Student Loans- the best part of college

You can pretty much think of student loans as your shadow until you finally pay them off or at least get them "forgiven" since they are not something you can get rid of through bankruptcy or any other means. How do you get them forgiven? Easy, make payments for 25 years and get them approved to get them forgiven. Even if you are just making minimum payments, 25 years of minimum payments will be greater than the principal you originally owed. Add to the fact that student loan minimum payments are not stable. When you make a big payment on one, then the minimum amount due will decrease. The other way to get student loans forgiven is to die. So in reality there are three ways to get rid of your student loans, making payments for 25 years which will be a huge burden on your wallet, dying, or paying them off. I guess there is one other way, which is to get a federal job/any other job that will pay off your loans for you. So I guess some public jobs, and some private jobs will also rid you of your loans. But if you're like me and work in the private sector and your company will not pay off your loans for you, then the most reasonable thing to do is pay them off yourself as quickly as possible. Some people will make an argument that say you are on a 10 year payment plan, and  you only the minimum, and use the rest of your money that you were going to pay off loans to invest that you will actually end up with more money after 10 years than the person who was on the payment plan. That is a valid argument, but it is also more risky. For me at least, most of my loans are in the range of 6% interest rate. So for me to actually make more money by investing I would need to find something that gave me rate of return greater than 6%. Not extremely easy in the economy we are in today. You will certainly not make greater than 6% from your savings accounts. So long story short, for me at least the best way to get rid of my student loans is to pay them off as quickly as possible. There are many theories here as well as the quickest way to pay of your loans, and if you have mathematical data to show that your way is better than mine, then by all means tell me because I'd love to find a way to pay them off quicker.

So I guess the best way to show how to pay off your loans quickest is through an example. I'll just make myself the Guinea pig. I started off the summer with $37,000 in student loans. So I'd place myself in the middle of the pack for debt. The way my loans were setup, I had about 10 different loans, some of them had the same interest rate, some had different ones. Luckily for me though, most of them were managed by one company so I can see my loan information pretty easily. Of my loans, they ranged from 6.8% to 4%. Many of my loans had already started to accumulate interest when I graduated. Unlucky for me, whenever I made a payment, the payment would deduct from the interest first and the principal with the remaining. My first payment I made was $500, and it was pure interest. So what you are going to want to do to figure out your payment plan is get all your loan information in front of you. I usually just use Excel and make a table to look at my data.

The first step you want to do is basically rank your loans from highest priority to lowest. Highest priority is always your loan that has the highest interest rate. So for me my number 1-5 were all my loans that were 6.8%, my 6-7 were my loans that were 6.0%, my numbers 8-9 were 5.5% and my number 10 was 4%.

It looked like this

1. 6.8%
2. 6.8%
3. 6.8%
4. 6.8%
5. 6.8%
6. 6.0%
7. 6.0%
8. 5.5%
9. 5.5%
10. 4%

The amount owed on each one is not important, the important part is the interest rate. So what you are going to want to do is make the minimum payments on numbers 2-9 and on your number one priority pay as much as you can. For me, I decided that I can live comfortably paying off $1000 a month. So I pay about $325 in minimum payments for my 2-9 loans and about $675 a month on my number one loan. Once your number one loan is paid off, you move to your number 2 loan. So after I paid off my first loan, I made the minimum payments on 3-10 which was about $300 and paid about $700 a month on my new number 1 loan. The important part is that once you pay off a loan, that you do not reduce the amount you pay per month. It totally ruins the process if you reduce the payments after each loan is paid off. From my calculations I should have all my loans paid off in about 2 1/2 years from now.

And if you need some incentive on paying off your loans, you can calculate your interest with this simple formula. Simple for two reasons, one because it is easy math, and two because most student loans are calculated using a simple interest rate. That means that your your interest is only calculated on your principal.

The formula is this: (Principal * Interest Rate)/ 365.25 = Daily Interest accumulated.

So if you owed $5,500 on a loan with an interest rate of 6.8%, the daily interest that you would owe would be as follows: ($5,500*6.8%)/365.25= $1.02 a day. And to see how much that is in a month just multiply it by the number of days in the month, so a 31 day month would be $31.75 extra you owe by not paying off your loan. From my own loans, I calculate that I accumulate about $100 a month in interest.  Thanks DebtFreeAdventure.com for the interest formula.

Less than Extreme Couponing

First let me start out with commenting how blessed I am to have been able to find a good paying job right out of college. With that said, and that fact that I like it when I get to keep my money and spend it on things I choose, or even save it for whatever endeavor I'd like to use it on in the future, I hate spending money on boring stuff. For example, Amanda and I were still short one thermometer. Not the most glorious purchase, but in our opinions something that we'd have to bite the bullet on. At my parents house, they have one of those cool thermometers that you just swipe across the forehead and it tells you if you have a fever or not, so naturally I wanted one too. So far this seems like I'm rambling which i partially am, but I wanted to have a good introduction to the main topic of this post, which is saving your money so that you can buy fun things, or save it for the future. Either one to me is more enjoyable than buying thermometers. Now since we have established I like to save my money, Amanda and I have decided that we really don't need cable tv. With Netflix and Hulu, we can pay a lot less and still get some entertainment. The reason I bring this up is because I was surprised about the show Extreme Couponing. The fact that they managed to turn coupon into a verb was reason enough to get me interested. Somehow i came across a sample of the show, and became enamored with the couponing. I know that when they say extreme, they definitely mean it, but I felt that with some patience and some use of Google, that I myself would be able to save some scratch.

