I Was Featured on CNN Money!

"4 Steps to Paying off Your Student Loans,
from Someone Who Crushed $100,000"

After connecting on Twitter, a CNN Money reporter reached out to me via email and asked for an interview. At first I thought the email must have been spam. It wasn't. So of course I said yes.

The phone conversations and emails that transpired woke me up to just how much I have paid off. Not that it didn't sink in before, but saying my financial story aloud from the very beginning to present day was quite the humbling experience.

I started this blog in 2010 and was so... ashamed isn't the correct word... sad. Sad about the amount of debt I had and therefor did not want anyone to know my feelings about it. After all, many of my friends had the same situation going on, but for whatever reason, no one spoke up about it other than the occasional griping over hefty monthly payments. I needed an outlet. So I created this blog. I had no idea that 6 years later it would land me on the front page of the personal finance section of CNN Money. But I am glad it did. Now that I am out of the woods, I am okay with everyone knowing this blog, and all of these words, are mine. The encouragement I received after the article published was simply unexpected and overwhelming.

I do not have a business set up where I charge people for financial advice. The article does not lead you to a website where a company I created can help you. It leads you here, to this blog; it is simply my story. And Katie Lobosco, the reporter, broke all of my ramblings into 4 simple steps. Those simple steps are what got me to where I am, and I hope that others can follow suit from that. I have spent several hours with several different friends in the last 2-3 years quietly helping them create their debt pay-off plans and budgets. I have no idea what the future holds for me, career wise. It could be staying in corporate sales, singing/songwriting, music business, or it could be becoming a CFP and starting my own company; I just don't know yet. All of that to say, right now I am simply focused on the next 5 months of getting these loans out of my present day life.

If you would like to give it a read, you can find the article here.

I Chose A Road

I consolidated! Let me say that again: I CONSOLIDATED! I was actually approved for a private student loan consolidation :) I cannot explain to you the joy and relief the words, “you were approved” brought to my soul; I cried a happy tear or two at my desk then texted my mom and a few close friends about the news. It took 6 years to get this. Although I have a decent stretch of road to travel in front of me, I am hoping that the ride on the latter half of this journey is a bit smoother.

The facts: I decided to go with Charter One/Citizens Bank. The reason being: interest rates. The only other real option in my mind was Wells Fargo; however, Charter One’s interest rates were approximately one point lower on both the fixed and variable options. Also of note, I have been denied consolidation from Wells Fargo on more than one occasion so I figured I would try Charter One first to take advantage of the lower rates and if denied, try my luck over at Wells Fargo again. Thankfully, Charter One gave me an approval.

The only way I would accept a refinance would be a). approval with no co-signer b). a low interest rate and c). no early re-payment penalty. Based on my debt-to-income ratio (which is finally no longer inverted) I was approved to refinance without a co-signer. Based on my credit score, which they reported was 809 (they source EQUIFAX), I was offered their lowest interest rate. The only thing left for me to decide was the term length as well as a fixed or variable interest rate. This was a tough decision because as I stated in the previous entry, I was torn as to whether or not to embark on this refinance journey if I was only going to be reducing my interest rate by a point or two. Before I tell you which option I picked, allow me to lay out the options I was given to choose from:

Term, Type of Interest Rate, Interest Rate, Monthly Payment, Total Amount to be Paid:

