey bar represents my original total debt amount, the blue bar is my total debt one month ago, and the green bar shows how much debt I have today. Sometimes it’s hard to feel like you are making progress when you look at your BIG number on a month-to-month basis, but looking back to the beginning can remind you how far you have come!

total debt progress

Having ONE TARGET LOAN will increase the rate at which you can pay off your debt and decrease the amount of money you will pay towards interest to help you become debt free sooner!

Because I was paying above the minimum monthly requirement on my focal loan, the percentage being paid towards interest was very small—only 3% of my total payment went towards accrued interest. In contrast, 38% of the total amount I put towards the loans I am making minimum payments on went towards interest!! You want to pay as much as possible toward the principal because that is what helps speed up the process of eliminating debt. The chart below gives you a visual representation of these numbers.

It might seem like cash flowing money right now is rough, but if you make minimum monthly payments until all of your debt is gone, you will end up paying MUCH MORE than your original loan amounts in the long run

It might seem like cash flowing money right now is rough, but if you make minimum monthly payments until all of your debt is gone, you will end up paying MUCH MORE than your original loan amounts in the long run

Tell your Income Where to Go

The pie chart below summarizes where I delegated my earned income during the month of August. Just over 51% of my earned income went toward debt—that includes my minimum monthly payments and extra cash flow. Just below 49% went toward my living expenses (food, rent, etc.), and no money was put into long-term savings this month.

pie chart

Roadblocks: I did some “back to school” aka “back to work” shopping that was a specialty category separate from my allotted spending money for the month, but I kept that expense fairly low (probably lower than the amount I used to allow myself for clothes alone each month…yikes). I also had a credit card bill that was higher than normal because I used it to purchase a couple of plane tickets to head back to the Midwest for a wedding midmonth. We actually had two weddings we wanted to go to in August, but budget and work schedules only allowed for us to attend one :(

August Dollar Hollaaas: No significant increases in income this month, and I am aware that it will probably be that way for the rest of the year…so I am mentally prepared!

Looking Ahead

Up until this point, I have been choosing my focal loan based on its size. In order to reach my short term goals of paying off individual debts quickly (thus reinforcing my efforts with something to celebrate a couple times a year), I have made the smallest loan my focal loan and thrown all extra cash at it at the end of each pay period. Starting in September, I am going to tackle my debt a little differently.

Because my car loan has a very low interest rate, 97% of my minimum monthly payment is going towards principal. In contrast, my Great Lakes Student Loan 3 has remained stagnate for a year, and this is because less than 20% of my minimum monthly payments have been going toward interest. When that happens on such a large loan, it becomes nearly impossible to stay afloat— and more importantly, impossible to get ahead. That is why I have decided to start tackling my largest debt now.

The most crucial piece of keeping momentum to paying off your debts is to find ways to stay motivated. I know that watching the most stubborn loan I have FINALLY start to decrease will be more motivating than anything else, including paying off my car.  Even better, my car debt will continue to decrease at a steady rate as I make only minimum payments—so I will have visible progress across two loans.

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 Brittany