Q1 – 2016

I have recently changed my tack and decided that I will update my accountability post quarterly, rather than monthly because… who are we kidding.

Wins:
  • $250 bonus at work
  • On schedule for HSA max-out
  • Ahead of schedule for IRA max-out
  • Ahead of schedule (front loading) for 401K max-out
Losses:
  • Tax bill
  • Bought my cell phone out of installment plan so I can transfer to a cheaper provider
  • Work now requires that I pay for parking
  • Comcast fee… because Comcast is like that
Car Loan  $-6,461 (+$777)
Oh Sh*t Fund (emergency savings)  76% of the way to goal (+$522)
Other Savings  +$446
Savings Rate  61%
Net Worth $52,282 (+$9,804)

Overall, not terrible, but I can certainly do better.

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How I paid off my student loans

Between October 2011 and May 2015 I had a singular life goal:

Murder $37,136 in grad school student loans.

My reasons for fixating on this goal were primarily the following:
  • I loathe debt
  • I was secretly ashamed of the fact that I took on significantly more debt than I needed to
  • I felt like I had a psychological anchor that didn’t allow me to take risks or act like the foolish 20-something society said I should be (I now realize that this is something I’m grateful for in hindsight)
  • I couldn’t buy a house (yet another thing I’m grateful for in hindsight)
  • I couldn’t travel as much as I liked
  • I couldn’t invest or save for retirement like I wanted to
Before continuing on, let’s take a moment and check my privilege:
  • I’m healthy
  • I’ve never not had a roof over my head (well except for that short stint as a refugee when I was a kid before immigrating)
  • I currently live in a wealthy nation with a safety net, albeit a modest one
  • I have had uninterrupted access to education since I was a toddler
  • I had a family who loved me, sacrificed for me, supported me, and prioritized my education and future
  • I actually had an undergraduate education that was not only free, but effectively paid me with a surplus of scholarship money (my friends throw food at me when I bring this up).  In fact, I had enough money to get 3 bachelor degrees, travel, and take on free internships.  If you must, please only throw soft foods.
Alright continuing on.  So in October of 2011, I found myself with a newly minted Master’s degree, a $55,000 a year job at a public university, and $37K in debt.  I quickly realized that making the minimum payments was not going to get me anywhere.  I also realized there were ways for me to control this debt’s interest accumulations while I paid it off.  I used a combination of the following tactics to kill my debt:
  • I put ~50% of my post-tax income towards the debt
  • I realized that I could put my subsidized loans into deferment by registering for free classes at the university where I worked.  In fact even if they had not been free, I figured out that I could take classes at the local community college and pay less for those than I did in interest to the US government.  This is something I strongly encourage for people currently wrestling through student loan debt, especially for people running 6-figure student loan debts.  You may find that 6 credits worth of classes at a local community college run you $600 for a 5 month period, whereas the interest for that same stretch of time would cost you $800 or more.*
  • I automated the payments and just accepted that I wouldn’t get one of my paychecks every month.
  • I created visuals to encourage me along.  My favorite was this chart I created that tracked how many months of debt I was saving myself with every payment.
Screen Shot 2016-03-24 at 6.13.02 PM
The blue bars are how many months I saved myself every payment (see left axis).  The red line is the aggregate number of months I had saved myself over time.  By the time 2011 rolled around, I had saved myself 8 years of debt. 
When it was all said and done, I paid $42,694.35 to dig myself out.  That means I paid the United States Department of Education $5,558.25 to rent the funds from them for 6 years.
In hindsight, I know I could have done it faster had I discovered the FIRE community earlier.  I paid off my debt while eating out almost every single day, traveling extensively (I think I racked up 12 national and 5 international vacations in 3.5 years), STUPIDLY buying a brand new car, and not caring about my expenses in the least.
All in all, I’m so grateful to be on this side of the fence.  Currently, I’m the only one of my friends looking back on debt, but I can’t wait until they too find themselves here with me.  If you are in the drudge yourself, my heart is with you.  It absolutely sucks, but just know that there is light at the end of the tunnel.
*This only works for subsidized federal loans

$50,000!

I stumbled across a happy surprise this morning.  I logged in to my mint account and saw that I had hit a net worth of $50,000!

This is largely due to the recovery in the stock market, but in small part due to good old fashioned saving and investing.

It’s encouraging to hit this tiny (comparably pathetic) milestone at a time when I was feeling discouraged.  You see this is the time of year when everyone I know is planning their summer vacations to India and New Zealand and what have you.  Meanwhile, I am trying to invest that money in the short term to give myself the option of being on permanent vacation one day.

All in all, I’m happy with my trade off and happy with my tiny accomplishment.  I now get to work towards the $100K target.