Paying student loans

[KennesawNemo]

OP: betchya didn't know you were posting on the Everyone else is totally perfect and always makes the best financial decisions and never goes anywhere or does anything until ALL DEBT is paid off board did ya? Why can't people just answer the question asked without "looking for" things to pick on? What happened to encouragement?

Actually, i don't think it's about picking on OP.

Honestly, if it were me, the first thing I would look into is whether I could cancel the vacation even if I would loose couple hundred dollars of deposits but at least I could put the rest into the loan payoff. I know I'm not OP and I'm not saying she should have done this, but at least this is a valid suggestion.

I think this is what a lot people meant when they question why OP are taking two vacations this year. They were merely suggest a alternative priority.

Seriously, don't you think encouragement like "don' worry, you'll be fine, enjoy life as much as can, you need a break from your tough life " will help?

 

[sukhakuli]

I think I'm confused. Why don't you just pick a loan with a monthly payment you can afford, and start paying it? If you can"t afford any of them, then you have 2 options. Either cut enough out of your budget so you can afford it, or someone needs to bring in more income. Either you can work when your dh is home, or he can get another job. My dad often worked 2 jobs, and my dh works the equivalent of 2 jobs. If there are no jobs in your area, then move. We had to move across country when I was a kid because my dad couldn't get a job. A lot of people do that sort of thing. Right now there's tons of jobs in Texas, and I hear there are in North Dakota, as well.

And no, we're not perfect. We took trips when we still had student loan debt, but we also got our loans paid off in 5 years.

 

[adventure_woman]

I just wanted to say "thank you" to OP and all responders, for this cautionary tale. My DS will be headed off to college soon, and, because of this, I've sat him down and explained to him the *long term* consequences of college loan debt, for both him and his potential future wife. He is one of those people who would like to have a SAHM for a wife, and so they are going to need to take the long term effects of student loan debt into account.

Good luck OP!

Terri

Terri - I am glad that this can hopefully help him.

The fact of the matter is is that I am now realizing I have to pay back my loans. Before it was always....I will pay them back. 'I can forbear them and pay them back later...so why not?' has been my thinking for obviously way too long. I can't do anything about the past, so I am looking to the future. So thank you all for your thoughts and wisdom.

 

[RitaE]

OP: betchya didn't know you were posting on the Everyone else is totally perfect and always makes the best financial decisions and never goes anywhere or does anything until ALL DEBT is paid off board did ya? Why can't people just answer the question asked without "looking for" things to pick on? What happened to encouragement?

Since when is telling people they can do things like get a part-time job for extra money or skipping DCL cruises in favor of local trips picking on them?

Because seriously, if that's the current mindset, it is no wonder we're falling into this free for all "everybody just do what makes you happy right now!" kind of society.

 

[crisi]

Terri - I am glad that this can hopefully help him.

The fact of the matter is is that I am now realizing I have to pay back my loans. Before it was always....I will pay them back. 'I can forbear them and pay them back later...so why not?' has been my thinking for obviously way too long. I can't do anything about the past, so I am looking to the future. So thank you all for your thoughts and wisdom.

If it helps, remember that you are going to blink and your oldest will be filling out her own college applications. And with the state of state budgets, even community college is going to be expensive. As much as these vacations are valuable now- we never took them when I was a kid. But my parents put three kids through college without loans on a very middle class income.

 

[tar heel]

You asked for tips/hints on getting started.

1 - Bring in more money. You should evaluate "wants" vs. "needs" here.

2 - Don't do anything expensive that's a "want" instead of a "need." Yeah, the Disney trips go here.

3 - You should continue living frugally, of course, but don't lose sight of the huge difference between spending $1 to rent a movie at the Red Box and $$$ to go to Disney World.

4 - Do the other stuff, set up a schedule and start paying the loans, so they'll start getting smaller instead of bigger.

 

[m&m's mom]

To all the posters who have had a kind encouraging word - thank you. It makes me feel better that I am not alone and that it can be done.

And, not that anything needs justifying - but something to all those others saying never take a vacation until all debt is paid off.... Do you rent movies? Do you buy books? Do you get haircuts/pedicures/manicures/etc? We don't - we get movies from the library, books from the library, I only get a haircut maybe once a year and DH shaves his head in the shower so he doesn't have to pay the $18 every 6 weeks. The only thing extra we have splurged on was our cruise. We didn't do Christmas for each other or my birthday. In the meantime we also paid off our van.




Thank you for such the kind encouraging words. Read through all the posts.

