Friday, February 28, 2014

I Did It! I Paid Off My Two Smallest Student Loans!!!!!!

I never thought this day would come.

I am very proud to announce that I have officially taken the first big step towards paying off my student loans.  I have PAID OFF IN FULL two of my smallest student loans.  One was in the amount of $2,114.48 and the other was in the amount of $2,128.50.  The total payoff amount that was made today to pay both these loans off was $4,261.56.

By doing this, I have also reduced my monthly student loan payments by $100.00.  WOOHOO!  These are baby steps in relation to the total amount of loans outstanding, but I still think this calls for a celebration!  :)

Wednesday, February 26, 2014

"Student Debt and the Crushing of the American Dream" by Joseph Stiglitz

I came across this NY Times article from May 2013 written by the brilliant Joseph Stiglitz.

Here's an excerpt:

"Some wonder how the American ideal of equality of opportunity has eroded so much. The way we finance higher education provides part of the answer. Student debt has become an integral part of the story of American inequality. Robust higher education, with healthy public support, was once the linchpin in a system that promised opportunity for dedicated students of any means. We now have a pay-to-play, winner-take-all game where the wealthiest are assured a spot, and the rest are compelled to take a gamble on huge debts, with no guarantee of a payoff.
Even if compassion isn’t a factor — even if we focus just on recovery now and growth and innovation tomorrow — we must do something about student debt. Those concerned about the damage America’s growing divide is doing to our ideals and our moral character should put student debt at the top of any reform agenda."
While I'm working on diligently paying off my student loans, I know I'm not the only one that feels burdened by them to the point where it will definitely delay the purchase of a home and starting a family.  The repercussions of the student debt crisis are widespread and affect the health of our economy.  I may take personal responsibility and make sacrifices to pay off my loans, but it doesn't mean I don't question the system that creates a heavy debt burden for students pursuing higher education.  Not all societies are like this, as many other countries have much more affordable educational options, and my European counterparts, for example, have no debt upon graduation from law school.  As Stiglitz says, for many, education is the only way into upward mobility, so I don't believe blame should be placed on students who try to make a better life for themselves and their families by pursuing their education.  
What are your thoughts on this?

Monday, February 24, 2014

My Step by Step Debt Payoff Plan

Hey guys!

So I've been thinking about how to start attacking the student loan debt monster and I think I've come up with a plan that I can follow.  My plan is to first pay off the private loans because even though they have lower interest rates than my federal loans, the private lenders don't have flexible options like Income Based Repayment or loan forgiveness for public interest work.    

GOAL: Pay off all private loans by December 2015!

Here is my plan to reach this goal:
  1. First, pay off two smallest private loans (~$4261) by February 28th → reduces monthly payments by $100
  2. Second, pay off Private Loan 1 (~$11,523) by March 31st → reduces monthly payments by $161 (monthly payments reduced by $261 total)
  3. Then, pay off the various loans that fall under Private Loan 3 from highest interest rates to lowest (total ~$44,745) → reduces monthly payments by $305 (monthly payments reduced by $566 total)
  4. Next, I will pay off Private Loan 2 (~$10,139 - this has the lowest interest rate @ 3.03% interest) → reduces monthly payments by $81 (monthly payments reduced by $647 total)
  5. While I'm working on paying off my private loans, I will continue paying the monthly minimum on my federal loans until I have paid off all of the private loans. Once the private loans are paid off, I will reassess my strategy for paying off my federal loans.

By December 2015, I will have paid off the approximately $66,407 that is currently owing on my private student loans.  I CAN'T WAIT FOR THAT DAY TO ARRIVE!!!!!!!!

The process of writing out steps to pay off the $66k in private loans makes it all seem that much more doable rather than thinking of the total amount I need to pay off, which is quite a hefty sum. This list will help me focus on the process and just take it one step at a time.  

Check the blog often for updates. I will be tracking my progress here as I continue this adventure! :D

Wish me luck!

Thursday, February 20, 2014

My Big Bodacious Financial Goals for 2014

Hey guys!

I wanted to share my big, bold, and bodacious financial goals for 2014 with you.

2014 Financial Goals
  1. Earn $35k more in 2014 than I did in 2013
    1. Ask for raise or get a new job with higher salary (goal is to make $5,000-$10,000 more in 2014 than I did in 2013 through my full time work); and
    2. Earn $25,000.00 doing freelance/ consulting work on the side.
  2. Save $45k cash
  3. Pay off $45k of student loans with cash saved and reduce outstanding student loan debt to around $130k
  4. Invest $5k in 401(k)
  5. Invest $2,500 in Index Fund
  6. Increase net worth by approximately $60,000.00
  7. Have an emergency fund of $15,000.00
  8. Cut spending
  9. Pay off credit cards in full each month & don't acquire new debt
  10. Save $1,000.00 for vacation and actually take a vacation this year
  11. Donate $150 to charitable causes
  12. Find creative ways to be more generous to my loved ones
These goals are very ambitious for me and will definitely take me out of my comfort zone.  I like a good challenge, so let's see how many of these I will have accomplished by the end of the year.  

What are your financial (and personal) goals for 2014?

Tuesday, February 18, 2014

I'm on Rockstar Finance!

