Sunday, January 26, 2014

Welcome (and Why I Have $175k in Student Loan Debt)

I'm starting this blog as a way to mark my progress in eliminating almost $175k* in student loan debt.  You may think that is a preposterous number, but after going to a public undergraduate institution as well as a public law school, with tuition and living expenses paid for mostly with student loans, the cost can quickly add up.  I know I am not the only one in this situation.

I am making my effort to eliminate "My Debt Emergency" public because I can already feel the excitement and joy it will bring me to publicly announce that I have eliminated $175k of debt.  The debt feels like a burden to me and I've told myself that I can't really build wealth, save money for a house, or afford going on extravagant trips until this debt is dead.  So I am going to Kill the Debt!

I've been inspired by several personal finance blogs which have shown me that no, I cannot buy designer shoes or clothes when I have this much debt and that I'll have to continue hustling in a job I don't enjoy for a really really long time, longer than I'd like, in order to pay for everything and pay off the debt.  Since student loan debt is not dischargeable in bankruptcy, except for limited circumstances, and you can even have your wages garnished if you default on a loan, the stakes are extremely high with this type of debt.  It's a Debt Emergency and I have to do something about it!!!

My personal situation is as follows:
  • I have already eliminated consumer debt, i.e. credit cards, as I pay those off in full every month.
  • I have already saved for an emergency unemployment fund 
  • I contribute to my 401(k) at work up to the employer match
  • I invested in a Roth IRA last year
  • I have a little bit of money in a Rollover IRA
  • I have invested a little bit of money in Bitcoins (this will have another post - disclaimer: I don't recommend you invest in Bitcoin without doing your own research first, as it is highly volatile and currently unregulated)
I'm going to use what I call the CSEHP (Cut Save Earn Hustle Pay) strategy going forward for paying off the student loan debt.  This means:
  • Cut expenses more - Cut out extraneous expenses and see how I can save on necessities
  • Save more - I'm going to save the maximum amount I can from every paycheck
  • Earn more - I'm going to ask for a raise at work
  • Hustle more - Work harder in my current job and take on freelance work
  • Pay more - Pay off more of that debt so that I am no longer indebted to those lenders.  Hmmm.  
Follow me along on my journey and feel free to share your stories.  Let's make 2014 the year of eliminating debt and let's do this together!  

{*Update: I later realized that the beginning amount outstanding on my loans was actually $189k, not $175k.  This was because I failed to take into account accrued interest.  I am leaving the original post as is, but just wanted to point out why there may be discrepancies on the blog, and why some places refer to $175k and others $189k.}

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