Hi everyone! I’m just posting this quick update to let you know that beginning this Monday, June 3rd I’ll be posting a three part series on JerseySmarts.com talking about what my next hyperfocus will be after my student loan debt is retired. With the end of these ridiculous student loans coming at some point in the next two or three months I need to gear myself up for something bigger and better to focus my energies on. And, beginning this Monday and continuing through next Friday, I’ll give you a glimpse into what I think the next big hyperfocus will be for me. So stick around for some interesting entries coming up… starting this Monday!
The End Is Drawing Near… For My Student Loan Debt, That Is!
Did you read the last entry that I wrote about my student loan repayment? If not, then I encourage you to take a minute of your time and check it out. In that update I noted that my outstanding balance had fallen from $17 thousand all the way down into the four-digit range of $9 thousand. And now I’m back again with another update and another relatively sizable drop in my total student loan debt burden.
Only $7 thousand left
The reason for this decision is that I need to do a better job preparing this blog to showcase the journey that I had to take to get from about $121 thousand in student loan debt all the way down to $0 in a matter of a little under 7 years. Not to toot my own horn, but I believe that in the pages upon pages of student loan updates that I’ve provided over the years there are a lot of great tips and pointers for people struggling with seemingly insurmountable levels of debt. If you’ve been reading these updates for a while, then you’ll remember that I used to constantly remind everyone that my accelerated payment was possible even though I do my best to meet or exceed donating 7% to 10% of my gross income each year to charity. Also, in some of my early student loan entries I was big on reminding folks that not only was I paying off my student loans at an accelerated pace, but I was also paying for all of my own expenses without any help from any government institutions or individuals. In addition, I mentioned in more than one of these updates that I was able to do all of this while working for a nonprofit organization – not some big, investment bank that was dominating Wall Street or a hedge fund that was kicking off a 7 or 8 figure salary. Nothing along those lines is going on here. And I think I even may have written in some of these updates that I’ve even managed to continue my education over the last seven years by completing a Graduate Certificate program and enrolling in a Post-Master’s Certificate program.
The quick lesson from all of this? Don’t believe that an incredible amount of student loan debt will automatically stifle your ability to earn money and make significant repayments! Remember, YOU are the one in control of your life and decisions – and that includes your financial life and decisions.
As I’ve been telling people who I am close with that I’m on the verge of completely repaying my student loans, they’ve been asking me how such an accomplishment is possible given the circumstances noted above. Well, I think a variety of the answers to the “How?” question are found within my past updates and I’m working on finalizing a separate page on the blog to catalog those answers.
But stay tuned, everyone. Once that separate page is created I fully intend on repaying the balance of this student loan and kissing the whole thing goodbye forever. The end is drawing near for these student loans…
On May 14, 2006, I graduated from Rutgers University with a master’s degree and $120,720 in student loan debt. In July 2006 I made my first payment on these student loans and, so far, I’ve repaid a total of $114 thousand in principal. My lenders include the United States Department of Education’s (USED) Perkins loan program, the USED’s subsidized and unsubsidized Direct Loan programs, the New Jersey Higher Education Student Assistance Authority’s NJCLASS program, and CitiBank. The USED sold my student loan to the Missouri Higher Education Loan Authority (MOHELA) on April 16, 2012. I currently owe about $7 thousand in principal to MOHELA. To date, I’ve repaid over $35 thousand in interest to these lenders. Follow my student loan repayment story on JerseySmarts.com.
My Great Miscalculation or How I Forgot About Homework
Earlier this week, I finished grading final exams for my face-to-face teaching assignments for the spring semester. This was the first time that I’ve taught in a physical classroom since fall 2010. I’m glad that I was offered the teaching assignments because they were a lot of fun. I’ve been offered further teaching assignments for this coming fall and spring 2014, all of which I’ve accepted and I eagerly await. However, a made a minor miscalculation in my preparation for getting back into the front of the classroom – I didn’t realize how much time and effort I was going to have to spend on grading my students’ work! As you might imagine, it was a bit of a shock to see 250 pages worth of student papers sitting on my desk in early February waiting to be graded. Believe it or not, it was relatively easy to get over that shock and move on to the next grading assignment or classroom prep work that I lined up for myself. That’s why I call this a minor miscalculation.
Yet, I did make a major miscalculation both this semester and last semester…
It feels like I read this many books this semester!
For my longer-term readers, you may remember about a year and a half ago when I wrote that I was ready to get back into the classroom as a student in my pursuit of some additional higher education. I kickstarted that process about a year ago when I applied (and was accepted) to a post-master’s certificate program in curriculum studies. My first class started in September 2012 and it was a bit of a shock for me since I hadn’t taken a class in two years. Yet, much like getting over the shock of seeing my students’ papers sitting on my desk waiting to be graded, I quickly got over the culture shock of sitting in a classroom and being assigned homework and papers to complete. This process was helped, in part, by the fact that I opted to take a hybrid course. This is a course that meets once every other week with some online interaction in between. If hybrid courses are delivered correctly, they are a much better, much more efficient method of delivering higher education – and they work for me!
