Jumping in! ($94,373)

I gave a call to the bank on my potential student loan refinance, because I got conflicting emails. Turns out, when they initially entered my monthly mortgage payment into their system, they added an extra digit somewhere, resulting in a $13,000 monthly payment. I now understand why they wanted a cosigner!
But they confirmed that it was fixed and requested some documentation, which was easy to produce (paystub, current loan statement). I checked the status today and not only was I approved, but I was approved for the lowest possible interest rate! I will now have to pay $558 as my monthly payment, instead of $501, but I’ll be moving from an interest rate of 6.625% to 4.74% (after the .25 reduction for setting up automatic payments, which I did).
Too much text. Let’s see some screenshots of what this gets us:

Paying $575 (rounding up my minimum) at my old rate:

Screen Shot 2014-09-24 at 7.26.04 PM

Paying $575 at my shiny new interest rate:

Screen Shot 2014-09-24 at 7.26.28 PM

 

Paid off a year and a half earlier with a whopping $8,519 in total interest saved!  And this is without any additional snowballing to the loan to pay it off earlier.

My original intent was to pay of my undergraduate loans (3.25% – with a cosigner), then decide between attempting to pay off my higher interest federal loans (6.625%) or my “law school loans” (5%).  Now that my “federal” loans are at a lower interest rate I think it makes sense to hit them in the following order:

UG3: $537.28 (Projected November 2014)

UG4: $3,131.99 (Projected March 2014/bonus time?)

UG5: $4,646.23 (I can’t predict the future here)

Perkins Loan: $6,387.96

Law School Loan: $13,683.27

“Federal Loan”: $70,300 (ish)

I will also pay off any remaining balance on my federal loan (interest accruing before the refinance payment comes through) next month.  I’m happy that all of the smaller chunks in the “law school loans” category will now be at higher interest rates than the big daddy federal loan, so that eventually/$28,000 from now, I’ll only have one loan open!

 

Student Loan Refinance ($93,974)

I’m not going to wax poetic with you here about Elizabeth Warren.  Interest rates go up and down. When interest rates go up, we don’t ask the federal government to adjust our fixed rate loans accordingly, now do we? Because they’re fixed rate loans.  People want the benefit of a variable interest rate when it helps them, but they don’t want the risk of rising rates.  I don’t think the government should adjust rates on the contracts we entered into.

With that said, I think there should be a MARKET for refinancing student loans, and there seem to be some options out there. Should a bank refinance your loan if you aren’t currently paying? No, because that looks pretty clearly like a bad investment of their funds.  Should you be able to refinance if you have good credit, and a good history of paying your loans? Yes–this can be a good deal for banks, as they are getting an interest rate on their money (say 5%), and for the borrower who is currently paying, say 6.625%.  The thing about student loans is that they generally come from the government, or the government otherwise allows them to not be discharged in bankruptcy because otherwise no one would give an 18 year old that much credit in the first place.  Non-dischargability is the price you pay for the ability to borrow when no one in their right mind would lend you money.

I’ve completely gone off on a tangent on the purpose of my original post.  I found a bank that offers loan refinancing in my area and applied.  The lowest interest rate they offer is 4.74%.  Still much higher than what current students are getting, but much lower than the 6.625 I’m currently paying on most of my loans.  Could be a good deal, but without the benefits of borrowing from the federal government (the possibility of income based repayment if needed down the line; special programs for working in public service or being in the military).  I was willing to forego these benefits and applied.  I got two different emails back. The first told me I needed a co-signer and the second said I need to send them some additional documentation (proof of current payment amounts, paystubs, etc.).  I’m not sure if the first one was sent inadvertently, and the second is what I should be acting on, but I’ll give them a call.

Which brings me to my point.  The man seems to think asking someone to cosign for me is no big deal, but I don’t agree.  I’m not concerned about meeting an untimely death. I have life insurance and can get more relatively inexpensively.  The issue is if for some reason I were to lose my job, and unable to timely find a replacement, it would be bad enough if my credit got damaged, and late fees were incurred.  It’s much worse if someone else like my dad now had to pay the $550 a month, or risk harm to his credit. The $500 a month doesn’t seem like small potatoes to me. I know I would need to make serious changes if I suddenly had an extra expense of $500 a month.

So normally I just write to write, but today I’m going to ask what anyone reading thinks?  Is saving $1,000 in interest a year worth the additional risk to a co-signer?  I don’t mean just in whether you would feel comfortable co-signing, but would you feel comfortable putting the risk on someone else?

 

N.B.  At the lowest possible 4.74% interest rate, my payment on a 15 year loan would be $558 a month.  That’s $57 more a month to pay off my loan (making minimum payments) in 2029 instead of 2042.  Damn.

The Most Un-Romantic Blog Post You Will Ever Read ($93,724)

I got married last Friday.  That was our plan BEFORE we got engaged — hence my extreme surprise when a ring was presented to me.  My boyfriend/fiance/hubby (I’m never really sure what to call him) is currently a student, and we bought our two-family house together.  I wanted to ensure that I could put him on my benefits, because I wasn’t sure if his having an income would affect his insurance eligibility, and I’d rather not have to scramble if he were to find out that he now has to pay a huge amount.

