The misadventures of a first time father

Tag Archives: college debt

Eight years ago, I was single, working as a newspaper reporter and living on my own in an apartment.

Oh, yeah. I was also buried in debt – student loans, credit cards, car payments, you name it.

It’s not something I’m proud of, but as I’ve chronicled here in the past, I put all this out there for two reasons. The first is as a motivator. By admitting to the mistakes of my past, publicly, I hope to be less likely to repeat them. The second is because it is a reminder for me of just how far I’ve been able to come at eliminating debt.

Back then, I felt trapped, helpless, that this was going to be the way it was for the rest of my life and there was no way I could possibly get myself out of it. At times, I even took the absolutely wrong approach of looking at myself as a victim. I blamed the credit card companies, I blamed the banks, I blamed everybody because I felt ‘preyed upon’ in my youth, I didn’t know what I was getting into, etc. That didn’t help matters.

But in time, I realized I had to sink or swim. I got serious about it early on, but my desire to “clear up the books” only intensified when Meg and I got married, and hit overdrive when we had our little guy and began to realize that one day, there’s a good chance we could outgrow our house.

Before he was born in 2012, I had managed to clear up the credit card debt and now live completely credit card free. It’s incredibly liberating. Planning budgets, spending only what you have, saving for something if you really want it. It’s like a great big puzzle, but one that is so absolutely satisfying when you’re not owing money (and interest) to someone.

We bought our current house as a foreclosure and fixed it up, keeping our mortgage low but putting a nice roof over our heads and a warm place for our family to grow.

With the credit cards paid off, I began, as noted in earlier posts, to focus on student loan debt via Dave Ramsey’s Snowball Method to debt. With four student loan lenders, I took focus on one at a time (making regular payments to three of them), but throwing as much extra money as I could at the one with the smallest balance.

We’re often told to go for the one with the highest interest rate, but there’s a psychological aspect to paying something off. It motivates, it makes you feel like you’ve accomplished something, and hitting the lowest balances first allows you to do that and feel great about it, making you want to move on to the next.

So for me, I tackled Keybank. Once they were paid off, I moved on to National Education, taking all the money I was paying each month to Keybank and ‘snowballing it’ on top of my regular National Education payment. Before I knew it, I had that student loan paid off as well.

That then led me to two student loans and a car payment. The car payment was the lowest balance between all three, so I took the payments I was making to Keybank and National Education and snowballed them on top of my car payment, which has just recently allowed me to pay off my car more than a year early.

It really feels incredible.

This is where I was in May 2014:

National Education – $1,500

Car Payment – $6,800

Sallie Mae – $12,200

Discover/Citibank Student Loan – $23,000

Here’s where I was in September 2014:

Car Payment – $4,833

Sallie Mae – $11,878

Discover/CitiBank Student Loan – $21,379

And here’s where I stand now:

Sallie Mae – $11,379

Discover/CitiBank Student Loan – $19,386

I’m not one who needs a new car every few years and believe me, if I can maintain the one I have and get it to last as long as possible, I will be thrilled to do so, because now I own it. No bank, no dealer, just me.

Believe me. I’m the guy who is still using the old 4:3 television set I got as a Christmas gift from my parents in college 15 years ago as the family TV in our living room. I’m not one obsessed with spending money on the latest and greatest.

Of course, now there is all that money that was going toward these snowballed car payments each month, which has totaled out to roughly $700.

So, from here, I stood at a crossroads, determining what to do with that $700. If I were to continue on in the purest form of Dave Ramsey’s Snowball Method, I would take that $700 and apply it on top of one of the two remaining student loans. But, there’s other things I’m taking into consideration, including the possibility of needing another car eventually and the fact that one day, we might need to be looking for another house if our family grows out of the current one.

With that in mind, I’m doing a sort of ‘partial snowball effect’ from hereon in, taking $200 of that car payment money and applying $100 extra toward each of my student loans (Discover and Sallie Mae). It will likely take about five years to pay them each off, but that’s better than the 9 remaining years if I were keep making basic payments on each.

That leaves $500 of non-earmarked money that can be put away for any variety of things – whether that be some toward an emergency down payment for a car one day, a little money put aside for Christmas shopping, building savings, or just eventually being able to have some more money to put toward a mortgage if we decide it’s time to find a new home.

I’m not writing this to brag. The reason I’m doing this is because I once felt so buried that I saw absolutely no hope that my life could get better, but it did. It took time. It took cutting back, living a little more simple, not having everything.