My major miscalculation, though, was the homework that I was assigned for the course that I took this past fall. And though it seemed like a lot during the fall, the miscalculation really came into play this semester when I had a five way battle going on. The warriors in that battle were my obligations to my professional office, my obligations to educating my online students, my obligations to educating my in-class students, my obligations to operating my two small businesses, and my obligations as a student with homework to complete. Remarkably, I managed to meet all of these obligations. If I lightened up on meeting any of them, though, it was those obligations as student in the post-master’s certificate program. Without question, I could have spent more time digging through the readings for the class I was enrolled in. I could have spent more time finding additional sources to support my arguments in class. Granted, I received an “A” in the class, but I think I could have been more effective as a student if I had more time to focus on the readings and the lessons we were discussing.
I write this entry as a method of displaying some humility. Even with the meticulous planning and plotting that I do in my financial life (and soon to be other aspects of my life), I still managed to overlook a massive component of going back to school… homework!
Student Loan Balance Just About Sliced in Half – We’re Into Four Digits Now
Only a few days ago I posted an update about my deliberation on whether or not I should eliminate my student loan debt once and for all or play it safe and hold on to a portion of my accumulated home down payment money. Most of the people I asked suggested that I immediately eliminate the student loans and finally be done with them. And I admit, that is the path I was heading in and the decision that I already made prior to posting the update linked above. However, I decided against making a full payoff and instead pretty much split the difference. I kept about half of that portion of the down payment (remember, I have much more saved for my eventual down payment on a home than the $17 thousand that I’m hemming and hawing over) and I used the other half to pay down my student loans.
Down to $9 thousand!
Amazing, right?
I want to take a little bit of space during this happy post to write something similar to what I wrote a few months ago when I hit $17 thousand in student loan debt. If you remember that entry, I wrote about what was going on in my life when I had accumulated my first $17 thousand in student loan debt. Well, I’d like to do that again, but this time I’d like to recall what was going on in my life as I built up my first $9 thousand in debt.
In order to do this correctly, we have to take a short trip back in time. All the way back to the year… 2000!
Unlike the post a few months ago, I was not yet a Sophomore in college when I accumulated my first $9 thousand in student loan debt. Instead, I was a second semester college Freshman. This was Spring 2000 and the major event in my life back then was joining my fraternity. The pledge process lasted 6 weeks (7 if you count spring break) and was pretty entertaining. While I won’t go into the details of what my pledge brothers and I did to join the fraternity, it’s nothing that I wouldn’t do again (and probably keel over in laughter at in the process).
I was also doing pretty well in school during the Spring 2000 semester. In fact, during Spring 2000 I was just coming off of a pretty powerful first semester of college in Fall 1999. During that first semester, I scored a 3.8 GPA and was on the Dean’s List. I racked up straight As or A- grades in all of my courses except for Western Civilization where I took home a B+. Truth be told, the instructor of the Western Civilization class did not put together a very good syllabus and was pretty confused with the honors cohort of students that I was in. I remember that very clearly. He wanted to teach what he typically taught, but because my class was an honors section of the course and because our honors section was part of this honors cohort, the poor guy was just confused and didn’t do a good job explaining the otherwise fascinating history of Western Civilization.
I scored a 3.3 GPA in Spring 2000 with mostly As and Bs in my classes. My lowest grades that semester we straight Bs in Elementary Italian and Discovery in Natural Science. I was (and am) totally fine with those grades. I tried to learn Italian as a language, but I found that it really only reinforced my existing knowledge of Spanish. And that’s not an entirely bad outcome in the long run since I have a pretty good working usage of the Spanish language. Also, I didn’t actually go to the Discovery in Natural Science classes. I had an agreement in this class (and in my Fall 1999 College Algebra class) that I would just show up for tests because I earned As in my high school classes that were more advanced than these courses – both of which were general education requirements at Monmouth University. During Fall 1999, I scored an A in College Algebra (obviously, I scored an A in Advanced Calculus in high school) and during Spring 2000, I scored a B in Discovery in Natural Science (which was fine with me considering there were only two tests and those were the only two times I went to class).
I know these grades because I can still access my student profile online. So no, I didn’t memorize them!
Spring 2000 was a busy semester for me between pledging, working for the school’s information technology department, and school. I wouldn’t go back and change anything, but I would probably have spent less time concerned with academics than I used to back then. You always hear people say that if they knew then what they know now, they would have changed this or that in their lives. Well, if I knew then what I know now – that hyper-focusing on general education classes doesn’t really do much to increase your job preparedness or overall learning – then I wouldn’t have spent so much time studying that semester.
