And I mean that literally: I have massive student loans. I was very lucky and paid about $2,000 total for my undergrad tuition (not including books, which I tried to buy cheaply online, and other incidentals, so the total was probably around $3500 with all those things considered), so I had no loans from that period in my life. Law school was another story.
I went into it like many law students: without the best understanding of how student loans would impact my future. All I knew was that I wanted to go to law school, and this was a necessary evil.
I am occasionally asked if I regret taking out as much money as I took out for law school. I always answer no. I wanted to go to law school and be an attorney, and in my first year, I realized that I really wanted to be a criminal defense attorney. And I got to to do that. I love what I do (minus the criminal appeals, which make me want to kill myself and have sucked literally all the joy out of my life), so how could I regret the loans that got me here?
So I don’t.
I hate them, and yearn for the day when they’re off my back, and I think it’s criminal that banks get to borrow at like 1% interest from the government but students borrow at like 7% (which is my rate, which sucks but whatever), but I still don’t regret them. They have changed my life, and will continue to do so, but I can’t regret them.
Like many law grads, I have a student loan debt in the six figures. And I have to deal with it, so I am.
How? Here’s how.
After law school, I used the deferrment because I was unemployed. I was unemployed for a while, so I used another deferrment that was offered under the 2008 (I think?) Obama student loan legislation. Thank goodness for that. I had some savings, so I just chipped away at the interest, but those payments were few and far between.
Then I had kind of a mini breakdown and broke with reality. I’m not proud of it, but that’s what happened.
I stuck my head in the sand about my loans. I decided that I just wasn’t going to think about them … and maybe they’d go away. That’s not how it works, obviously, but the anxiety about the six figures hanging over my head became too much. And I just ignored it.
I didn’t make any payments. When I got letters in the mail, I threw them away sight unseen. When I started getting calls from my loan provider, I let them go to voicemail while I internally panicked. This happened for about 3 months. The anxiety about my loans was crippling, and I just couldn’t face those calls, or face the fact that I had these huge loans.
I know, a total weenie reaction. But that’s where I was with it.
Finally, one day, I was walking out of a cute Naperville boutique having just bought a birthday gift for my best friend. I was feeling pretty good. And right as I stepped outside, I got a call from my loan provider.
And for whatever reason, I picked it up. I decided to nut up and accept the call. It was a good thing I did, because the automated recording was a new one: it was warning me about the prospect of default.
Now let me tell you, even though I was only at the 120 day mark, and not yet halfway to the 270 day mark that triggers default and fucks up your credit rating and all that, that word caused me even greater panic and anxiety than the loans themselves.
So I went home, pulled out my checkbook so I had my account number handy, and called the loan provider back. I spoke to a very nice representative, who informed me that I owed like $4,000 or something – just in interest. I don’t know if that number is right. It might have been lower. Let’s say it’s right.
Now, I had more than triple that in my savings account alone at that point, so it didn’t trouble me. The idea of getting that number to 0 was very attractive. I still remember how surprised the representative was when I asked, “Can I pay that entire balance off right now?”
I gave her my account number and it was taken care of. And I decided that I was going to face my loans head on and make every effort I could to pay them down.
I logged onto my loan provider’s site and created an account. I looked at my balance and looked at my next due date a month out.
Now, I’m luckier than most, even with these huge loans. I live at home (which is basically cultural – I can move out, and I want to, but at this point since my parents are so resistant to it, I’m just not willing to hurt them by leaving although I will be leaving in the not too distant future), so I have fewer bills than most. I basically just have my car bill (which is hefty, because I have a wonderful car, basically my dream car, and that’s fine, because I drive so much and I love it and it’s comfortable and it’s an expense I’m willing to bear and it’ll be paid off in less than a year, anyway), and my loans, and slightly more discretionary things like food and clothing and all that normal stuff.
So a huge chunk of my paycheck isn’t going toward rent. At that point, I was basically socking away most of my pay and putting some in my Roth IRA.
Two weeks later I got another paycheck, and dropped another two thousand on my loans. I felt fantastic.
According to the website, I was paid off for about three months. It was a great feeling, and I chased it. I decided I’d make regular payments toward my loans, and I did that.
Whenever I could, I made payments toward my loans. In about two months, that due date for the next payment was six months off, which meant I was applying more money toward my principle.
When I started, I think my total was $117,000, but that included the interest that had built up. Today, it is $110,000. In another year, if I keep this up, it’ll be in the five figures. Which will be a huge accomplishment.
At that time, though, I was still very disorganized with my payments. I knew how much I had to pay off, I knew how much I was paying, I knew how much I had coming in, I kenw how much I had in savings, but somehow it wasn’t all connected.
I did not want to be paying more toward my loans and my discretionary bills than I had coming in. I had a very comfortable savings cushion, but I didn’t want to deplete it too fast without realizing it. So I started looking for help.