So here are what Amanda and I did to save a little money, get some freebies, and actually have a little fun while shopping this past Sunday. Most of these deals are still available until this next Saturday, so if you need any of the items we needed, you could save some money like we did.

Walgreen's: Walgreen's has these promos called Register Rewards. Basically when you buy a certain product they give you register rewards which is basically Walgreen's money good on your next purchase. The catch is, say you get register rewards for three or four products, they'll print you that many rewards. When you make your next purchase, you are not able to use four rewards on one thing, you need to buy as many products as you have reward printouts. So you can do like we did and find cheap fillers to make up the item requirements.

What we got were,
Omega Smart DHA Kids vitamins, $10 with 10 register rewards = Free
Tom's Deodorant, $4 with 3 register rewards = $1
Tylenol Precise Pain (basically heating pads or Icy Hot) $6 - $3 coupon found online, and 3 register rewards = Free
Syntha 6 energy bar, $1.89 with 2 register rewards = More than Free!!
Colgate toothpaste/Toothbrush, 2 for $6, with 2 $0.75 coupons and 4 register rewards= $0.50
Palmolive dish soap, $0.99 with Walgreen's coupon, and $0.50 off one with manufacture coupons= $0.50
We had a grand total of $22 in register rewards. Right after we got the rewards, we continued to shop and look for the thermometer. Luckily it was usually $60 but on sale for $40, and we used the register rewards to only pay $18. I'm smart enough to know that we really didn't get it for $18. We essentially paid the full $40, but we got the rest of our stuff for $2. Not too shabby, we got something we needed, and were able to get other essentials for a relatively cheap price.

Target: While at Target, we bought 3 1.5L bottle of Listerine for $5.74 each, but the good thing was that if you purchased three, you would get a $5 target gift card. We also had manufacturer coupons, 3 $1, and one Target one for $0.75. So basically we got three big bottles of Listerine mouth washes for $2.82 each. We also were able to get some face wash as well. We had 2 Clean and Clear coupons for $2 off one product, and one Target coupon for $.75 off one. So we purchased two face washes for $5 each, used $4.75 in coupons so basically 2 face washes for the price of one.

Fred Meyers: Fred Meyers was our last stop. While at Fred's we had 2 $1 off three Trident gum packs, and conveniently FM's had a store coupon for Trident gum $0.69 each with a max of 6. That worked out for us, so we got 6 packs of gum for $0.36 each. We were also able to get 2 Odwalla drinks at a nice discount. FM's had select Odwallas on sale buy one get one free, and we also had 2 manufacturer coupons for $0.55 of one. So we got 2 Odwallas for $1.55. Luckily for us they had Superfood in the sale, which is the kind both Amanda and I like.
obviously
The way we get our manufacturer coupons is that we have two Sunday only subscriptions (purchased at a discount of course, - Thanks Groupon, and Thanks Dad), one for the Seattle Times and one for the Everett Herald. We also go to some of the manufacturer's website and usually a lot of companies have coupons right on their websites. We are not extreme couponing, but it is nice to save a little money for other uses. Speaking of other uses-- paying of Student Loan Debt!! One of my next few posts will be the method I am using to pay of my student loan debt, which I believe to be the most practical way to pay the least amount of interest. I'll also review other theories  that come in to play when paying debt. Thanks for reading-- J

Out with the Old, In with the New...Years that is!

It's pretty amazing that another year has passed. Well, amazing on how you look at it. From the big picture, it really isn't too incredible. The only thing that was accomplished was that we, the inhabitants of planet earth, took a ride around the sun. Once. Not to impressive, but generally we do not look at things, especially our lives, in such an enormous perspective. When I take time myself to look back at what I accomplished in the past 365 days, it's pretty impressive to me, but that's because my accomplishments before have not been of the greatest magnitude. I will however remember 2011 as a year of new beginnings. But you know what they say, every new beginning comes from some other beginnings end. Which I know is a lyrics from Closing Time, but it felt appropriate to swipe that from them. I finally graduated college. It wasn't exactly a linear route from straight from high school, but really, who gradates in 4 years now? I'm not trying to put you down if you did do that, I actually applaud you for staying on track. Graduating college was pretty big, but lets face it, in today's world, a bachelors is becoming the new high school degree. So it's an accomplishment I can now check off the to do list, but it really doesn't set me that far apart from my peers. A bigger accomplishment in my mind was finding a job that actually required my degree. This was exciting, and it made me feel that the past 5 years of sitting in classes and paying my instructors and institutions $36,000 I didn't have actually worth my while. Of all my 2011 accomplishments, I'd really have to say that jobs come and go, and you can go get your education when it fits in your life, but when you find that special person that you know you want to spend the rest of your life with the, and hopefully the feeling is mutual, that marrying them is without a doubt the biggest accomplishment of the year. 2011 was a year of endings, I ended my formal education... for now, was fortunate to finish being on the job search before it even started, and ended my life as a single man. It's my hope that when I look at 2011, that I'll be proud of my accomplishments, but realize that they are only the first steps to my ascension to greatness that I hope I am capable of. Only time will tell. Oh yeah, and remember the next time you're buying an airline ticket, remember to tell them "If it's not Boeing, I'm not Going!"