Money, Honey. April 16, 2014
Howdy! My head is full of odds and ends--I've been up since 1:45am so I'm punchy, so please forgive me in advance.
First, the winner of Dan Berne's The Gods of Second Chances is Renee the First (you've been emailed!). Thanks, all, for your awesome book recommendations, and for saying that you like my taste in books. I like yours.
Second, this morning I did some math and my mind is REELING. We finally paid off an old tax bill this weekend, our last debt that wasn't a mortgage or student loan (which were acceptable debts, I thought). We're in the process of refinancing our house (yay! Fixed rate, finally!).
So our last debt, besides the house, is my student loan.
Let's talk numbers Because you know what? I'm still of the mind we don't talk about debt enough. So many of us are crippled by it, and we're not talking about it because of shame.
Screw that. Screw shame. We're all in the same rapidly leaking boat. Have I mentioned that on top of the tax bill ($25k, now paid off), we were $47,000 in credit card debt? It's all paid off, as are our cars (my goal of paying off the SmartCar in six months was met). We have three incomes and no kids, so it's a lot easier than some have it, but we weren't employed that whole time and we live in one of the most expensive housing markets in the world, so that's harder. We work really hard at paying off debt. And we've been doing great.
I didn't worry too much about my student loan even though it didn't really seem to be going down because everyone says, "Oh, student loans are at such a low rate and they're for a good reason." Yeah. Well. Truth?
* A low rate at a high amount is still a damn lot of interest.
* Student loans let you defer payment when you graduate, which most people do, because they're not making enough to pay them. There's a penalty, of course, and there's interest added on top of that, but that's okay, because it's a low rate and for a good reason, right?
* They make it SUPER hard to know what you're paying and what you've paid. Today I decided to figure out once and for all, why, after borrowing $40,000 for grad school and after deferring for five years and paying for seven, I still owed $50,000.
True: $40k + 5 years deferral + interest = $56,000.
True: Seven years of making payments every month= $26,000 paid toward the debt, TWENTY THOUSAND OF WHICH WAS INTEREST.
Biggest, most awful truth: Seven years and $26,000 later, I've taken $6,000 off my student loan, and I'm at $50,000. TEN THOUSAND MORE THAN WHEN I GRADUATED thirteen (fourteen?) years ago.
You know how I figured this out? You'd think I went to my loan's website and just pulled up the facts. No, I had to poke around on that site and press buttons and caress and cajole until I found a list of numbers with no totals and no information. I had to create an Excel spreadsheet and run the numbers to figure out this horrifying truth.
Seriously. I'm gobsmacked. We'd always paid the minimum because we were concentrating on the credit cards and the tax bill. And because the student loan was "acceptable" debt.
My student loans are not acceptable debt. There's nothing acceptable about a system put in place that cripples people trying to do the right thing. (And we get paid well! Don't even start me on the teachers I know who have the same debt and no way to throw money at it! Augh!)
So: This is our focus now. Get rid of that student debt.
But you know what? Today Katelyn, our dog walker who takes our dogs up into the hills to ramble for hours once a week came and picked up the dogs while I was working on these numbers. Also, Alex fixed our back deck, pressure-washing it, getting it ready to stain tomorrow. The handyman, Carlyle, came to give us a quote on getting a dishwasher because I've never lived with a real live dishwasher in my whole life. All of this, cash. We're not rich. We live frugally and we don't have piles of money in savings (if we did, I'd pay off that damn loan). But we've gotten to a place where we can do the things we want and not lose sleep over the bills. There were many, many years when I didn't sleep, and I truly think You Need A Budget, my budgeting software that I love so much, has helped us SO much in this. (Get $6 off with that link.)
Talk. Talk to me, your friends, your loved ones. They've all been there, or ARE there and are too scared to admit it. If they haven't ever been there, then tie the laces of their Kenneth Coles together and we'll all laugh as they trip gracefully to their beautifully and expensively tiled floors.
Throw money at the debt. Make coffee at home. Eat at home. Move. Sell your yarn, sell your books. Let's change the way we live. Let's talk.