Also - if you think me staying home and raising my 2 daughters isn't "work" you have another thing coming. I work harder than I ever have staying home with my girls. Just saying that because I choose to raise my girls instead of having someone else do it for me doesn't mean that I'm not working.

Let's be honest. Because you do not have a job earning money, you feel your student loans are less of a priority. I think you are feeling "I don't want to suffer to pay for something that I am not using". Understandable feeling BUT.... it's all about C H O I C E S you made.
You could/probably should have paid off all your loans before you started having kids. That would have made a huge difference.
Based on your age, you are a good 10 years younger than me. I understood what debt was no matter if it was a credit card or a student loan. I knew that was a burden I did not want to have hanging over me so I thought it out and took a slightly different approach by working a lot in college, taking lower classloads and taking a year longer than my friends but I graduated and went to grad school with less than $5000 debt which I paid off pronto.
Not glamarous- or fun but I say at this point buckle down- get drastic- and get them over with. They are not going anywhere.

 

[Soben]

OP, I'll give you this piece of advice: You MUST resolve this issue before your oldest is . . . maybe 14. Up until that point, you can do dozens of things to make raising kids less expensive. You can buy used clothing, limit their activities, shop for inexpensive groceries . . . but about the time they start high school, you'll hit expenses that can't really be "cheaped out". The used clothing sources will -- for the most part -- disappear, and their high school activities will cost MUCH MORE than their elementary school stuff.

Yes, my daughter is 15 and I totally agree. I am cheap and it really accelerates no matter how you try to keep costs down. It's nuts. I also like that the child tax credit stops the year they hit 17, it should start then. When they were 5 I spent very little on them.

 

[MrsPete]

I don't think anyone is acting like she's spending like a drunken sailor suggesting she prioritize paying off a debt that is accumulating interest

I don't think she's spending wildly . . . I think she's spending without having a long-term, big-picture view. I think she's making big decisions (like whether to work or stay home) based completely upon emotion.

The best advice I'd give is to think years ahead about what she wants for her family. These are her "building years" -- building both emotional ties with the children AND building financial stability. Both matter, especially in the early years.

When we hear "your kids can always borrow for college but you can't borrow for retirement," we need to reflect on threads like this. How are the kids supposed to save for THEIR retirement, live THEIR lives, etc. if they are drowning in student loan debt themselves because they had to borrow to get an education? It becomes a vicious cycle IMHO. Not sure what the answer is, but taking out big student loans to go to college should be discouraged at all costs in my opinion.

I've always thought that student loans are something to avoid. The general opinion a decade ago seemed to be that student loans are just part of life, that discouraging kids from borrowing was limiting them . . . I see that opinion changing these days. More and more people are questioning the concept of "good debt", more and more people are questioning whether THE COLLEGE is worth any cost, any amount of debt.

I've also always disliked that "let your kids borrow for college because you can't borrow for retirement" concept. That's essentially saying, "I'm going to spend what I have, and you figure it out yourself." I totally agree with you when you say that failing to save SOMETHING for your kids' college is essentially guaranteeing that they'll be caught up in the can't-save-for-our-kids/can't-save-for-college cycle. It seems logical to encourage them to go with a more moderately priced college, to live at home, to make whatever choices will help them get out debt-free.

And, not that anything needs justifying - but something to all those others saying never take a vacation until all debt is paid off.... Do you rent movies? Do you buy books? Do you get haircuts/pedicures/manicures/etc? We don't - we get movies from the library, books from the library, I only get a haircut maybe once a year and DH shaves his head in the shower so he doesn't have to pay the $18 every 6 weeks. The only thing extra we have splurged on was our cruise. We didn't do Christmas for each other or my birthday. In the meantime we also paid off our van.

Your point is valid -- everyone splurges on something; however, it doesn't make much sense to compare a movie rental with a Disney trip. It's a matter of degree.

I suggest that it's best to have a percentage of your income set aside for little splurges: Trips to the movies, a new pair of shoes, a meal out. But make sure that the amount you've set aside is reasonable for your income and other financial circumstances. If you DON'T set aside something for fun, you reach a breaking point and end up over-doing. It's kind of like a mistake I made once when my girls were small: I never, never, never bought any clothes for myself. First, I was hoping to get back into a smaller size before buying, and second I felt it was more important to spend on the girls and to save . . . well, looking in from the outside, you can guess what happened: After a couple years, at back-to-school time I realized that literally everything I had to wear to school was a rag: Stains, cloth worn thin, skirts that I couldn't wear anymore because the matching blouse was too far gone -- I didn't look professional AT ALL. So I found myself forced to spend a whole lot all at once -- not the best, most balanced approach I could've chosen. Depriving myself ended up being a bad thing for our budget in the long run. Since then, I've worked harder on having a budget for my clothes; I buy a little every year so that I won't again end up needing EVERYTHING at once.

