Interest-ing

From the blog I found and liked, I happened upon this link:  http://www.vertex42.com

Now I’ve only been using it for about three days, but it’s nice to see how much of each payment goes to interest in a nice little column.  A few months back my federal loan servicer changes. Now as a background, I had switched to income-based repayment, then very shortly thereafter moved to a place where I don’t have to pay rent.  As a result, I continued to pay the non-income based amount, so even though it showed $0 due every month, I was always paying about $500 each month.  When my servicer changed, I had some issues.  First, I got a few emails about the fact that my servicer was changing and I didn’t have to do anything, they would contact me when the switch was all made.  I set up a log-in anyway, and thought it was odd when a while later they still hadn’t contacted me, so I logged in.  It says my $900+ payment from last month is late, and another is due this month.  Now I know I was paying an income-based amount for a month or so, and that this means more interest is accruing than I’m paying, so when I get off income based the payment might be slightly higher…but not to the tune of $400. I call them and try to figure this out and they’re completely useless.  They tell me I can request income based payment if I need to, but generally they don’t know anything.  Whatever, I pay the $1,800 before even talking to them, because I’ve been working extremely hard at building my credit and the last thing I need is for “late” payments to ruin that for me.  Looks like I’ll just have to spend less on nonsense, but the extra $400 a month isn’t something I can’t handle.

Lo and behold, a month or two ago I log in to pay, and I only owe $400 or so that month.  I didn’t request income-based, so what’s going on? Turns out, under my old servicer, I was on 20 or 30 year repayment, because my total debt was (way) over $30,000.  And when the new servicer took over, they decided to just wait a few months, and bill me an extra $1000 during that time, before putting me on the plan I should have been on.  Now because I don’t pay rent and have a decent income I was able to deal with it, but many other people in my debt-paying situation would not have.

But now that the background is done, we get to the moral of the story.  I can pay the $450 or so that is due every month, and when I look at my fancy put-everything-in-one-place excel sheet I see that $426 of that is going towards interest.  So in my $450 payment, I’m making a $24 dent into my principal.  NO THANK YOU.  So while I have the plan of throwing extra money at my debts in a specified order, I’m instead paying the $925ish that would be due if I was on 10 year repayment for these two (payment combined) loans.  I also make rounded up payments to each loan payment, so I’m not technically throwing all my money at my debt in my predetermined order, but hopefully I’ll start seeing small dents to go with the big ones.

Screen Shot 2013-09-28 at 8.49.03 AM

(This screenshot took me way too much effort–and is still way smaller than I would like.)

On another note, My mom got me a Starbucks card.  We’ll see just how long I can make it last. I’m hoping that with the $25 I added to my card myself yesterday I won’t have to add any more in October (and maybe even a little into November? Wishful thinking?)

 

 

Rebecca Black says It’s Friday

It’s Friday!  Two days from the next end-of-month payday, and six from the next bi-weekly payday.  My next bi-weekly check will be the first full one since probably June–wouldn’t it be nice to have paid holidays and/or vacation days?

With the exception of gas and parking, and my one cave-in on the Auntie Anne’s pretzel, I’ve spent no money this work week.  My big boss goes to lunch everyday and keeps inviting me, but I’ve brought all week–same for coffee.  I did add to my Starbucks card this morning, but considering I usually budget $80 a month for coffee (and yes, I know how ridiculous this is) and this month I’d spent 30 so far, I’m not feeling guilty about buying today–plus I’m pretty much out of K-cups.

I’m planning on dinner and a drink with friends on Monday, and bringing a small housewarming gift to a gathering on Saturday (likely a bottle of booze), as well as buying gas tonight–but that should be all of my money spending for the rest of the month.

It seems a bit arbitrary to me to cut things off by month–I can’t buy more groceries or body wash until Tuesday, but you have to make the cutoff somewhere.  Generally I just borrow against the next month–“I’ll spend money on this now, and just spend less next month,” but that never actually happens, I just spend the more money.  I’m hoping by adjudging my budget at the beginning of the month for the expenses I know I’ll have at the beginning of the month will make me stick to it more.  I know already I’ll be spending a chunk in the “other” category next month, so I’ll allocate more in advance, and see where I can save elsewhere (like in not buying delicious coffee…)

Humble Beginnings

Starting around the new year, I started making efforts to get my financial life in order. I had been paying at least the minimums on my credit cards for several years, but I had about $120,000 in total debt between 9 student loans (AFTER consolidation of my federal loans) and a couple credit cards.  The Capital One card was pretty much at its credit limit, and the other is a CareCredit account, which I don’t really use.  The beginning of my efforts included trying to keep track of what I spend, and see how much I’m spending on nonsense.  I still have been spending a lot on nonsense in these last eight or nine months, but now I have a better idea of how much, using Mint.  In my quest to make Mint work with one of my loan services providers, I came across a personal finance blog by someone in a similar debt-laden boat, and thought it might be a good way for me to keep track of my progress and look back at my successes.  Anyway, I had wanted to start putting some money away, but the tax man came in April to make a huge dent in the savings I’d made.  But then I decided that I should be throwing my money at my debts as much as possible, so I’m living with a little bit of savings for the time being.  

