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Someplace to Start

December 7th, 2014 at 05:55 pm

Finally dealing with my debt has been a relief. I still have not opened those other two credit reports and therefore do not have a complete picture, but that is ok. Even though I wanted to get into a position to improve things for a long time I know I have to pace myself. Otherwise I will get discouraged and probably do nothing which will not do any good. Here is what I have tackled so far:

Title Loan
Amount Financed $3,090.00
Amount Paid $6,642.01
Balance Due $2,748.34

Yes I know that is ridiculous lol. The interest rate is outrageously high and I accrued late fees when I could not pay on time or made partial payments. I do not like to say never, but after this experience I can truly say I will never do this again! I am absolutely determined to have a decent EF so that I do not have to resort to this ever again. I seriously cannot wait to pay this off and be done with them forever.

Given that this is my top priority and the interest rate is so high I decided to use a modified Avalanche method. Basically instead of making a monthly payment I am making payments from each paycheck, because I have been blessed with two jobs. Given my estimates of this months income I see this loan paid off before the new year.

Student Loans
Grad $56,475.22
Undergrad $8,666.40
Total $65,141.62

While the goal is to be debt free one day I am less stressed about these debts. Why? Because before my world turned upside down (when I just had my Undergrad loan) this was the one debt I was actually happy to pay. The whole experience of getting this bill, writing a check, and putting it in the mail reminded me of what I had accomplished with the money I borrowed. Despite how easy it was to get a forbearance I felt the guiltiest about being unable to pay this debt. At that time the payment was $100.00 a month and the fact that I could not afford that (or less than that!) made me feel like such a failure.

As soon as I finished my Grad degree this past spring I could not wait to enter repayment. I was still working a low paying job (although permanent full time with benefits) with no idea how long it would take to get a better one so I applied for the Income Based Repayment (IBR) on both loans. I was surprised that IBR gives you the choice of using last years tax return or submitting current paystubs to determine your monthly payment. I opted to use last years tax return because my income was less while a full time student and primarily temping/unemployed. I figured I could use the breathing room to take care of more important debts and get caught up on household bills. Right after I turned in the IBR paperwork I landed my new job, but decided to stick with my original plan. IBR is good for one year and here are my monthly payments:

Grad $0
Undergrad $0

They likely settled on $0 because at the time I was making less than a third of my overall loan total. My hope is that I can begin paying midway through 2015 and at least enjoy writing the interest off on my taxes. When its time to renew in 2015 I am leaning toward using my 2014 tax return so the payments stay low, allowing me to focus on building my EF.

6 Responses to “Someplace to Start”

  1. LuckyRobin Says:

    Sounds like you've got a good plan for getting started. Are you going to start saving for your Emergency Fund right away? I know it can seem overwhelming to both pay off debt and start on an EF when you are just starting to get your financial life together, but it is worthwhile to do. When I first started saving for my EF all I could manage was $10 a week. Then I started saving my change for it. It seemed like such a small effort but it did add up. So if you can, set aside a little something for the EF, even if it seems negligible.

  2. LittleMissSplendid Says:

    Yes I am pushing myself to focus on both debt and savings. If I estimated my income right for this month I can pay off the title loan and put 1k (or close) in an EF. You're right that it seems natural to feel like you can't save if you have debt, but I think the biggest lesson I've learned in the last 10 years is that not saving is one of the main reasons I got into debt.

  3. llabruce4 Says:

    Congrats on how things have turned around for you. I am in a similar situation, and just now trying to get things back in line, so it is nice to see another 30 something turning things around. Good luck with everything, and best of luck for 2015

  4. crazyliblady Says:

    I would concentrate on the title loan, credit cards, and building an EF right away. I would not worry about your credit rating now, as it does not really matter. Concentrate on the basics. And if your jobs offers a 401k, sign up right away.

  5. FrugalTexan75 Says:

    I think you are making a great start!

  6. crazyliblady Says:

    The interest on title loans is terrible. Would it be possible to transfer the debt to a credit card or bank loan?

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