Since when is telling people they can do things like get a part-time job for extra money or skipping DCL cruises in favor of local trips picking on them?

It isn't picking on anyone -- it's good advice. Some people think that it's mean to say anything except, "Oh, you poor dear, you can't possibly do anything differently. Just keep on as you are."

Clearly, the OP asked the question because she isn't satisfied with her finances. She asked for help. She asked for suggestions, and I hope they provide her with a start in the right direction.

Yes, my daughter is 15 and I totally agree. I am cheap and it really accelerates no matter how you try to keep costs down. It's nuts. I also like that the child tax credit stops the year they hit 17, it should start then. When they were 5 I spent very little on them.

Don't get me wrong: I'm not unhappy about my teenaged girls' expenses. They're great girls, good students, responsible around the house, and it's a great joy to be able to provide them with the things they want. The point, again: It's important to get your finances under control before you hit this expensive point in your kids' lives.

 

[goofyredraider]

Terri - I am glad that this can hopefully help him.

The fact of the matter is is that I am now realizing I have to pay back my loans. Before it was always....I will pay them back. 'I can forbear them and pay them back later...so why not?' has been my thinking for obviously way too long. I can't do anything about the past, so I am looking to the future. So thank you all for your thoughts and wisdom.

As I said, I've BTDT, it isn't fun at all! I did the same thing...and then now, I see the excessive interest that I accrued as a result and it makes me ill

Look toward the future! Call the bank and see if you can consolidate and do graduated terms....look at what you CAN afford to pay....see about a part-time job of some kind.
You'll feel better making the payment every month...I know I do.

 

[crisi]

I've also always disliked that "let your kids borrow for college because you can't borrow for retirement" concept. That's essentially saying, "I'm going to spend what I have, and you figure it out yourself." I totally agree with you when you say that failing to save SOMETHING for your kids' college is essentially guaranteeing that they'll be caught up in the can't-save-for-our-kids/can't-save-for-college cycle. It seems logical to encourage them to go with a more moderately priced college, to live at home, to make whatever choices will help them get out debt-free. Your point is valid -- everyone splurges on something; however, it doesn't make much sense to compare a movie rental with a Disney trip. It's a matter of degree.

We are entering into an intergenerational indentured servitude for college. The reduction in purchasing power for middle class incomes plus the inflationary rate of college tuition (the cost disease of services - for anyone interested in economic theory) plus the "need" to have a college education for many jobs plus the scaling back of government support for education is going to create a crisis. Back before WWI, only a privileged few went to college, and it wasn't needed for many careers. Those careers it was needed for frequently had shorter specialized schools - a two year "teachers program." MOST people didn't need an education beyond eighth grade.

That started changing with the rise of the middle class during the 20s, and by the end of WWII, the GI bill made it possible for tens of thousands of young men to get college educations who would have never gotten it before - those educations were out of reach for their working class parents without a LOT of sacrifice.

My Dad is a college student of the 60s - when it was possible to live at home, hold a part time job and pay for school. There aren't many states where even a community college student could pay for school with part time wages.

By the time I went to school - in the 80s, it was pretty hard to pull that off - it took either your parents help, or going part time, or financial aid. And financial aid was already a lot of loans (where ten years earlier, it had been a lot more grants). But I had a lot of friends whose parents said "I paid for it, you can too" - not realizing how much more difficult that had become. (I was lucky, my Dad said "it was HARD to work 20 hours a week at the pizza place and carry a full load, I don't want my daughters to do that.")

And now - a generation later - its become that much harder. People get married and have kids and carry between them a mortgage worth of student loans (more if either or both got graduate degrees). Its really difficult to save for your kids to confront the NEXT increase when a significant portion of your income is spent paying off your own education.

I think the crisis will create a bubble and the bubble will burst - and you'll be back to the period around 1920. Fewer people getting traditional college educations, smaller and fewer colleges. But if it bursts, people might start figuring out a way to get people educations for much less money.

 

[m&m's mom]

As I said, I've BTDT, it isn't fun at all! I did the same thing...and then now, I see the excessive interest that I accrued as a result and it makes me ill

Look toward the future! Call the bank and see if you can consolidate and do graduated terms....look at what you CAN afford to pay....see about a part-time job of some kind.
You'll feel better making the payment every month...I know I do.

