Some Advice for Paying Off Student Loans

I posted yesterday about my burden - student loan debt - and how we're not alone in this. I came across an article, How to Pay Off Student Loans Now, that gives some advice on tackling student loan debt and why we should do so now rather than later. I am currently doing two out of the four strategies. I live with my fiance, prior to that, I lived in a house with 3 other roommates. My current living situation is cheaper that living with my roommates, which is surprising to me, but not unexpected.

Chris and I try to be energy conscious. We turn off lights when we're not in the room, turn off computers when we're not using them (I usually use the computer during the weekend), keep the thermostat set at 68 degrees in the winter, opt not to use an air conditioner unless it gets extremely hot inside the apartment (so far it's been actually okay), and we don't buy food we will not eat during the week. Small things, but they add up. When I was living with 3 roommates, I couldn't control all their money-wasting habits.

The other strategy that I try to follow is to not get into more debt. I pay off my credit card in full every month.

The other two strategies - get a second job and drive a beater - I didn't quite make it there. I'm still going back and forth about a second job, which I mentioned in my last post. I gave my 2001 Chevy Malibu to my mom since her 1996 Dodge Caravan was on it's way out. I decided to get a new car, a 2012 Mazda 3 hatchback, since I knew I was going to keep it until it dies. I also drive 40 miles a day to work and back, so I wanted a reliable car that wasn't a maintenance nightmare. I knew I could have bought a used car, but after going back and forth, I decided to buy new. I worked out all the numbers and with the payments, I was still able to contribute to my savings, Roth IRA, and still have money left over for extra student loan payments. All in all, I'm doing okay, but I will be stepping up my student loan payments more aggressively in 2013.

The Burden of Student Loan Debt

I know I'm not alone. I have student loan debt, more than the average, but I have it. According to the Project on Student Debt, the Massachusetts state average for 2010 grads was $25,541. I wish that was the amount I owe. Multiply that by 3 and that's closer to what I still have left to pay - I started repayment in December 2009. I went to a private university and it wasn't cheap. It could have been more affordable, but I wasn't as smart as I am now about my finances. See my post One Year After Graduation.

I came across an article about a Harvard Business School graduate who got rid of his $90,000 student loan debt in 7 months. That's amazing. His story is the extreme of what one person will do to be done with the payments. At times I feel like I should do something drastic. I'm caught in a current state of analysis paralysis.

How I Got My Financial Life In Order

It wasn't always easy for me to deal with my finances. I used to be happy spending money every weekend on things I didn't need. It wasn't until my student loan payments were due that I realized that I needed to change my ways or I'll end up in a bad financial situation.

Here's how I got my financial life in order:

Financial Wake Up Call

To be honest, I don't recall the exact date that I became this personal-finance-obsessed person. It most likely happened in the fall of 2009, probably in September after I joined Mint.com. The grace period for my student loans was almost up and the thought of shelling out $800 per month scared me. I was a big spender back then and I knew I couldn't keep up with the payments if I didn't change my ways.

I remember looking at the MintLife blog and reading some interesting articles. After reading through most of the posts there I decided to search the rest of the internet. I came across a lot of PF blogs and websites like Wise Bread. There's definitely a lot of information out there. It can almost be overwhelming for a novice like me.

I started slow. Baby steps. Breathe. It's not the end of the world, but it felt like it. At the time I was still sending money home to my mom on a monthly basis. I felt like the Bank of Patti. I also felt like I wouldn't be able to pass the stress test should something big come up in the future. I didn't have a lot of money saved up and I was surely spending too much. That thought ate into me day after day. What to do? Where to start?

I knew I had to do something...

Little Mom vs. Big Credit Card Company

Being a dutiful daughter I am helping my mom pay off her credit card debt. For the past 11 months I've been sending my mom $300 per month. What I should have done was asked to see the credit card statement. Had I taken a peek early on I could have help reduce some of our payments, our headaches, and most of our heartaches.

Big Yarn Stash, Little Closet Space

Yes, you read this right and didn't stumble upon my other blog. My hobbies can be stressful. To be more specific it's the supplies I acquire for my hobbies that really stress me out. I started crocheting about a year and a half ago in 2008. Two things I needed were crochet hooks and yarn. Lots of yarn.

Every week A.C. Moore, Joann's Fabric, and Michael's Arts & Crafts would send out e-mails about their latest coupons and sales. I'm a sucker for them. Yes! I can save 40% on one item! 25% on my entire regular purchase! I would go into the stores and buy $30-40 worth of yarn with the good intentions of making this or that project. The end result? I have over 200 balls of yarn and about $600-$800 in yarn debt. Not only did I spend a lot of money buying yarn but my closet is overtaken by them, too.

One Year After Graduation: Advice for College Students

Today is May 1, 2010. It's been exactly one year since I graduated from college. Where did the time go? It's been an interesting year to say the least. Going to college was great and all, but the one thing I wish they taught me about was personal finance. There should be a mandatory freshman year course on personal finance. If not during freshman year of college then during senior year of high school. So many college student graduate with huge credit card debts and even bigger student loans.