The misadventures of a first time father

Tag Archives: Student Loans

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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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.

 


I think every parent wants their child to have better opportunities than they were able to have, or afford. Just about anyone with a child wants their child to be able to have a better life than their own (and if they don’t, then maybe they should re-think this whole parent thing).

With that in mind, I’ve started the process of setting up a 529 account for our son so that when he becomes of age, there is money that has been invested and put aside to help him further his education. Of course, we’ll also be hoping and encouraging him to apply for scholarships and grants wherever they’re available.

Whoa whoa whoa. Slow down there, dorky daddy. Talking about college already when your son is only nine weeks old? What gives?

Here’s where it comes from. You see, while I went to college and received a degree, it was not a road easily traveled for me financially. Sure, I’m confident there are many who had things far, far worse when it came to affording higher education, don’t get me wrong.

However, financial aid and a grant only covered so much, and the rest (and there was a lot of ‘the rest’) was covered by student loans. What’s worse, the majority of them were private student loans, as public student loans only cover so much.

I would never want to give up the experiences and lifelong friendships that I made in my time away at college, but the costs that came along with it have become the gift that keeps on giving…to the banks.

At the young age of 17, 18, 19, I wasn’t thinking about what my life would be like 10-15 years down the road. It was all so ‘far away’ that I just naturally assumed and had confidence in the fact that I’d very easily get a job and pay off any loans that I took out to pay for college.

How young, foolish and wrong I was.

Even in the current journalism job that I’ve had for more than five years, I’m still paying out half of my paycheck each pay period to student loan lenders and will be for years to come.

So is it worth it anymore?

It used to be that people attended a college to learn more about a specialized field. Today it seems like it’s become nothing more than a “credential” that one needs in order to get a job.

So, we take out massive debt to get a piece of paper that may or may not help us get a job in order to pay for the massive debt we took out in the first place.

We’ve become indentured servants to our schooling and the banks, forcing us to stay in jobs that we might otherwise take the leap of faith out of to bigger things, but stay where we are for the security of knowing we can pay off that education debt that has outgrown so many other bills.

I don’t want that for my son.

Hopefully, by teaching him not only the importance of learning and how to learn, but investing in the 529, should he choose to go on to college, he will not become the Jacob Marley of education, wearing the shackles of student loan debt that so many of us on the college degree chain gang must wear.



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