I’ve been stuck, seriously stuck with the worst case of writer’s block. I could not get one word on a page…that is until I received an e-mail from Terri. Here goes!
Hi there! Your story is inspiring and I could use some practical, objective advice. I will give you the outline version of my situation.
– Graduated from college with $90k in student loan debt *anxiety strikes just from typing that number*
– That is for both undergrad and grad school
– Employed full-time but only making $19/hr
– No credit card debt (thankfully)
– Car is paid off. Nothing too fancy, a dependable 2005 Jeep
– No outstanding medical debt
– I definitely do not live beyond my means. Cook dinner at home 90% of the time, no fancy vacations or shopping spreesI’m actually quite sensible with my money but the student loans are overwhelming! With my current salary, I am only making enough to pay bills and meet living expenses. I’ve been looking diligently for a better job but that hasn’t happened yet. I know my earning potential is great, but right now I feel stuck.
Advice, please!!! Thank you in advance.
I loveeeee some reader advice. It makes the writing juices flow. Here goes my advice.
Terri, you’re doing great! I know that as humans we tend to focus on the negative, but you have lots of positives going for you right now. From your message, you appear to be healthy and you have a job that pays more than minimum wage. Everything else is up from there!
Beyond your student loans, you have no post consumer debt which puts you miles ahead of many new grads. I would love to have known if your loans are a mixture of private and subsidized loans, what the interest is that you’re paying on them and the monthly combined totals. It would also help to know where you live as living expenses on the coasts vastly differ from other areas. No worry, we’ll help anyway (I say we because we’re all in this debt thing together).
If you work a minimum of 40 hours per week your weekly wage is $760 before tax or $39,520 annualized. That’s not bad for a recent college graduate. Yes, we all want the fabulous job with the fabulous salary and while you may be fabulous some of that financial fabulosity (yes Kimora Lee, I borrowed your word) will come with time. Right now you want to do a bit more than survive. You will need to cut costs as much as humanly possible.
Where do you live?
Your highest cost right now is probably simply keeping a roof over your head. This is where I always advise to swallow a little pride. If you’re living in an apartment, can you take on a roommate and split the bills? My buddy Mike Choi paid for his college education and his entire mortgage by renting out rooms. He paid his 30-year mortgage off in six years that way.
If you’re not willing to take on roommates, you might need to move. Are you located in the swanky part of town? Can you deal with a little dust? Look for a cheaper apartment. Maybe you’ll move from a one bedroom to a studio apartment or from 800 square feet to 600 square feet. One of my tenants wanted the larger of two apartments that I had for rent but when we went through her finances, I pointed out that she was better financially suited to the smaller apartment. Don’t let all of the fancy home shows fool you into upgrading your living standards into something that you really can’t afford.
Are you living at home with your parents? Would they be willing to forgo rent as long as you pitch in to reduce their work load? Are you willing to shovel snow, mow the lawn, take out the trash, do the laundry, etc? Free or reduced cost housing will help reduce your largest cost of living allowing you to pitch that extra money towards that student loan bill.
Are you spending too much on technology?
We’re all plugged in all day all time and we pay for the privilege. I switched phone plans to a prepaid phone and kept my number. I now pay $40 per month with taxes and fees included instead of a normal $80 to $100 per month on phone bills. If you can hop on a family based plan splitting the cost can save you money.
I love television, but I hate paying the cable bill. You can not escape these days without a bill that is over $100 every month. If you don’t watch television too much, try switching to Netflix, Hulu or even Roku. My Netflix is getting a serious work out because the thought of spending $1,800 a year just to watch television in the few hours when I’m home and awake gives me hives.
Same thing goes for getting expensive toys all of the time. Your cell phone shouldn’t be the price of a car payment. My phone was $50 on sale at Best Buy and it does these things that you wouldn’t believe. It makes and receives calls; allows me to surf the web, download apps, e-mail, tweet, Facebook and most importantly, check my bank accounts for tenant rent payments. 🙂
Is money slipping through your fingers?
Do you think you know where your money is going? Are you sure? Until I forced myself onto the envelope system, I never really know where my money was going. The minute I started splitting my cash into envelopes and working strictly from cash – no credit or debit cards included – I really saw where my money was going.
Was getting a latte from Starbucks part of the problem? Heck yes! When you’re making $19 an hour and $4 of it goes to a just one beverage it’ll add up fast. Thankfully, you already make your own food, so that might not be your problem. However, I guarantee that you have small habits that might be leeching money that you haven’t noticed. Bite the bullet and put yourself on a budget. I hate that “b” word but it works. My budget was done with envelopes. When I mastered that I ditched them like yesterday’s news. Your budget might need to be electronic like the Mint app or something. Low tech? Try any of these budgeting templates. Find what works for you.
How motivated are you?
You have a job and you’ve been looking for another one. Perfect. Don’t rest on your laurels settling for what you have. With that said, don’t forget to check your current employer for openings that might come with higher pay. This may involve some skills improvement on your part so stay sharp. Approach your manager and say that you are interested in advancing to the next level and ask if they are willing to work with you on a career path.
If that doesn’t work, are you willing to pick up a second job? Do you even have time? With my 1.5 hour commute to work each way, I really didn’t. Instead I started selling stuff. You name it, I’ve sold it. I’ve sold Beanie Babies. I’ve sold candy. I’ve sold costume jewelry. I’ve sold adult toys. Let’s not talk about that one. You can sell stuff (eBay, flea markets, Amazon, Etsy) or you can sell your free time. No, not like that. Sites such as Fiverr, eLance and oDesk have people who need stuff done and will pay you for you to do it. If you have transferable skills that you can use outside of work, why not get paid on your own time to do your own gigs? Don’t forget Craig’s List too. Just be wary of creepy psychos, killers and stalkers.
The fact is, you can only cut so much. You will have to raise your income somehow. Be eagle-eyed and constantly on the lookout for something new with higher pay. That $90,000 gorilla needs to get fed.
Let’s get practical
In all honesty, you have to look at your student loans and be as strategic is possible in your repayment. If you have a private loan, would you consider refinancing it? Every interest point that you shave from your loan can result in thousands of dollars in interest being shaved from your loan as well. A penny saved is a penny that you don’t have to send to the student loan people.
Do you have loans held by the federal government? How about consolidating? Student loan rates are still pretty dang low. Consolidating can result in one lower monthly payment, but be cautious that the rate on the consolidated loan doesn’t result in a you paying more interest.
Can you change how you’re repaying your loan? Try splitting your payments up into a biweekly period. This will result in one extra monthly payment made per year without any real effort. Another strategy involves paying more on the loan with the highest interest so that you end up repaying less overall.
Whatever you do, I’m confident that you can dig out of the $90,000 student loan hole and go on to that fabulous life that we discussed earlier. It might take a few years, but, I’m confident that you can do it.
If you need help with something, feel free to shoot me a message. I’m always happy to help.
Alright gang. You see what I have for Terri. What do you recommend?