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Whittled my law school debt down to $147k

Howdy, I will not receive the award for world’s most consistent blogger, but you already knew that if you’ve kept up with my sparse posting habits. In any case, I thought I’d check in and let you guys know how I’m doing.

Here’s the latest damage:

Principal Accrued Interest Interest Rate Total Interest Per Day
$21,672.54 $98.60 6.55% $21,771.14 $4.58
$34,412.11 $210.12 7.65% $34,622.23 $8.49
$22,976.11 $109.59 6.55% $23,085.70 $4.85
$0.00 $0.00 8.25% 0 0
$42,932.49 $274.07 8.00% $43,206.56 $11.08
$8,543.60 $29.04 6.30% $8,572.64 $1.74
$15,688.64 $78.96 6.30% $15,767.60 $3.19
$800.38 TOTAL: $147,025.87 $33.93

Thanks to my tax refund, I’ve scheduled a nice, fat $1,500 payment toward these loans next week. So, I’m making some progress, albeit not to the level I’d like but I’m moving in the right direction.

I dealt with a bit of drama regarding my Income-Based Repayment (IBR) application earlier this year. The re-certification process for IBR seems meaningless to me. If one’s circumstances haven’t changed, why should I have to waste my time to send in paperwork? I hate paperwork (yet another reason it was a bad idea for me to choose law school, but that’s another story).

kccd8 (1)In any case, my IBR certification got canceled even though I sent in my re-certification two weeks before it was scheduled to expire. It took my loan servicer more than three weeks to “process” my paperwork. I’m not sure what processing entails, but it certainly doesn’t take three weeks to glance at my pay stub and immediately realize my circumstances have not materially changed from the prior year. So moral of the story here: send in your IBR re-certification months before the deadline set by the models of efficiency at your loan servicer. Don’t say you never learn anything by reading my blog!

In terms of reducing avoidable expenses, I’ve become very good at packing my lunch. This is a huge money saver. In a large metro area, lunch can easily run you $12-15 each day, which adds up to $240-300 every month! I’ve shifted my perspective a bit on expenses though. My current attitude is that I will avoid any and all expenses that are pointless and don’t positively contribute to my life. However, I’ve become okay with spending on items that contribute to my physical and mental health. There’s a gym in my work building. I resisted joining it because it cost $45 per month. Instead, I joined a cheaper gym closer to home, but I found I was often missing the gym because I couldn’t make it there in the morning. With the new gym, it’s much easier to go every day and I’ve rarely missed a workout since going, which has contributed positively to my physical and mental health (seriously – it’s huge).

So, I think with things like lunch, where it doesn’t really contribute much to your life if you eat out or pack it at home, I will avoid these expenses at all costs and do all I can to minimize them. But with something like a gym in my work building, where there’s no adequate substitute good (to draw upon my mediocre economics knowledge), I will pay for this as long as the price is reasonable. I haven’t completely solidified my thinking on this and I will track my loan progress to see if this is the right long-term strategy, but that’s where I’m at right now.

So there you have it. I’m down to $147k. I’m spending lavishly on totally optional gym memberships. I’m still striving to improve my career and pay down my debt. I still worry that I’ll live the rest of my life single and never own a home due to my disastrous financial and career condition. But somehow, I’ve managed to stay calm about things (I’ve been experimenting with meditation over the last few months and it’s helped).

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2 responses »

  1. Nice to see you back! You’ve reduced your debt by over 25% since you started, right? With your level of income, that’s pretty impressive. I think you should lead with that rather than with “I live with my parents” when you’re wooing 🙂 Good on you regarding the tax return, too. Have you been exploring refinancing options? That 8% one is — as you know — totally nuts.

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    • Yes, it’s about 25% down but that came about through draining any savings and retirement accounts I had. I currently have zero emergency, savings, 401k, etc. But I’d rather have my debt paid off than have a huge high-interest debt along with some (meager) retirement accounts. I’ve looked around at refinancing programs (e.g., SoFi) and I wouldn’t feel comfortable using it because the minimum payment would be much higher. After law school, I experienced some significant underemployment and unemployment and I’m reticent to sign up for a program that would require a significant monthly payment. With IBR, I pay significantly more than the minimum payment (probably on the level of what SoFi requires), but I know that if everything hits the fan, my minimum payment will be manageable and I won’t get hounded by creditors. Further, I don’t think my SoFi application would get approved. They’re really looking for law school grads with BigLaw jobs (and consequently BigLaw salaries). I’m making $50k, which frankly sucks given my debt level, education, etc. and I don’t think they would accept me given my debt to income ratio. I may be able to work something out with my parents where they give me a lower interest loan, which would be applied to my high interest loans (the 8% and 7.65% one are main offenders), and then I would just pay them. We’ll need to work it out. I don’t want to imperil their financial lives. Debt has really complicated and diminished my life and I will avoid it at all costs for the remainder of my existence. Wish I could go back in time and slap some sense into my 23-year-old self.

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