But the feeling of a possible future that’s not tied to a shackle of debt is one that can and will keep me going.

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Paying BillsWhat a feeling.

If you’re just tuning in, some months ago I decided to apply what’s known as The Snowball Method of what remains of my large debts. It’s all steps toward as much of a debt-free life as I can muster, and to show my son that no, debt is not just ‘something you’ll always have,’ as so many of us, myself included for many years, were led to believe.

Some years ago, I decided enough was enough and started taking control by paying off roughly $13,000+ in credit card debt. But I was still saddled with four student loans from four different banks, and a car payment. For the purpose of this, I am referring only to debt accumulated through borrowing (including a car, but excluding out home), not monthly bills for services.

With that said and the credit cards paid off a few years back, I had taken aim at my four student loans. One student loan (Keybank) was paid off earlier this year. I then used the Snowball Method and applied everything that was being paid on that first student loan toward my second student loan, on top of my regular monthly payments.

To recap, this is where I was in May:

National Education – $1,500

Car Payment – $6,800

Sallie Mae – $12,200

Discover/Citibank Student Loan – $23,000

Well, last month I’m very glad to say that the National Education is now paid off too. This was accomplished by taking the roughly $300 ($150 each paycheck) and applying it on top of my monthly payment of $75 to National Education.

Four months later, my debt now looks like this:

Car Payment – $4,833

Sallie Mae – $11,878

Discover/CitiBank Student Loan – $21,379

Now, all that money (the $300 originally from Keybank then to National Ed, on top of the $75 from National Ed normally) will get applied on top of my usual monthly car payment of $325. That’s $700 a month, roughly toward my car payment. By my estimation, I should have my car paid off by late winter/early Spring, leaving me only with two student loans to worry about each month.

It may no look like a lot on paper (or screen, as it were), but the feeling to know there is one less in that stack every month is invigorating. Knowing that within a few months that can be down to two is rejuvenating.

Even if I get down to the two and only continue my regularly monthly payments, that frees up at least $700 a month for our family. Money that can be put aside and saved, or even put toward a new home someday as our family grows (not growing yet, just for the record. But we hope to someday).

And I’ll be very happy and proud to know that through saving, determination and hard work, I was able to earn it for us and to teach my son and any other children we may have that it IS possible to live within one’s means. That you can get by without credit cards, without a big television, or the latest technology, and still live full, enjoyable lives.  We can still be one big, happy family and we can also be debt-free (or close to it) at the same time.


Bill Kenwright production ofSCROOGEwith Tommy Steeledirected by Bob ThomsonWhether it’s writing a check for your car payment or clicking ‘pay online’ for that student loan installment, carrying around debt can often times feel like you’re dragging along the undead chains of Jacob Marley.

That’s why I’ve already started the ball rolling in the past few months on what I want to take full-strength into the end of this year and the start of the next – paying it off. It’s possible to have a debt-free life. Oh, I know there will be bills to contend with, but debt is not the necessity that so many of us have been fooled into believing is necessary.

That whole idea that you need to spend some credit to get credit?

Nah-uh. I no longer buy into it. Why create more debt for yourself so that you can add to that debt or create new debt later?

I’m not preaching from on high on this. I’ve been saddled with debt for a very long time. I transferred around colleges a lot, including two years at a private school before going back to a state school. During that time, I frequently would get those student loan notices in the mail that would offer me the chance to make a payment then, but would read “$0.00 due.”

Well, the coffee shop barista/movie theatre projectionist who was working while in school and had expenses to pay for (apartment, food, gas, car payments, etc) chose to focus only on that “$0.00 due” and never gave a thought to the bigger picture. “Graduating college was a long time off, right? I’d get a great job and pay those off in no time when the time came.”

That’s what I told myself.

After college came some very low-paying jobs…and credit cards were added to the mix. I should have seen the warning signs early on that when I was relying on credit cards to get me through gas fill-ups on the car, among many other things, there was an issue. I didn’t see it, or chose to ignore it and I paid for it, with interest, later on.

Fortunately for me, it took about 3 1/2 years, but that credit card debt, all $10k+ of it was paid off in full several years ago. I can’t express what that felt like. It was like a boulder had been taken off my chest, and to know that I was able to pull that boulder off with some hard work and dedication, made it all the greater a feeling.

After that came paying off one of my four student loans, this one through Keybank. (Don’t you love how banks can sell/buy your debt around to each other, splitting off loans, adding to your monthly payments, as if you were an indentured servant? It’s scary.)