20 Years, Fixed, 5.44%, $299, $71,919.13

15 Years, Fixed, 5.19%, $349, $62,831.51

10 Years, Fixed, 5.04%, $460, $55,314.88

5 Years, Fixed, 4.99%, $813, $48,835.84

20 Years, Variable, 2.82%, $239, $57,438.50

15 Years, Variable, 2.67%, $294, $53,004.60

10 Years, Variable, 2.62%, $411, $49,375.23

5 Years, Variable, 2.57%, $766, $46,019.30

 I went with the 20 year/variable term for merely monthly payment/total amount to be paid reasons. Although the cap is astronomical, there is a cap on the variable interest, but it is so huge (like upwards of 25(ish)%) that should it ever get that high, I am in some deep water. All of my previous Sallie Mae/Navient loans had variable interest rates, and they never changed. I know that Dave Ramsey states to not choose a variable interest rate when a fixed is offered. However, I did not know why he stated that as it seemed pretty clear to me that if I stuck to repaying the amount as fast as I could, I would save myself money in the long run. Literally the day after I signed everything, I ran across one of his broadcasts on YouTube (I am the nerd that listens to these on my lunch breaks) where he stated his reasoning for always choosing fixed is to eliminate any and all risk associated with your finances. Risk basically equals stupidity. In my case, I was too late to back out and choose a fixed rate - here's to hoping I stay crazy committed to paying this baby off. I may look back on this paragraph 2 years from now and hate myself for it, but for right now, in this moment, I feel okay about my decision.

What this means for me: To begin, I did indeed get the remaining 6K paid off from the original 14K I talked about in my last entry; this put me right where I imagined, financing approximately 43K through Charter One. This does significantly reduce the amount of interest I will be paying each month, but in no way is this a cop-out in regards to my repayment responsibility. I will still follow Dave’s advice to the best of my ability and get this debt gone as fast as I possibly can. I have sacrificed my money, time and freedom for far too long and am more than fed up with this burden; I believe my annoyance and sacrifices in combination with the fear of a rising interest rate will continue to fuel my inner crazy to keep putting every extra penny I come across towards this loan.

Although I am out from under the shadows of the MONSTER that is Sallie Mae, I am not going to rest. I am going to look at this consolidation as a ‘job well done so far’ high-five and KEEP RUNNING. I hope you all will continue to follow me on this road to debt freedom and I pray that soon, we will all be able to hang up our running shoes, take a seat, and have a glass of sweet lemonade together. Happy spring, people!

Financial Sweatpants

Today I paid off the first of my two federal loans! This, my readers, is what I would like to call unbuttoning and unzipping my tight business slacks. This loan was the one that was sold to the Department of Education when my other one stayed under the same Sallie Mae name. Although it was under another name, I believe Sallie Mae still had some sort of ownership over it because I was still paying on it through their website. I chose this one as my second loan to pay off because it was the lowest of the 2 federals; both started out at $4,500, but where the other one had a 0.5% higher interest rate, its total balance was higher. I will tackle that higher one sitting at a little over $4K next.

If you had told me 2 years ago that I put down almost $17K towards my student loans between March of 2013 and May of 2014, I would have a). told you to walk away, you've got the wrong person or b). figured I hit it big while gambling during the Vegas bachelorette party I knew I was about to attend. I would not have thought it was from budget discipline based around some financial dude’s theory.

It has not been the easiest, especially during changing seasons when I would rather give my hard earned cash to Macy’s over ole’ hag Sallie. However, I know that in the end I will be glad I chose the road to financial sweatpants.

2 down, 4 to go.

Snowball (since it’s winter and all)

Unfortunately, as this is my ‘I’m all grown up now’ blog, I am not talking about a literal snowball, but rather Dave Ramsey’s theory on paying off debt. And let me tell you, it works. It is a realistic, hands-on approach with a surprisingly fast turn-around time in regards to results. A positive attitude can take you far, and for a while that is all I (somewhat) had, but there comes a point when you realize all of your rainbows and butterflies are about to get repossessed.