I started with Mint. Everyone raves about it, so I thought I should look into it. I linked all my accounts, even my little PayPal that collects a small amount each month from the pay-by-month advertisers on my blog. (If you want to advertise with a text link, contact me!) And then I looked at the interface. It gave me lots of great ways to track stuff, and an app, but …
This is embarrassing, so I’m just going to say it: it was too complicated for me. I didn’t want to spend that much time tracking my expenses. I wanted to be parked/stopped in the drive-thru, waiting for them to hand me my card back, and be able to enter the $1.89 I spent on coffee into my phone while I did so. Mint was just too much for me.
Then I looked into apps that were specifically geared toward people in debt. I heard of Level and signed up, but didn’t end up fully investigating it and using it. This was probably because I was burned out on all the different services I was researching and all the finance articles and books I was reading. So that’s unfortunate, but not in the long run, since I ended up finding something I really liked. I have a friend that really likes Level, and he swears by it, so if you’re looking around, you may really like Level.
I then saw a Facebook add for Ready For Zero. Isn’t that a great name? Also, those FB algorithms figure out everything. My FB ads changed based on my browser history. So I guess it’s a good thing I’m not trolling for crazy fetish porn? I don’t know. Anyway, I signed up for Ready for Zero and started loading my accounts and my student loan into it. The weird thing was, my loans are consolidated, but RFZ read them as unconsolidated, so it separated them out. Which was weird. And then it encouraged me to pay off the lower interest one first? But they both have the same interest rate, because they’re one loan? So, whatever.
Still, I loved the model for RFZ. It tracked how much money you put into your bank accounts, and then sent you helpful emails like, if you put $100 of that toward your loan balance right now, you’ll pay off your loan by such and such date. If you use $500, it’ll be such and such date. And I’m great with dates and numbers, so that was really attractive.
It also had a built in loan calculator, which was my main reason for going for it. The bad thing was, RFZ only lets you set like $1650 as your minimum monthly payment for the loan calculator to work, and that’s what your little “put this much toward your loan” alerts are based on.
Well, I was NOT able to have $1650 be my monthly minimum payment at that point, which rendered the app basically useless. I’m still signed up, but I delete those emails unread whenever I get them. I really should unsubscribe.
I tried a bunch of little budgeting apps that I can’t remember, too, but deleted most of them pretty quickly. They were just too complicated, or they didn’t let me do what I wanted to do. It was a frustrating journey, but ultimately, I figured out a way that worked.
I’ve divided it up into some categories so it’s easier to follow:
The Loan and Loan Repayment Calculation Aspect:
I found an online loan calculator, and also this one, that was flexible enough to not care too much about what the “official” monthly payment was, but more about how much I was putting toward my loans. When I plugged in everything – my total loan amount of like $117,000, the interest rate of 7.35%, how much I was putting toward it, which are all old figures now – the result was encouraging in terms of how many years it would take to pay off and how much would go toward interest.
If I paid only the minimum payments, I would pay out over the next 22 years, and pay more than my initial loan amount in interest alone. Even though the upside was that at the end of the loan repayment period of 25 years (I think?) I wouldn’t owe anythign and wouldn’t be hit with a tax bill. Although maybe my loan repayment at that time was at 10 years? 15 years? I don’t know. If it was either of those, I’d obviously be hit with a tax bill for the unpaid “forgiven” amount, which is such balls. But whatever. Still, that was UNACCEPTABLE.
Given how much money I was putting toward my loans, less than half of my initial loan amount would be paid in interest. So that was good, but still not good enough.
So that was the loan payback calculation stuff itself, which is different from the personal finance end of it. I researched what I could do to affect the repayment part of it. I realized that my loan provider offered a markdown of 0.25% of the interest rate if I signed up for automatic withdrawal every month. I called them up to confirm that I could do automatic withdrawal even if I was paid up for about a year, which some loan providers don’t let you do, and they confirmed I could. So I immediately entered my checking account information and took advantage of my new 7% interest rate. It’s still terrible, but better than it used to be.
Now, every 25th, $828.00 is automatically withdrawn. I plan for it in advance and haven’t even remotely had a problem with that. (My bank account is kind of dumb, in that I always have to have $1500 in it, so that’s the only problem that could ever come up, but it never once has, so that’s good.)
Another option is transferring it to another provider, which might offer a lower rate. I admit, I’m still researching this, because if I want to do it, I want it to be the right choice and the best option. I know that every day I don’t, I’m paying more in interest, so this is something I’m going to have to put closer to the top of my priority list.
I always plan for the $828, so I don’t even consider that anymore. As soon as it’s in, it’s gone. What I focus on is what extra money I’m putting toward my loans. Since I got my interest rate lower, I turned toward the personal finance aspect of it.