I started paying off my credit card, with a limit of $3,500 and an interest rate of 22.8%. When I started the balance was probably right around $3,400.  I started paying in chunks of $500 or so, and after about two months of that I applied for a Chase card, with a limit of $5,000 and an introductory 0% interest rate. I did this not only so I could transfer my balance over to the 0% rate (I paid a one-time balance transfer fee of about $70, as compared to the around $60 a month I was paying in interest), but also so that I would have more available credit, and would therefore be using a lower percentage of my available credit.  The balance was paid off in probably another two months or so, and I’m happy to report that, while I have occasionally used the cards (and I have one charge that automatically goes to my Capital One account) I haven’t paid interest since, because I’ve paid off all charges within the month.  By opening the card now I’m hoping it will be a few years old when it hopefully comes around time to consider buying a house, and the average age of my accounts will be older.

With no credit card balances, I’m now tackling student loans.  I have FIVE student loans from undergraduate that have a comparatively fantastic interest rate of 3.25%, the highest balance was around $5,000.  I also have $75,000 in federal loans from law school, at 6.875%, and some loans from my law school at 5%, initially another $25,000.  While my undergraduate loans have the lowest interest rate, they also have a co-signer, and the lowest balances, so I decided to tackle these first.  These are also private loans, so there is no possibility for income-based repayment in the future (should it be necessary in the future) and they aren’t discharged if I bite the dust–on a related note I also got some term life insurance for about $20 a month, and I’m not sticking my co-signer with my debt–not a cool thing to do for someone who did you a huge favor that allowed you to comfortably stay in school.  The other reason to try to take out the private loans:  because they are five separate loans, they show up as separate open accounts on my credit report–too many open accounts with fixed monthly payments doesn’t look good.  I can halve the number of accounts I have open while actually only eliminating about twenty percent of my debt, hopefully helping my credit.

Student Loan number one had a balance of a little under $2,600 when I started tracking all my debts in December 2012.  I’ve been steadily paying $100 or so over my minimums almost every month since then, but in the last month I’ve really been making an effort, because I see how low the balance is, and how there’s really no reason why I haven’t paid it off yet.  In my last two paychecks, I’ve paid a total of $600+ extra, and my balance is down to less than $1,200, which I’m hoping to pay off in the next two months (particularly given that I will get three paychecks from my main job during October).

So that’s where I’m at in terms of debt. Next:  budget.  Every month I’ve been spending more than I should be–on what?  In September I’ve been pretty vigilant though.  I should come in under my budget, in spite of the fact that I’ve had two weddings to go to–between gas, gifts and hotel, I spent very little on “Everything Else” this month. I bought no clothes, barely fed my iTunes addiction. So far this month I’ve spent $31 at Starbucks–that’s 6 or 7 coffees for me.  Delicious, delicious venti caramel cappuccinos.  I’ve made my own coffee every day so far this week, as well as bringing my lunch, both of these will be the death of me/my bank account.  I really need to start planning meals better, and scheduling when I’m going out to lunch or for drinks ahead of time, instead of buying for lack of planning.

When I look at my transactions the last two weeks, in terms of things I shouldn’t do, I see three or four lunches at work, and a few lunches by my house.  I also went out to dinner with some friends, but that was planned spending.  This week no coffee and no purchased lunches (though one Auntie Anne’s pretzel–worth it).  We shall see what I can do in October.  I’m hoping that by sending most of my money to my loans as soon as I get it, I’ll be less tempted to dip into my meager savings to supplement spending.

A few final thoughts:  I need to start throwing a bit of money into savings because I expect that I will be likely owe taxes again this year.  I likely won’t be able to deduct any of the thousands in student loan interest I’ve paid this year because I make too much money (the threshold seems so low, given that in order to make “so much” money I have two jobs, and over $500 a month in commuting expenses).  I also need to plan my spending for October–I have to pay my bar dues and I have a hair appointment, and have a few plans with friends that I need to plan for, so I don’t spend too much money outside those things.  In an effort to help this, I’m hoping to wake up early tomorrow and make the early train.  If I can get myself out of bed early enough in the next few work days, I’m going to start driving to a different train station, 30 miles closer to my house, and with free parking (for the rest of the year).  The monthly pass is a bit more, but I’ll make up for it in gas and parking.  We shall see how it goes.

One more thing:  I really enjoyed tracking my net worth over time through Mint.  After my federal loans got transferred to a different servicer, I kept getting an error updating the old servicer account–so I thought “I’ll just delete it.”  As a result, it deleted all the account history, and even though I’ve re-added the account, the history won’t come back (Mint had like seven pop up windows warning me about this, but I chose to ignore it in my frustration–my own fault). As a result my pretty bars tracking my net worth aren’t accurate anymore.  My guess is that when I started out my net worth was about ($116,000).  As of this moment it’s about ($110,100).  I’m hoping to be in the five figures by June, 2014 (including paying off 3 or 4 of the first five student loans).