But insurance benefits aren’t the main reason we got married this year.  Tax benefits are.  Getting married this year instead of next year means about $6,000 less in tax liability.  That’s a lot of money when you’re planning a wedding/bought a house/paying off debt.  So we got legally married for about $150 in marriage license and officiant costs.  We don’t really consider ourselves married for any purpose other than taxes and benefits, and we purposely planned to do it on the same day as our wedding celebration next year (only one anniversary to remember).

While updating my benefits, I also updated a few more things.  I decided to change my withholding to married, which will lower my tax refund, but will mean more money in my pocket now.  Offsetting this, I increased my HSA contribution.  I’m hoping that I am able to make a lump sum contribution to the HSA around bonus time next year, so that we can get LASIK for my man–I had it about six years ago (is it really possible that it was that long ago?!) and it was some of the best money I ever spent. I mean, I financed it, and that wasn’t wise, but otherwise it was definitely worth the cost.

I also increased my 401(k) a percentage point.  I’m now contributing 8% of my salary.  I would like to do more, and I have it set up to automatically increase a percentage point each year, around what I think is raise time.  Ideally I’d like to be contributing 15% (or really the annual maximum) to make up for the amount of time I contributed nothing towards retirement. The lovely website recommends saving 10-15% of salary each year, which I assume is geared toward helping you maintain your existing level of comfort in retirement.  The good news is, I certainly don’t spend money (on housing, food, etc.) like someone who makes my salary–because I’m sending $1,000 a month in student loans.  So really, I’m living like someone who makes at least $15,000 less annually.  This makes me feel a little bit better, but as soon as those loans are paid off, I want to ensure I’m contributing at least 15%.  Hopefully it doesn’t take me 15 years to get there.

I Said Yes to the Dress ($93,905)

And I even deducted the cost from my net worth!
I went to David’s Bridal for the second time this weekend, intent on trying on a specific dress. I had the same intent with a different dress last time, but it was discontinued and they didn’t have any left in the store. In both cases, I had been creeping on an eBay listing. The first one was used (you know, once) and going for $450. After trying on some dresses I basically decided that the silhouette wasn’t for me anyway, so no big loss.
In between DB trips, I stopped at a place that I heard was going out of business. They had exactly zero dresses in my size, but the saleswoman convinced me to try on a dress that was three or four sizes too big. I liked it, especially the shape of the dress, but it had a lot of folding action and zero lace action. It was also on sale for $600, down from $900. While I appreciate saving $300, I really didn’t see this as a dress I’d pay $600 for. Then add in the massive amount of alterations. And while I’m confident in the seamstress’ ability to take the dress in, because I’m so much shorter than that size, I didn’t think the folds and curves would be in the appropriate places. Next!
So I continued to creep on eBay and saw a dress I thought looked really nice, and what I was looking for. The seller apparently cancelled her wedding, and was trying to recoup some losses on the $1,350 dress and $600 in alterations–removing the sleeves and changing the neckline. I let one auction with a starting bid of $450 lapse, but it got relisted almost immediately. So I figured I would try it on while I was in the store, and I loved it, except for the top, and much preferred the top of another dress by the same designer–very similar to what she had altered.
So when I went to go bid on this $450 listing I discovered that she has dropped the starting bid to $400, with only a couple days to go. Sweet!
So that’s my story about spending $450 on $1950 worth of dress. So far I’m okay with my wedding budgeting.

Cheating! ($93,055)

By posting my net worth on a payday!
I just got really depressed looking at the last year of net worths on my Mint. I just realized that what I was looking at was actually my change in debt, and therefore is slightly less depressing, but it could always be better.
It’s a little hard to see on the bar chart, but I’m giving it anyway. Maybe I’m just not a “visual learner”:
Screen Shot 2014-09-05 at 8.49.36 PM

And for you numbers folks (like me!): *
Screen Shot 2014-09-05 at 8.49.52 PM

So in the last year, my net worth has gone up an average of about $1,000 a month. Now that’s nothing to sneeze at, I guess, but is it really going to take me another 8 years to get above 0? Sweet lord, that would be terrible. And I know I’m going to spend a crap-ton on the wedding. It’s really disheartening when you consider that I’ve made good money for the last 8 months, and I feel like I have little to show for it. I have to remind myself that (1) we bought a house that we put about $10,000 down on, and have had many associated new house/moving expenses, and we really think it’s worth more than what we paid, (2) I have a 401(k), with a vested balance of $5,000 (this is actually really not a lot of money at all, considering my age, but it is something. When we become a two income household I plan on stepping this up, and I’m hoping raises and bonuses will assist too), and (3) we’ve got another $1,000 in our “house” account, because we’re saving the money we collect in rent. So I’m definitely not in too bad of shape. $12,000 in twelve months doesn’t seem like a good net worth job, but $28,000 seems decent. I’m really glad that I’ve had the better paying (same) main job over the last 8 months, because I’m really going to miss the extra monthly paycheck at this time next year.
One bright spot: the greatest change in my net worth in the last year was from April to May. I realized that this is because May is a three paycheck month for what is now my only job (really, May was a four paycheck month when I had the second job). And that magical three paycheck thing happens twice a year, the next time being next month. Woohoo!

*(that close parentheses and the colon made a frowny face)