Although, it wasn’t all just studying. Joining the fraternity came with its benefits. Back then (and somewhat still today), the campus was absolutely dead when it came to fun student social activities. Sure, there were university-sponsored events, but those events were inundated with university minders and were generally cheesy. After I was initiated into the fraternity, the social aspects of college picked up considerably. Along with the social part of college kicking it up, I was given more opportunities to express my leadership abilities. And I continue to do that to this day, though I’ve personally decided to pull back on playing the leader of the pack in the national fraternity and instead have opted to focus on developing the leadership and professional potential in our undergraduates.
But back in Spring 2000, life was good. I don’t have many complaints or aggravations about that time in my life. Here’s a picture of me hanging out with one of my lady friends (she’s the awkward smiley face – it’s my blog, not hers, so I don’t know if she wants to be put out there in public).
Those of you who know me aren’t surprised at seeing the SoBe bottle… or at the fact that the liquid in that Power SoBe (fruit punch) is clear!
In May 2006, I graduated from Rutgers University with a Masters Degree and $120,720 in student loan debt. Since I started repaying my student loans in July 2006, I’ve repaid a total of $112 thousand in principal to various lenders including the federal Perkins loan program, the New Jersey Higher Education Student Assistance Authority, and CitiBank. I currently owe $9 thousand in principal to the United States Department of Education’s federal Direct Loans program. This loan is serviced by the Missouri Higher Education Loan Authority. To date, I’ve repaid over $35 thousand in interest to these lenders. Follow my student loan repayment story on JerseySmarts.com.
Decisions, Decisions – Retire Student Loans Forever Or Increase Down Payment?
Ah… the more things change, the more they miraculously manage to stay the same. Just a few days ago I posted an “update” on my student loan repayment progress. In that update, I noted that there really wasn’t an update to provide because I haven’t been making excess payments to the USED / MOHELA. No excess payments = no major principal balance drops to write about on the blog. It’s a pretty simple equation, right?
The update from the other day was based on the premise that my roommate was leaving to take a job in another state and that I needed to find a new place to live. That update also noted that I’ve been holding back the excessive additional student loan payments so I can use those funds to purchase a home in the next few weeks.
Could this all be over soon?
It turns out that the organization that was going to hire my roommate has decided to cancel all hirings for the time being. The next possible time that they’ll be bringing in new hires is this October… maybe. This is another topic entirely, but I’ve been telling my roommate for a few years that he needs to diversify his career prospects. He’s in the process of doing so right now, but let’s not digress from the purpose of this entry.
With the change in my roommate’s career switch I’ve been presented with a unique opportunity. Clearly, I’m going to push back my plans to purchase a home for a few more months. It just makes sense to rent the townhouse that I’m in through at least October, if not through next spring (I would stay through next spring in the event that my roommate doesn’t make/isn’t offered the career change in October). The unique opportunity that I now find myself in is that through saving to increase the size of my down payment, I’ve been able to put away more than the $17 thousand that I need to eliminate the remaining balance of my student loans. Most folks would make the quick decision that since I’ll be staying in my rental for a few more months, if not longer, then I should some of these funds that I’ve saved up to retire the student loan debt once and for all.
After all the aggravation that I’ve been through with my student loans, that’s an extremely appealing option!
However, as a guy who tries to be reasonable and thoughtful on issues of money and personal finance I can’t help but think that I should just save this money and use it to increase the amount of my down payment when I do eventually purchase a home. Retire the remaining balance of my student loan debt or keep hording money for an eventual down payment? It’s an interesting dilemma to consider.
Trust me, I’ve been giving this issue some deep consideration.
I think the benefits of saving the money for a future down payment are obvious. The total amount of the mortgage is reduced and since I didn’t plan on putting 20% down for the new home, by increasing my eventual down payment I’ll be able to put down 20% and avoid having to pay private mortgage insurance. Further, the more you put down, the better rate you can demand (even in a world of low rates). As a guy with near-perfect credit, increasing the amount of my down payment would be an ideal use of these funds.
And yet… I can’t shake the idea from my head that if I decide to use these funds to retire my loans, then I’m literally about two weeks away from having absolutely no student loan debt, period. Gone. Done. Eliminated. Game over.
The benefit of repaying my student loan debt? In financial terms I’d be retiring debt that is currently accruing interest at 4.25% and (when I purchase a home) replacing it with a mortgage at a lower interest rate. That’s good for my financial health over the long-term. The bigger benefit to retiring my student loans, though, isn’t something that you can easily quantify. The bigger benefit is the combination of financial freedom and the incredible feeling of accomplishment that comes with repaying such an immense amount of debt. The benefits of saving this money aside, I just can’t shake the idea of how awesome it would feel to know that I repaid $121 thousand in student loan principal and another $30 something thousand in interest in under 7 years.
For those of you who are analyzing whether or not I would suffer from using $17 thousand to retire my student loans, here’s some information for you. If I wait until November or December to buy a home, I can pretty much replace that entire $17 thousand with new income from the summer months. In essence, I’d net out even and wind up in a state of stasis, but with one less bill each month. My minimum student loan repayment is $333.50 per month – so that amount would be put towards my future down payment, too.
What to do… decision, decisions… What do you think? If you were in this situation – what would you do?
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