Increasing And/Or Supplementing Income:
The first part of this two-prong approach was obviously increasing my income. Easier said than done, as I’m sure most of you know. But not impossible. Far from it, actually.
I said before that I was disorganized about how much extra money I was putting toward my loans. That had to change if I was going to make some headway on this.
Bottom line, no pun intended: I needed more money.
I had a steady paycheck from work, which was excellent. I was reimbursed for healthcare, so that was cool. I don’t have a phone bill, since my boss pays for that as well. (See what I said about being lucky enough to have limited bills?)
I also got mileage reimbursement for all the miles I drove to court. My boss offered to reimburse me for tolls, but that’s such a pain to document with this iPass bullshit that I just never took him up on it. Once all my ducks are even more in a row, I may look into that more seriously.
For now, I try to offset that amount. I used to pay between $120-$160 for tolls each month, which is RIDICULOUS. That’s because the route I take to work – really, the best way to actually get there without going on a tour of the Midwest) is the pits. The tolls are so fucking high, it’s LITERAL HIGHWAY ROBBERY.
My first epiphany was that if I used a non-toll route to get to a certain courthouse, I actually got there 10 minutes earlier, and paid nothing. So that led me to use (abuse?) the Avoid Tolls option in Google. By doing that to get to court, and occasionally taking the long way home from work (which is roughly the same mileage, so I’m not driving up my already insane amount on the odometer), I got the amount down to $4o-60 a month, which is pretty great.
Another thing I love: cash back awards. I had a Chase Sapphire account already, which gave me decent cash back that I had linked to my Amazon account. I had always kept only one credit card, but soon looked into getting another one with different cashback schedules. I settled on a Discover, and linked that to Amazon as well. I buy a ton of stuff on Amazon instead of going to the store, so it works well for me to have that cashback sent there. So getting another credit card was a good decision, especially since I have never carried a balance on any card ever, and always pay in full each month.
Swagbucks was another good deal, because every two months or so I get a $5 Amazon gift card. That’s not much, true, but it’s an extra $30 a month that I didn’t have before. It all kind of depends on what your shopping habits are.
I’m sure I’m a member of other rewards programs, but I can’t remember them at this point. So much of it depends on what kind of consumer you are, so the programs I use may not be applicable for you.
Another interesting thing I ended up taking advantage of were part-time, contract-based writing gigs on Craigslist. They’re few and far between, but once a week I spend a little bit of time checking the listings. The pay isn’t anything to write home about, but I love writing, and I do it really fast. So it works out, and it’s extra cash that can go toward my income without taking much away from the quality of my life.
I also take advantage of discount offers that come my way. I never used to care, but if I get a $20 gift certificate in the mail to one of my favorite restaurants, I’m an idiot for not using it. This also included signing up for the email lists of some of my favorite places. For example, RA Sushi sends out a $20 gift card during the month of your half-birthday, which is awesome. Little stuff like that.
If I had more free time, I might consider a part-time job. I know many young lawyers that do that. However, I have too much going on at work, and that’s just not something that I want to fit into my life. If I were more desperate, I might. I won’t lie, I’ve thought about it sometime. But I don’t want anything like that taking away from the quality of my lawyerly work, so it’s not going to happen. No disrespect to the folks, lawyers or otherwise, who have part time jobs to pay off their loans or other bills. (In fact, props.)
I also make some money from ad sales on my blog. I used to make way more from it, but extra money is extra money. It goes to my PayPal account, and is a nice little reserve for me when I’m buying random little things that I need for my sanity and happiness, and can pay with PayPal.
But you know what’s really made the biggest difference in my life, both good and bad?
Yup. I play the Budget Game. My friends mock me for it – and other friends are actually concerned about me because of it – but it’s working for me. And I’m always fine-tuning it, too.
The discussion above focused on apps and services I tried that just weren’t for me. I wanted a simple to use app that still gave me the flexibility to categorize my purchases the way I wanted, not in pre-determined categories, and without having to hunt for all the niche categories. I wanted a no-frills app that just kind of let me do my own thing.
And I found it with iSpending, and I want to show you why I think it’s so great. It’s an iPhone app, and I recommend the paid version, which is just a couple dollars and so worth it.
This is the home screen of the app, basically. I blurred out my money totals because that’s no one’s business. Basically, you put in all the income you have, without linking to any accounts, and then you track your expenses. It uses that colorful pie graph to show you the balance between your income and expenses, and in my case, the $338.74 is what I have left until my next paycheck. (I tend to do factor in my set amount bills early, and then sock away more toward my loans, and spend whatever is left very carefully so I can put some more toward my loans right before I deposit my next check. So that’s why the amount is always artificially low, because I plan ahead.)