These days those ‘debt chains’ consist of the remaining three student loans and my car payment and I intend to pay them off as quickly as I can. It’s a lesson I learned but wish I hadn’t done so through “trial by fire.” I started an Investment Fund (with the intent to be used for education) for our little guy the minute I could, as did some relatives, contributing a little each month into investments that can be used for his education, should he choose to when he’s of age. It’s a head start for him, and it’s all in an effort to make sure he doesn’t repeat the same mistakes that I did.

So, I’m on the mission to pay this stuff off, sooner rather than later. Why am I telling you this and putting it out there to the blogosphere for all to see my financial shame?

Easy. The answer is – pressure.

tim_foley_student_debt-articleCurrently, how much I have to shell out every month and how much debt is still hanging over my head is known really only to me, my wife, and some of our family. I feel that by putting it out there, there is more pressure on myself to stick with it, to make it happen, or else I’ll have to admit to you and all the world on here that I failed, that I caved, that I didn’t see it through. And I see things through, even the not so great ideas.

I’ve read of something called the ‘Snowball Effect,’ where, once you pay one debt off, you take the money you were paying into it each month and throw it at another debt like wood into a fire. Disregard higher interest rates. You throw everything at the next lowest balance and pay the minimum on the rest. When it’s paid off, you take all that and throw it on top of the next one, etc, etc.

With that said, here’s where we stand (these are rough estimates):

National Education – $1,500

Car Payment – $6,800

Sallie Mae – $12,200

Discover/Citibank Student Loan – $23,000

So here’s the plan. I had been paying $75 on National Education every month. I’ve taken the money that went to Keybank ($150) and applying that to National Education EVERY PAYCHECK, on top of the monthly $75 I was making. So, that means I’ve gone from paying them $75 a month to $375 a month. By my estimation, that should have National Education paid off by the fall.

Once that is done, that $375 then gets tacked on to the $325 I already pay every month on my car, meaning I’ll be making $700 payments on my car each month. If I did the math right, that should wrap that up by the middle of winter.

Hopefully, you see where I’m going with this.

So, there you have it, interwebs. That’s my plan, and I would never share something that personal with the world if not for the need that by putting it out there, I feel the pressure to stick with it every month. It can be done, and it will be done.

But I will admit that I’ve given myself the clause that after National Ed and the Car are done, that I could use that $700 towards a mortgage if we’ve found a house in an area we like at that point. We’ve only been casually looking as we continue to fix up our own and try to find one we love, with room for our little guy to run around safely and possibly more kids down the line.

We’ll see, but there you have it. That’s my plan to unlock these chains.

 


File photo of ReceiptsFor somebody who still has a lot of debt from college to manage, I like to think I’m good with money. Not great, but good. My wife always tells me she thinks I’m better at it, especially since I’m meticulous about keeping a written, balanced checkbook ledger.

I try very hard to be frugal. Sometimes I think I even come off as a cheapskate at times. I don’t mean to. Sometimes I just get into overdrive about saving, especially since I’m trying to pay down (as quickly as possible) what I can of my student loan debt and move toward a debt-free lifestyle for our family (a future post all in itself, I’m sure).

Then there are other times where I am, for whatever reason, completely careless and spend more than I intended, only to feel the sense of regret as I load the bags into the car or balance my checkbook. Take a recent trip to Target, for instance. I had run in with one particular goal in mind – purchase a hot pot or electric kettle for the office to make tea. We have a coffee maker there, but I feel like the accessibility of coffee being there all the time has made me to eager to drink it way too often. And I don’t like making tea in the microwave. They had one left for what I thought was the reasonable price of $12.99. Simple, no? Okay, I’ll spend $13.

This is where I always fall into the trap. Wait, we need creamer at the office. So I go, find some organic creamer (naturally a little more expensive than non-organic). So, there’s another $3.19.

You know what? I might as well stock up on some tea for my desk while I’m here. I’m buying the hot pot for coffee, after all. Okay. Green Tea and some black tea. ($3.59 and $2.29, respectively).

See what happened so very quickly? I just bumped the Subtotal of my bill up from $12.99 to $22.06. Throw in tax and now I’ve spent $23.20, roughly $10 more than I had agreed to spend in the beginning of this trip.

It’s an issue I really, really need to get better at. I can’t stand the sense of regret I feel when I get done, get home, or get in the car and realize “what just happened? why did I spend that?”

Discipline. I lack discipline sometimes.



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