Well, my net worth is, at least.  J. Money, one of my favorite personal finance bloggers, has listed my net worth on his Rockstar Finance site, alongside other bloggers' net worth.  I highly recommend you check out that site, along with Budgets Are Sexy.  Lots of good stuff on both of those sites.

Check out my net worth, along with other bloggers' net worth here:

My net worth is the lowest of all the bloggers on that list, but this motivates me even more to make some serious progress in reducing my debt!!  And hopefully I can inspire others who have negative net worths due to high levels of debt that it can be done!

Check it out and let me know what you think!

Friday, February 14, 2014

My (Negative) Net Worth as of February 2014

Alright, I'm putting it all out there!  According to Personal Capital, my net worth is currently


This consists of:

  • Cash: $23,081.53
  • Investments: $23,113.20
  • Credit Cards: $2,155.21
  • Student Loans: $174,104.74
One of my financial goals for 2014 is to increase my net worth by continuing to invest, earning more money at work, paying off more debt, not incurring more consumer debt, and reducing my expenses!  

I will continue to check on this monthly and provide updates on how my net worth stacks up each month, and compare it to the prior month.  

What are some strategies you recommend for increasing my net worth?  

And Happy Valentine's Day all you lovers!  :)  

Thursday, February 13, 2014

Coulda Woulda Shoulda...

On the way home from work yesterday, I started thinking about "what ifs"...  You know how that goes.  What would my life have been like if I hadn't gone to graduate school?  What if I had gone to a lower ranked school and taken that scholarship?  What if I had worked more during school (mind you, I have been working since I was 15)?  What if, what if, what if...

It didn't take me long to realize that this kind of thinking doesn't lead anywhere good.  As you can imagine, it leads to thoughts of negativity, envy, and doubt.  Thinking this way does not come from a position of strength or confidence, but rather weakness and fear.  And anyone who is going to eliminate almost $200,000 of debt must do so from a position of strength, power, and confidence.

One of my goals is to catch myself when I think about the "what ifs" and instead think of the "what next?"  I can't change the past.  All I can do is accept it and move forward to progress in my life.  I can and will shift my attitudes towards money and make conscientious choices going forward.  I'm not only going to build a plan to crush this debt, but I'm also going to build the confidence needed to take on such a massive endeavor.

Monday, February 10, 2014

Rethinking Consumerism

Paying off a large sum of debt is as much a psychological and spiritual endeavor as a financial and practical one.  In considering different ways of paying off my student loan debt, I've come to understand that I need to rethink my relationship towards money and debt, and along with that, shift my attitude towards consumerism.

I've changed a lot in the past few years since graduating law school, but perhaps one of the biggest things that did not change in my thinking was my relationship to spending and consumerism.  I always thought that I could justify purchases based on the assumption of future income and by paying off my credit cards in full.  But what I didn't think about was opportunity costs.  What could I have done with that money instead?  Unfortunately, it took me a long time to realize that just because I could afford to pay for something in cash or pay off my credit card balance in full did not mean I could actually afford to purchase it.  What I mean by opportunity costs is that by spending money I had on consumer goods, like clothes, shoes, makeup, etc., and on conveniences, like taxis and coffees at Starbucks, I forewent the opportunity of, for example, saving that money, investing that money, or using that money to pay off more of my student loan debt.

I've only recently realized that if I want to pay off my debt and make smarter choices for my life, I have to shift my way of thinking about money.  I now think twice before I order another dress online.  Not shopping and buying more clothes has forced me to get more creative with the things I already own at home, and has made me re-discover items in my closet that I forgot were there.  Another thing that helped was de-cluttering my closet and donating clothes I hadn't worn in years to a donation center.  Seeing all those clothes and thinking about how much money I had spent on them made me feel wasteful.  And buying and storing all those clothes in my closet certainly didn't make me feel happy inside.  If anything, it was something I did because I was bored and it just made me feel empty afterward.  I've now found better things to do with my free time.

As an indication of how much I have changed, I went to a store the other day to pass time before meeting a friend after work and I felt so uninterested in the clothes.  I just kept thinking that I simply don't need any more and that saving that money, or investing it, or using it to pay off debt, would make me far happier in the long run than a new dress would.  I felt overwhelmed by all the stuff in the stores, and just kept thinking to myself, who needs all this stuff?!  Our culture is so consumer-centric that sometimes it's hard to think outside the box and imagine that all this emphasis on shopping is culturally specific and often harmful in ways we don't like to think about.  The deleterious environmental impact of the continual production of new clothes and the use of cheap labor in places like Bangladesh where a factory collapsed and killed over 200 workers are not things I wish to support or contribute to.  That would not be in line with my values.

I have decided to take a more mindful stance toward consumerism.  One way of doing that for me is to simply buy less.  Another way of doing that is to buy things second hand.  For example, I bought a second hand sofa from a nice couple last summer.  It is like new, cost me way less than a new sofa, and no one can tell the difference.  A third way to do that would be to only buy from socially conscious and responsible vendors, or local, ethical producers of goods.

Rethinking consumerism is a sign of maturity and indicates the capacity to step back and think critically about the everyday choices we make that have huge ramifications not only financially and in our personal lives, but also globally.  

What are your thoughts on the excessive focus on consumerism in American culture?