So from this home screen, at a glance, I can tell that I have $338.74 to spend during the next 8 days, which is not even remotely a hardship. In fact, I can easily afford to put another $150 toward my loans right now, and still have more than enough to carry me through the next 8 days without breaking a sweat.
(In fact, I might just do that right now. That would be the Smart Adult thing to do.)
While this app calculates all your spending habits and your income in, expenses out, the home screen only shows that current calendar month, which I LOOOOOVE. I don’t want to see the last thirty days; I want to plan out the month. And this works great. It gives me the exact information I need without giving me too much.
If you want to add an expense or add money coming in, you press one of those two buttons and this comes up:
It’s so so so simple, and it fulfills my desire: to be able to add an expense while waiting for my coffee in a drive through. (Also I avoid buying coffee now, because it adds up. Instead, I invested in a great Contigo travel mug and now I just make tea in the morning, or wait until I get to the office to have some coffee.)
The category option isn’t a drop down menu. So I get to pick what I put in. To resist the temptation of getting too specific, I sat down with a piece of paper and tracked all my expenses on my Chase credit card, and decided which categories they fit into. I think I had 7-9 categories total. Specific enough to accurately describe my purchasing habits, but general enough to keep it all sensical. Only then did I start using this app to track stuff, according to those categories.
So here, you just enter the amount, a broad category, the date if it’s not contemporaneous, and in the Notes section you can put something as specific as you want. So I might put “Shopping” as the category and put “NARS Dragon Girl Lipstick” in the notes so I can see that I was actually splurging on makeup.
That leads me to the fact that no-frills apps are great, but I obviously need more information in order to budget and plan effectively. If you click Details on the home screen, you go to this page:
The green is the money coming in, which I blocked out. The black is money going out. Depending on how it all works, some purchases are repeated in both black and green. You can see that I counted the $35.38 as both an expense and income; that’s because that gas purchase will be reimbursed since it’s due to traveling to court. (I keep separate records on that so I’m not being reimbursed for more than the proper legal amount.) Also, if I’m paying for something using a cashback reward, or my PayPal money (which is automatic, and not my own money, but money from ads, etc), then I count the amount as an expense AND income, because it’s not going out of my paycheck but is money I already have sitting around.
If I wanted to click on Entertainment, it would tell me that I spent the $6.92 on books from Thriftbooks, because that was the information I put in the Notes section. This way, I have as much and as little information as I want at the time.
I have recommended this app to several friends who asked me about budgeting, so I figured I’d share it with you readers as well, in case you’re looking for something similar. iSpending is hands down the best app I’ve come across, and it really has helped me track my spending down to the cent.
And when it’s the 16th, and I’m depositing my next check, I can look at this app and see that I have $200 left over from the previous check that I haven’t spent. Then I can decide how much of that to put into my IRA or savings account or my loans. To be honest, since I have a comfortable savings account and small IRA going, I put most of my extra money toward my loans. So on the 16th, I could deposit my next check and also put $200 toward my loans. Yay?
Because I put every dollar I can toward my loans, and I have the automatic payment that I’ve already budgeted for in advance, I pay a nice, hefty amount toward my principle each month. And that’s all I care about. Because a lower principle means less interest being paid daily, and that is so important to me. I want to pay this off as quickly as possible and with as little interest out as possible.
There are still other things I can do – like investigate private lenders to see if I should make the switch, and other ways of increasing income, and obviously my tax refund will go to my loans – but for now, this is my strategy. And it’s working so far.
The goal of my budget game is to have broken even at the end of the month. I don’t want to spend more than I earn, and I want to be able to put almost every spare dollar toward my loans. I know I should be paying myself first, but I’m balancing that priority of saving with my loans. It’s a work in progress, figuring all that out.
I hope this very personal look into what I’m doing to attack a huge problem in my life (one that I don’t regret) has helped at least one of you. Do you think there’s anything else I should be doing? What has worked for you? What resources do you use?
Do you want to join up with me and overthrow this capitalist system and force a total wiping out of all debt and massive financial restructuring in this country? Wait ignore that last one, I’m totally not serious about it.
Drop me an email, if the comment forms are still hinky. You can do so in the sidebar – just submit a note and I’ll put the suggestions and resources together and post them, crediting you with the idea. Let me know!
Oh, and fuck the fuck off already, any member of a previous generation who only knows how to bitch about how Millenials are “so entitled” and so lazy and all that bullshit. Millenials are a highly skilled, very adaptable and versatile, well-informed, hardworking as fuck generation making the best of a crumbling economic and financial infrastructure put in place by fucking Baby Boomers who worked during the summer to afford an entire year of college because tuition was that low back then and money went so much farther and also didn’t have many of the bills we have today including data and cell phone bills because those things were literally nonexistent and still like to tear down Millenials. FUCK THE FUCK OFF, NO ONE GIVES A SHIT ABOUT YOUR WORTHLESS OPINIONS.