It is around this point of realization that you begin to accept the fact that a change needs to be made. Making the minimum payment amount each month on an enormous pile of loans, especially when the minimum payment is being applied to interest only, will get you nowhere fast. Excuse me, it will get you somewhere – into more debt. I now understand why Sallie Mae welcomes ‘Interest only’ payment plans with open arms to new graduates as it significantly increases their revenue. Allow me to demonstrate:

I borrowed (in 2007-2008) = $68,545.00
I owe (as of March 2013) = $78,950.18

For those of you without a calculator handy, that’s a $10,405.18 INCREASE of debt in a matter of approximately 5 years.
I have PAID out of pocket (starting in December of 2009 – March of 2013) = $22,510.32
Amount of $22,510.32 that went towards my private loan principal = $0
Amount of $22,501.32 that went to my federal loan principal = $875.85

In summary (5 years):
Sallie Mae gets = $32,039.65
Jessica gets = $875.85

Nauseating.

This seemingly unethical situation is indeed legal and is WAY too common than I care to realize. It looks as if my rainbows and butterflies will not have any friends to play with here soon if people in my similar situation do not make the proper financial adjustments. I created this blog not only as an outlet for myself, but as a publicly visible flashing bright neon warning sign to all parents/students out there to read before entering down the same road I did. Why travel for 20 to 25 years down a bumpy gravel road when you have the option of a shorter, smooth paved one?

I could write pages upon pages on how much I detest the above situation and how many hours of hard work it took and how much I had to sacrifice in order to be able to pay Sallie Mae the bare minimum each month. And I have pretty much done just that in my prior posts, but as I stated in the beginning, maintaining a positive attitude surrounding a situation you loathe can only get you so far. In reality, it is little ole’ you against a beast that gains size and momentum at a daily rate. You shrink smaller and smaller as its monstrous shadow alone expands over you until you eventually shrivel up and freeze to death. Like literally, your mind fast forwards and you visualize yourself as an educated homeless person freezing under an overpass, huddled up in your cardboard box waving a ripped white T-shirt as your surrender flag. Okay, I know that was a tad dramatic, but I would be lying if I said my mind never went there for a split second. I mean, cardboard box/parent’s house, potato/potato :) Only joking mom & dad, but once you calm the hate in your heart and decide you want to survive and fight for the lifestyle you went to school for, what once seemed like an impossible solution, starts to seem possible. A sort of survival instinct kicks in when you take your blinders off and stare your debt in the face.


My baby snowball:
My total monthly expenses: $1,625.00
My total currently in savings: $5,000.00

I should have approximately $600 to put into my savings account every month. In a year, I can save $7,200. This does not include the money I will get from work bonuses or tax returns. Also, my income is somewhat variable as my second job is waitressing so I have more of an earning potential than just the minimum I factor into my monthly income number. That in combination with time and a half for overtime at my day job, I can again increase my monthly income. If I really stay focused and put every dollar I can into savings, I can start to make a dent or two. On the flip side, I will have things happen that will increase my monthly expenses such as doctor appointments, dentist appointments, car trouble, ect.

My rules:

-          I will not let unexpected expenses get me off track as it is not failure on my part for not contributing the entire $600 each month; I can make up for what I lost by saving more than $600 some months.

-          I will never let my savings account fall below $1,000.

-          I will not use my credit cards without paying off the entire balance each month. 

My car and credit cards are paid off, and I rent my house so I aimed at the lowest dollar amount private loan (debt) to tackle first - $12,400.00. In order to get my monthly payment on that loan down a little, and to avoid having what is a mountain of money (to me) just sitting in my savings account, I plan to put money down on the loan in increments of $4,000. It will be a tight rope, but little by little I should be able to get my debt down to somewhat level with my income. I made this plan in March.

It is now December 30^th and I am happy to report I have paid off my $12,400.00 loan in a shorter time span than expected! I did have dentist, doctor and car bills pop up, but I picked up extra shifts at work and stayed late some nights at my day job in order to get overtime pay. My best friend moved out of state in May so that helped cut out dinner, movie & going out expenses. It took 9 months, and was very painful to watch chucks of 4 grand be handed over to Sallie Mae; but I knew if I didn't start this now, it would hurt much more in the long run. I will continue to practice this method as it is the only thing I have done thus far that has produced actual results.

1 down, 5 to go.