Showing posts with label student loans. Show all posts
Showing posts with label student loans. Show all posts

Wednesday, April 18, 2012

writing with a broken pencil

...is pointless. Hah!

I'm sure I'm not the only child of a baby boomer who was told college was non-negotiable. I'm sure I'm not the only person who didn't know what they wanted to study in college but who wanted to "get as far away from home" as possible. I'm also sure I'm not the only person who left only to come back and study at a state school. And I'm 100% sure I'm not the only person with significant student loan debt.


We've talked a lot about credit cards, "bad" debt, and even worse habits. Like many people, I don't think about my student loans as bad, since I got something out of it (although, with a B.A. in Sociology/Anthropology, whether I got the better deal is up for debate). Yesterday, I read an article in my hometown paper about Stockton students having some of the highest student loan debt in the state (read it here). Approximately $30,000 for a state school. Granted, this is about a quarter of the debt you would have if you went to an out of state, private college, but, still, I find that number shockingly high. Let's run & compare my numbers as a Stockton alumnae, shall we?

Year 1: About $15,000 for room & board at Simmons College in Boston, MA after grants & scholarships (half the total price). That's a hefty price tag for the "college experience". My major? Being ridiculous.
Year 2- Fall: I'm only coming up with about $2,000 in loans, which doesn't seem right, but I did obtain some grants, scholarships, and continued in the work-study program. I transferred to the Catholic University of America for fall semester because I decided I wanted to be a theater major.
Year 2- Spring: I leave CUA two weeks into spring semester because I realized I wasn't crazy enough to be a theater major. It's too late for me to transfer into Stockton, so I work & party pretty much everyday. Summer 2006 is still one of the best memories of my life (so far).
Year 3: I start classes at Richard Stockton College. I live at home, since my mom's house is less than five miles from campus. I decide to go for a Sociology degree because it would be the fastest track to graduation. Mom helps me out financially with school and pays for one semester a year. Loan amount: $4,170.77
Year 4: Stockton needs to fund it's expansion projects and tuition is slowly creeping up. Loan amount: $5,440.31
Year 5: Mom has to take a pay freeze, so she can't help me with school this last year. Stockton ups their tuition significantly. I took loans to pay for the whole year to the tune of $12,761.13.

When I graduated in May 2009, my total loan debt was approximately $28,000 and it hasn't decreased much at all. I should also note that unlike Years 1 & 2, I did not receive any scholarships/grants/work-study at Stockton, which definitely contributed to the overall total.

Once I started working, between my low wage (thanks to that Sociology degree) and my bill payments, I couldn't manage the $400 a month Sallie Mae wanted and I signed up for a 5 year interest-only plan. I'm almost into year three of the plan and I still couldn't fathom finding an extra $200 a month to pay for my loans (I pay about $200 per month right now). While it's not something I stress about now, in a year or so, I'm going to have to figure something out!

Do you feel like you got your money's worth out of your degree? If I could do it all again, I would've gone to community college for the first two years, then transferred to a state school. Although I met some great people and got to experience life on my own, I'm not sure it was worth $15,000 (and then some, when you include the other bed debt I got myself into!).

Thursday, March 22, 2012

5gether

Does anyone know where the name of today's post came from? It's from the geniuses that developed this little diddy:
Can you believe it's been twelve years since that series aired? Me either. Anyway, "5gether" was the first song off their sophomore album 2gether: Again. It popped into my head while reading the article "5 Tips to Cut Custs on Your Home" What? You're not reminded of fictional boy bands while reading finance articles? Weirdo.

Absolutely none of the recommendations are helpful to us at the moment. None of the homes in our area are even selling for me to fight a property assessment (though this tip did help my mom last year!), we can't even afford basic remodeling right now because of the costs of removing the zoo from our attic, I'm fairly certain we have the cheapest mortgage we could have scored (and a low interest rate to boot), and we don't have a business that needs a home office, at least not until this blog goes viral.

The only tip that got me thinking was #3 - Know how much mortgage you can afford. I distinctly remember being on the phone with Wells Fargo during the pre-approval interview and almost having a heart attack when we were approved for a $1,600 per-month mortgage. Once I picked my jaw up from the desk, I remembered I was only paying half that amount. $800 per month still seemed like a lot, especially with our wedding right around the corner. I never did a monthly mortage calculator back then, so why not do one now?

Most mortgage calculators tell you to take your gross monthly income and multiply it by 28%. This percentage accounts for monthly payments for principal and interest, mortgage insurance (we have it), property taxes, homeowners insurance, homeowners association fees (don't have it), and payments for a home-equity loan or line of credit (don't have either). I used my take-home pay to do the calculations - I don't see the point in figuring out what I could afford before everything is taken out, since that's not what goes into my bank account every other Friday.

$2,200 x 0.28 = $616.00 per month

I'm just squeeking under the max by $16.00. Phew!

The other calculator the article suggested was a Maximum Monthly Debt Repayment (MMDR) calculation of your gross monthly income multiplied by 36%. The MMDR includes mortgage payments, credit cards, student loans, car loans/leases, ailmony, child support, or other debt with more than ten months of repayment left. It's noteworthy that the ideal percentage is 36%, but in places where the cost of living is higher, like the northern NJ/NYC region, the percentage may go as high as 45% Here's mine:

$2,200 x 0.36 = $792.00 per month

Here is where I blow past the recommended 36% and even topple the cap of 45%. Between the morgage ($600), my student loans ($205), and my credit card payments ($350), I'm closer to using 52% of my monthly take home pay just for debt. Wow! No wonder it's tight during the winter months when the electric bill gets sky high as well.

What's your percentage look like? Off the chart or small and sweet?

Day Thirty One Spent: $0.00
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Day Thirty One Saved: $0.00