Based on your screen name you know the school I went to that I worked and scrimped to get out of virtually debt free. I know it was not a prestigious Ivy Leaugue school but I am way happy with the income that degree got me.

 

[indimom]

Sometimes it's not picking on someone.

It's trying to help someone "face facts."

The fact is the OP has been living extremely frugally in order to afford vacations while letting a debt sit on the back burner. If the budget is so tight that she has to leave a debt sit (cannot make minimum payments) in order to take vacations, then she really can't afford them. At least not all of them.

I have all the compassion in the world for the OP. I've been there. I'm still there. Our budget is so tight it squeaks, but we are not putting our debts on the back burner while taking pricey trips. (And, yes, for me, a Disney vacation is a pricey vacation.)
We've taken 2 (value) Disney vacations in 16 years of marriage. They were the most expensive vacations we have taken and we were eating from our room two meals a day during the second one. Our kids got "the dream," but they also got a stable home. The OPs situation does not sound stable or sustainable.

This year we took no vacation, not even a trip to visit family, because we had unexpected medical debt and we needed to make that our priority. We had the option of making small ($20/month) payments on these bills at 0% interest, we could have drug this out for years and still taken vacations, etc. But we have learned the hard way that spreading out the pain is NOT painless; and it's still, in reality, "living beyond our means".

Instead we are using every spare penny (including vacation and a good portion of the entertainment budget) to pay it off. So, next year, we can breathe easier, and maybe take a vacation "debt free" (honesty compells me to admit we will still have our mortgage ).

Obviously, we have no idea how big these loans are. But 20 hours a week at a minimum wage job (evenings and weekends) would bring in around $450-$500 a month after taxes. That's a nice sized loan payment. Two full time day care kids would bring in $650-$700 a month after taxes.

And it may even be possible to do both of these jobs! It may take months of searching to find the right fit, it may not be quite 20 hours at first, or you may only have one day care kid in the beginning, but every little bit helps and you could keep looking for something better.

Between two jobs of this type, she could add up to $1,100 a month to their budget! Now add in a few years without the cheap Disney Vacations. Let's say she budgets $2,000 for those. That's another $160/month which could go toward the loan during her non-vacation years.

Here is the thing that I've learned over the years: You might feel great during that one week vacation where you let the stress in your life go, but you are coming home to the same stress filled situation. Actually, a worse situation, because the debt is growing instead of shrinking.

Okay, I wrote a novel. Sorry. But because I have been there, done that - because I am still always weighing the options and studying our budget - It really pulls at my heart to hear from others who are struggling. I am only trying to help. Trying to pump up the OP to find her solution. Because a solution is there. She does have options. It's not hopeless.

OP - I know I was pulling figures out of my @$$, but I really think you can do this. And the sooner, the better. Get your name out there, apply everywhere for evening and weekend work. Advertise for some day care kids, advertise to clean homes. Anything and everything you are qualified for. Maybe you have an option that relates to your degree?

Apply every spare penny you can to the loan, even gift money from family. The more you can do, the quicker you can eliminate this stress in your life. And when it's gone, you can decide where you want to go from there. Keep the jobs and put that money toward vacations, retirement, school funds for the kids. Start looking for jobs that you find more fulfilling or go back to being an at-home mom stress free.

But, your first step is just to take that step (okay, maybe it's a leap ).
Good Luck!!

 

[goofyredraider]

Based on your screen name you know the school I went to that I worked and scrimped to get out of virtually debt free. I know it was not a prestigious Ivy Leaugue school but I am way happy with the income that degree got me.

Wreck 'em Tech! I'm very pleased with my education, and what it has given me. I had some scholarships, grants, etc....but came out with two degrees and a ton of debt. I grew up dirt poor, but my mom instilled in my that education was something that I would always have, and no one could ever take that from me (she did not go to college). So, I worked hard at getting one, by any means necessary. Unfortunately, that meant loans. I remember crying outside the the financial aid office on campus when I realized I would have to go that route.

By the way, I just noticed we're also neighbors. I live in Lewisville, and my kids go to school in Flower Mound.

 

[luvsJack]

Why does she need to get a part time job or cancel any trips or any of that?? She said they paid off their car and their credit cards. I still don't get why she can't just use THAT money to pay on the student loans??

What exactly am I missing here?

If you had a $300 car note and now you don't, well there is $300 that you were paying before and STILL went on trips and didn't have a job, so take that same $300 and put it toward the loans. What is the problem?

 

[Planogirl]

Why does she need to get a part time job or cancel any trips or any of that?? She said they paid off their car and their credit cards. I still don't get why she can't just use THAT money to pay on the student loans??

