Money Matters
StashaT12
member
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Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
If you have questions about this, please email help@theknot.com.
Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Any other ideas?
Hi fellow nesties! It's a long post...sorry, but I do feel desperate! Here's my situation, and it's a bit strange...I *think* (or maybe it's an excuse) ;-). I am a recently graduation veterinarian (yay!), who went to a private university for vet school. I went in knowing I would accumulate more than twice the amount of debt for a state veterinary school. My debt as of TODAY is..wait let me look it up...
GradPlus loan: $220,561.96 (7.9% interest)
Stafford loan: $112,198.82 (6.8% interest)
Total: $332,760.78
I like to shock people with "my number" because it is incredibly surreal. So I'll let that sink in for a bit....Ok continuing with the rest of my situation. I did not attend a state veterinary school because well...I couldn't get into one, and I wanted to be a vet badly enough to decide to take the Ross University adventure! I spent 2.5 years on a Caribbean island and one back here in the states, and am now a Doctor of Veterinary Medicine. With an outrageous loan. I have come to terms that I can't get rid of it. I can't make it go away. Therefore, I must budget and deal with it. I am currently in my grace period for payments, and am required to start making payments at the end of July. Meanwhile, interest is accruing. I start at a base salary pay of $60,000 in Texas at 50hrs/week for my first year, and then my contract is renewed with base plus production (percentage will be determined at the next contract). I have looked into income based repayement, loan consolidation, loan repayment options, etc...you name it, I've researched it.
I am uninterested in going into the Army (4 years service for up to 120,000 repayment), or working for the USDA (3 years contract for 75,000 repayment). Let's look at IBR - gov't takes a max of 15% out of each month's pay - at 60,000/year at the 25% tax bracket, I take home 45,000/year or approx 3750/month. 15% IBR means ~565/month payment...and doesn't even put a dent in my interest. I can only continue IBR if I don't make additional payments, otherwise I no longer qualify for it. Consolidation just averages my interest rates, and I'm no better off. I am very interested in repaying this mother back as quickly as possible.
I have a husband who is a full time student, and is looking for a part-time/PRN position as a pharmacy tech. He hopes to go to pharmacy school (which by the way is undergrad tuition for the next 2-ish years + 4 years of pharm school at 130,000). We currently live with my in-laws, in preparation for my loan payment. We pay a part of electricity an internet, as well as our own groceries, gas, life insurance, etc. We do not pay rent.
Here's my current budget:
| Budget 2014 | |
| Item | April |
| Her Income | $3,750.00 |
| His Income - ?? | $0.00 |
| Car Insurance | ($116.60) |
| Renters Insurance (inlaws) | $0.00 |
| Life Insurance Him | ($24.15) |
| Life Insurance Her | ($28.15) |
| Health Insurance (opted out) | $0.00 |
| Internet | ($50.00) |
| Electricity | ($75.00) |
| Groceries | ($150.00) |
| Car Gas | ($80.00) |
| Him computer game | ($16.00) |
| Phones | ($50.00) |
| Netflix | ($9.00) |
| Her Loans - ?? | $0.00 |
| His School - ?? | $0.00 |
| Savings | $0.00 |
| Fast Food | $0.00 |
| Fun | $0.00 |
| Total | $3,151.10 |
| (598.90) |
We have had trouble with sticking to the budget, I think because I'm not actually making loan payments yet, and DH and I are using whatever income we have without said budget. I have debated the envelope cash system, but DH really isn't interested in carrying around a bunch of envelopes with cash in them. I have thought about an "allowance" for each of us to use. I have tried to entice DH with a "challenge" of the 31-day zero-spending I found on Pinterest. He gets very defensive anytime I even look at the bank accounts online, as if I'm going to yell or ask him about something, much less try to talk to him about sticking to a budget. I honestly don't know if I could take another job or maybe emergency shifts...I am exhausted when I come home from work already. Again, possibly an excuse?
So my question is this: does anyone have any other ideas that I've not discovered? If/when DH gets a PT position, I'm hoping he will bring in our cost of living so that I can pay off as much as possible (my entire paycheck) to the loan. Even if I do this, how are we every going to have a life? Or even move out of the in-laws house? I can't even make rent much less save for a house payment. This ginormous number is wrecking havoc on my mental state, as well as I'm sure my marriage, because I constantly stress over it and about money. How do I get past this??
Re: Any other ideas?
