Tipping the Scales - Graduates find alternative ways to pay back student loans | The Corner News

I was interviewed by The Corner News at Auburn:

Thomas Hill graduated from Auburn University in May 2010, buoyed by his degree in industrial engineering - and weighed down by a student loan debt of $120,000.

According to the Project on Student Debt, at least nine times more people have significant student loan debt than did 10 years ago.

The average debt amount is higher, and more graduates owe money after college. More people are faced with quandary of how to begin cutting off the heads of their hydra of debt.

Read the rest of the article here...

Tipping the Scales - Graduates find alternative ways to pay back student loans | The Corner News

Student Loan Monthly Payments

Greetings!

So my initial calculations for monthly student loan payments are below. I still have to confirm this with my lenders, so we'll see. I based this off of current balance with interest accrued capitalized, interest rate, and a 10 year term.

• Type :: Interest Rate :: Balance :: Monthly Payment
• Perkins 1 :: 2.85% :: $2500 :: $26.50
• Perkins 2 :: 2.85% :: $6500 :: $68.95
• Sallie Mae 1 (Sub Stafford) :: 6.8% :: $8305 :: $95.00
• Sallie Mae 2 (Sub Stafford) :: 1.88% :: $8500 :: $80.00
• Direct Loan (Unsub Stafford) :: 2.85% :: $10987 :: $130
• Sallie Mae 3 (Consolidated Federal) :: 2.85% :: $23000 :: $225
• Citibank :: 3.5% :: $74,400 :: $775

Total Student Loans: $134,128.89

Total Monthly Payment: $1400

So at a minimum we need to pay $1400 towards loans to get these paid off. If we paid this and only this, then it would take us to November 2019 to pay off the loans (according to a fancy loan snowball spreadsheet I found). Of course that is assuming all things are equal, no major expenses, no raises, etc.

If I pay $3000 per month (a $1600 snowball) then the numbers change drastically. Payoff drops down to November of 2014. This requires though that my wife work the entire time and still assumes no raises.

If I assume 2.5% raises yearly, then the payoff date jumps again to April 2014. However this also assumes that my wife works 6 days per month from now until then (Like I said before, my wife has a flexible, high paying, part time job). But, there is a lot of stress associated with my wife's job and we are contemplating options to minimize that.

She won't be working during the 3 months of maternity leave (Dec10-Feb11) so obviously that will bump the payoff date back. We also have a deadline to bring her home from work. We plan to home-school and would prefer that Hilary be a permanent stay at home mom while she does this. So we might set a date - like 3 yrs - and say that regardless of the loan balance, she comes home. If she works 3 yrs part time the loans probably wouldn't be 100% paid off but they would be drastically reduced. I would most certainly be able to finish them off on my salary within an extra year or two.

There are OTHER considerations that could change everything. Snowflakes (Dave Ramsey's term for extra money) could come from tax returns, bonuses, selling items, gifts, and God's various means of provision, all of which could be used towards the loans. Also, expenses could come up that are unplanned such as medical emergency, illness, car failure, etc. Those would lengthen the loan payoff term.

We shall see, as I always say. Only time will tell what our future holds.

I'll have more updates in the days to come. What topics can you expect?

• What was our $12,000 stupid tax?
• The status of our mobile home selling saga
• The difficult decisions regarding my wife working
• Our updated monthly budget
• To give or not to give : Decisions about donating to charity (in addition to tithe) during this period
• Much, much, more
• PLUS - a renovated blog design is in the works!

Grace and peace to you all!

Thomas

Debt Thermometer

I've had to update our debt thermometer. Since January 1st of 2010, we've accumulated about $161,000 in Total Debt. Currently as of this post we've paid about $12,250 on that debt. So we currently are about $148,750 under.

This is broken down now by:

• Credit Card1: $500
• Credit Card2: $1600
• Mobile Home in Auburn: $6900 (Hopefully this will sell soon)
• Stupid Tax (Will explain in a later post): $11,500
• Student Loans: $134,000

Like I said earlier, these numbers are harder than I thought to figure. When you have lots of debt spread around a lot of different places it is hard to really know how much you owe. I'll update them as the days go on.

Moral of the story: Don't go into debt.

Would you like to make your own Debt Thermometer? You can do it here.

I'm back...Here we go!

Well, it's been over 4 months since my last post. I apologize! You may be wondering what has happened since then and where we are on our journey. Over the next few posts I'll get everyone up to speed.

First things first - I've graduated! I'm officially an Auburn Alumnus. My degree was in Industrial & Systems Engineering w/ a minor in Supply Chain management. Graduation was May 14th and I started my new job with Eaton in Jackson, MS on June 1st. This spring has been busy with school, work, raising a toddler, and moving to a new place and job.

We are settled now though in our apartment in Brandon, MS. My job is going well and my wife Hilary is almost through with orientation at the hospital. She is going to be working weekend nights as a float pool nurse. With her working Friday/Saturday nights, we won't have to worry about child care! Plus, she will be getting paid very well so our income is much higher than I was previously planning for. We are so thankful that she was given such a great opportunity. By the way, you can check out our family blog at followthehills.blogspot.com.

My priority now is to get everything updated and settled. With a move and new jobs it takes a while to get expenses under control, figure out what monthly expenses & income are actually going be, etc. I am going to be drafting a realistic budget and will soon know how much of my income will actually be used to pay on student loans.

Student loans are funny. Lenders don't exactly make it easy to find info and pay. Of the approximately $140K, my loans are divided in to private and federal. Luckily my private loans are all in one place (Citibank). However I have to go to about 4 different locations to get information on my federal loans. Sallie Mae has most of my Stafford loans but they are divided to 2 different websites. My Perkins loans are managed by Auburn University on another website. Then I have about $10K of unsubsidized Stafford's managed by the Direct Loan Service on a 4th website.

To make it even more difficult, Sallie Mae divides loans into "loan groups" by interest rate. So, I make a different payment for each group of interest rates.

I'm not sure how many "different" payments I'll be making but once I get all that sorted out I'll post it on here. I'll then order the balances from smallest to largest and start the snowball method as Dave Ramsey prescribes.

The Challenge:

In order to pay the loans off asap we must stick to the budget and pay all extra towards the loans. Therefore, I'm going to try to pay my loans first and then leave only enough money to meet the budget. This should force us to live within budget rather then blow it and pay less then expected on student loans.

I look forward to keeping up with the blog regularly now. I also am looking into having someone design a better look for it. Thank you for following and see you soon!