What exactly am I missing here?

If you had a $300 car note and now you don't, well there is $300 that you were paying before and STILL went on trips and didn't have a job, so take that same $300 and put it toward the loans. What is the problem?

I was wondering if she might have had the part-time job when they paid off the car and credit cards? She lost that so that income is gone now so maybe that's the difference.

 

[bettymae1121]

Why does she need to get a part time job or cancel any trips or any of that?? She said they paid off their car and their credit cards. I still don't get why she can't just use THAT money to pay on the student loans??

What exactly am I missing here?

If you had a $300 car note and now you don't, well there is $300 that you were paying before and STILL went on trips and didn't have a job, so take that same $300 and put it toward the loans. What is the problem?

She paid off those debts with income from a PT job that she was laid off from. Now she has no extra income at all, hence not being able to put extra towards the loans.

 

[luvsJack]

Oh, I see. Well, then I agree she should get another part time job to pay off the student loans. If she does that then there is no reason she cannot continue with the trips they have been taking. She can do both!

If she doesn't want to get a part time job, then there can't be any extras like trips because that money has to go to the loans.

Its just a choice.

 

[MrsPete]

We are entering into an intergenerational indentured servitude for college. The reduction in purchasing power for middle class incomes plus the inflationary rate of college tuition (the cost disease of services - for anyone interested in economic theory) plus the "need" to have a college education for many jobs plus the scaling back of government support for education is going to create a crisis. Back before WWI, only a privileged few went to college, and it wasn't needed for many careers. Those careers it was needed for frequently had shorter specialized schools - a two year "teachers program." MOST people didn't need an education beyond eighth grade.

That started changing with the rise of the middle class during the 20s, and by the end of WWII, the GI bill made it possible for tens of thousands of young men to get college educations who would have never gotten it before - those educations were out of reach for their working class parents without a LOT of sacrifice.

My Dad is a college student of the 60s - when it was possible to live at home, hold a part time job and pay for school. There aren't many states where even a community college student could pay for school with part time wages.

By the time I went to school - in the 80s, it was pretty hard to pull that off - it took either your parents help, or going part time, or financial aid. And financial aid was already a lot of loans (where ten years earlier, it had been a lot more grants). But I had a lot of friends whose parents said "I paid for it, you can too" - not realizing how much more difficult that had become. (I was lucky, my Dad said "it was HARD to work 20 hours a week at the pizza place and carry a full load, I don't want my daughters to do that.")

And now - a generation later - its become that much harder. People get married and have kids and carry between them a mortgage worth of student loans (more if either or both got graduate degrees). Its really difficult to save for your kids to confront the NEXT increase when a significant portion of your income is spent paying off your own education.

I think the crisis will create a bubble and the bubble will burst - and you'll be back to the period around 1920. Fewer people getting traditional college educations, smaller and fewer colleges. But if it bursts, people might start figuring out a way to get people educations for much less money.

The term "intergenerational indentured servitude" is new to me, but I think your assessment is quite truthful.

Don't forget, though, that while Americans' expectations for education (and the acceptablility of borrowing for those educations) was expanding, so was our appetite for larger houses, nicer vacations, and more. We've borrowed beyond our ability to pay in several areas . . . student loans being just one of those areas.

Why does she need to get a part time job or cancel any trips or any of that?? She said they paid off their car and their credit cards. I still don't get why she can't just use THAT money to pay on the student loans??

What exactly am I missing here?

She used to have a part-time job, and because of that income they were able to pay off the credit cards. But she lost that job, so her income has been reduced.

Even when she had the part-time job, she wasn't paying on the student loans; thus, without that income, paying on the loans looks pretty much impossible.

 

[crisi]

Don't forget, though, that while Americans' expectations for education (and the acceptablility of borrowing for those educations) was expanding, so was our appetite for larger houses, nicer vacations, and more. We've borrowed beyond our ability to pay in several areas . . . student loans being just one of those areas.

Certainly. Though our OP seems to have pretty reasonable expectations - with the exception of fairly large vacations with more frequency than seems sensible.

She used to have a part-time job, and because of that income they were able to pay off the credit cards. But she lost that job, so her income has been reduced. Even when she had the part-time job, she wasn't paying on the student loans; thus, without that income, paying on the loans looks pretty much impossible.

She's also had a second child recently - diapers. And is probably in the same spot most of us are - no raises, bigger food bills, more money going into the gas tank. If she was living frugally before, little things like the cost of milk can make big hits to your budget.