It's going to take you a really really long time to pay off your loans regardless of what you do. I wouldn't short yourself in areas like health insurance or savings. This may not be what others would advise, but I would worry less about paying it off and more on savings for now. If you have anything extra you can put towards it great. If not, don't ruin your marriage because of it.
Regarding your husband's theoretical loans, if you file your FAFSA early enough, you may get a grant for that. It actually happened to me when I went to grad school for my master's and teaching certification.
Regardless, I think you need to get on IBR in the short term. If you really don't want to you can find out if your extended repayment plan has payments you could do, but I bet they're still in the thousands a month. You can definitely make extra payments there, it's what I'm doing.
As for H's school, if you guys have combined finances I think he needs to find funding for his grad program. Have him apply for administrative assistantships, scholarships, teaching assistantships, etc. I would not have him take out more loans. Not to be a downer, but I just think that would be too much. If he insists, have him seriously check the job outlook in the field first. A well-respected pharmacist I know just told me that although it's a great paying career now, a lot of the functions are being automated and it's about to get very competitive.
I'd revisit the USDA offer. Three years isn't too bad to suffer through for such a big bonus, and federal jobs have many advantages. Good luck!
I guess I probably don't see student loan debt as bad as others on this board may. But off the top of my head.. if you pay 2000 a month, it will still take you about 15 years to pay off? Eventually you will want to move out of your inlaws which will increase many different expenses. Along with emergency savings, retirement savings, a vacation in the next 10 years?
Not my area though. So, if someone can explain the reasoning behind not doing it.
I wanted to second the getting health insurance. Yes, pre-existing conditions can no longer be counted against you...and OMG why wasn't that done frickin' years ago!!!! (Settling back down, getting off my soapbox). But the vast majority of the time serious healthcare needs...especially the crazy expensive ones...don't come with time to just sign up for insurance beforehand.
While I am all about budgeting and saving and ridding debt, you have to have some fun money also. You are going to get burnt out fast if you put your entire paycheck towards this loan.
On a side note after learning more about IBR and the income tax at the end when they forgive the rest. Does anybody else think a lot of people are going to be in trouble with the IRS in 20 or so years? I imagine not everyone is as thoughtful and concerned about this as you OP.
ETA subsidies. That's the word.
Theres one major factor to consider in IBR - yours and your DH's increased income over the next 25 years. With you a vet and your DH a pharmacy tech you will one day be making significantly more money. This IBR figure is based on just 60k a year.... that will easily double once your DH starts his career. So when you figure that - IBR will not work out for you, interest over 25 years and taxes will easily ruin that. IBR is not a long term solution and its not free money, your not getting out of paying this like some people like to think.
Right now you have an extra 3k roughly to pay toward these loans which you should start immediately! Don't save, just pay down debt. Keep a 1k emergency fund while you live at home you don't need more - but you do NEED health insurance for both of you. You can't just sign up when your sick just because they let you - because all it takes is one injury. Its not like you can be in an ambulance on your way to the hospital and sign up for insurance. You think student loans are a lot, try paying a hospital bill without insurance. Just don't risk it.
1st. Sign up for health insurance. If your young and healthy then a high deductible will be fine to lower your monthly cost.
2. Dump or lower life insurance temporarily.... a simple 100k each would be fine and that you can get really cheap for like 7 dollars a month. If you died, he wouldn't be stuck with your student loans because student loans are forgiven upon the death of the borrower or the student. Your husband is not attached to those loans legally. (Another reason why you NEVER transfer or take out a mortgage to lower the interest rate.... you lose the death forgiveness)
3. Start paying atleast 3k on the loans right now. You can pic graduated or extended but extended will cost you way too much if you stick to it. So pay as much as you can each month and your husband needs to get a part time job to help bring in money and make sure he can atleast cover his tuition and extra toward student loans. Keep his deferred until he graduates and just focus on yours right now.. You need to work a lot and be very disciplined to get these paid off asap.
4. If the loans are separate then pay the extra toward the smaller one to get one out of the way first.
5. You will get a tax deduction for the interest, so remember come tax time - any money you get back should go straight to principle.
6. Extra payments (above your monthly minimum) need to be paid over the phone and you need to tell them that you want to make a principle only payment- otherwhise they apply it to future interest. Its really wonky the way they do it.
I have 110k in student loans but i don't have your income potential. I know all too well how much it sucks and like you i want them gone asap! But the only way they will go away is for you to just go crazy and make more money and pay every extra dollar each month to them.