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The State of My Student Loans: Or, On Not Achieving My Goal and Why It’s Okay

Well, the day is finally here… I’m officially the big 3-0! If you’ve read my site at all over the course of the last 5 or 6 years, you might know that it’s been a longstanding goal of mine to pay off my student loans by the time that I turn 30.

So did I do it?!

Unfortunately, no. I’ve known for a while that it probably wasn’t going to happen by my birthday, but I was holding out hope for a Hail Mary pass at the very last minute. That play didn’t happen and I still have a pretty sizable balance.

Let’s take a look back at what I have accomplished, though. I’m pretty bummed about it and find methodical analysis of my finances almost as soothing as a nice, full-bodied glass of red wine.

Where My Student Loans Started

I made my first student loan payment in May 2011. I’ve been making payments on my student loans for exactly 6 years! My how time flies! However, I didn’t enter full repayment in May 2011, as I was still in grad school. Arcane rules for one of my private student loans required me to start making payments on my loan no longer than X years (I can’t remember how many) after I took the loan out, even if I was still in school. I made the first payment for (almost) the rest of my student loans in December 2011. I made the first payment for the last loan in April 2012. When I started paying off my student loans:

After capitalization of my student loans (interest earned in deferment is added to the principal), I owed just over $96,000.
My minimum balance was $756.07.
I had 15 separate loans split across 3 different servicers. This meant that my minimum balance was split across 3 different checks.
I had 3 private loans, 1 Perkins loan, and 11 Federal loans.
I decided to use a graduated repayment plan for 2 of my federal student loans from graduate school. A graduated plan means that the loan will still be paid off in 10 years, just like a standard repayment plan; however, the minimums start smaller and increase in size every 2 years.

Thankfully, I was able to get a full time job shortly after graduating from graduate school. I was then able to segue my education and job into a more lucrative (and personally fulfilling!) career that has resulted in me earning much more than I ever would have as a librarian.

Where My Student Loans Are Now

Even though I started with a LOT of student loans, over the course of the last 6 years (and really 5.5 if you’re counting when the majority of my student loans went into repayment), I’ve been able to get a fairly big handle on my student loans:

My student loans balance is hovering around $25,000. I’ve paid off 75% of my original balance!
My minimum balance is ~$440. Although I’ve paid off a number of my individual loans, my minimum balance has not gone down substantially, since my graduated repayment loans’ minimum balance has increased.
I have 4 remaining loans. I’ve paid 11 loans in full.

As you can see from the chart below, the bulk of my spending on student loans has been between 2012 and 2016. I’ve held steady at paying $20,000 in student loans for each of the last two years. This year, I hope to pay the rest off. I expect that interest will result in me contributing up to $26,000 to finish the loans off.

student loan payments by year

When you add up all of my payments, I’ve contributed over $91,000 to my student loans! A quick calculation tells me that if I end up contributing $117,000 ($91,000 to date plus my remaining balances), then I’ll have spent $21,000 on interest. Lord, the things I would do with $21,000!!! Or even, Lord, the things I would do with an extra $117,000 if I hadn’t had student loans in the first place.

How I Plan to Pay Off My Student Loans

Clearly, I’ve made a ton of progress; however, I still have a long way to go. In fact, I’ve been paying my loans for 5.5 years and my balance is now only getting to what the U.S. national student loan balance average is. That’s pretty sobering, if you ask me.

My goal is to pay the rest of my student loans by the end of the year. This year has been a bit crazy for us when it comes to finances. We got married (and paid for our wedding) and we also moved to Germany. The wedding cost a bit (although we were under substantially under the national average for that!) and moving will end up costing us quite a bit with furniture costs and security deposits. Stella’s final months were also quite expensive.

In the hubbub of moving, we’ve acquired quite a bit of cash. We sold our cars, received our security deposit back, had been earning steady incomes (and trying our best to not spend money on anything that didn’t contribute to the move), received wedding gifts, and sold some of our furniture.

We’d like to use a lot of that cash to make a big dent in the student loans. But first, we need to do a couple of things:

Pay security deposit for our new apartment
Purchase furniture and other household items
Max out ROTH IRAs for 2017 (doubles as a 3-month emergency fund)
Maintain a cash 3-month emergency fund

We’ll put whatever is left towards a large chunk of the loans. We are planning to rent an apartment that will allow us to save about 500€ per month towards retirement and other long term savings. Since we will have done all of our planned retirement savings for the year, that money will go towards the student loans until they are paid off.

May 24, 2017 by Nicole

Budgeting, Life, Money

Married Life: Rethinking Your Budget After Combining Finances

As I mentioned in my last post, I got married a couple of months ago! What a whirlwind that was! I’ll be posting about our budget and spending for the wedding in a little bit, but I wanted to talk a little bit about how our finances (and financial tracking) have changed since we tied the knot and decided to jump into combining finances with each other.

Before I continue, I do want to note that every situation is different. What works for us might not work for you and vice versa. Finances, especially when it comes to couples combining finances, are very personal and should be tailored to fit your individual needs.

Before combining finances: Separate accounts and separate budgets

Before we got married, our finances looked a bit like this:

Separate Accounts – We maintained completely separate bank accounts. We discussed how much we each had, but we never comingled funds.
Shared Expenses Split 50/50 – Anything that was a shared expense was split 50/50. There are a bunch of ways you can slice and dice money when you live with a significant other. We don’t have similar incomes, but we also don’t have similar debt levels. Richard earns less but has zero debt. I earn more, but still have my student loans. It worked out pretty well for us to split our shared expenses mostly 50/50 and the “extra” money I earned (when compared to Richard’s income) went to my student loans.
Separate Tracking – We both maintained separate Mint accounts. I would go back every month and make sure that my spending categories were displaying correctly. Since Richard would pay for some things and I would pay for some things, this was a way for me to accurately show how my spending was happening across categories.
Separate Goals – As I’ve talked about at length on this blog, I’ve had a goal to pay off my student loans by the time I turn 30. Achieving that goal probably isn’t going to happen, considering I have only 2 months left and $27,000 to go. In addition to that goal, I’ve also set savings percentage goals for myself as well as goals around my emergency fund. Before we married, Richard’s goals were less rigorous and defined.

After combining finances: Still mostly separate accounts, but combined budget

We could have made some changes to our personal budgets and accounts prior to getting married. We know plenty of people choose to combine their finances are different points in their relationship – when they move in, when they get engaged, when they get married or never!

We kept things separate until we got married for a couple of reasons. Firstly, I’ve been working towards my big bag student loan goal for a while. Secondly, lack of need. Honestly, we didn’t really see any reason to do it. We decided to combine our finances when we got married because we knew we would be receiving monetary gifts from people and wanted to put those deposits in a shared account and because it would hopefully make things easier from a moving perspective. We’re still not sure what my job situation will be when we move, so we wanted to prepare ourselves to be a one income household.

Here’s how we have things set up now:

Mostly separate accounts with a few joint accounts – We opened two joint accounts – savings and checking. We are still working to figure out how we’ll use the joint accounts, since we aren’t planning to get rid of our separate accounts, but for now we’re able to put joint money into them.
Shared tracking – I track all of my spending in Mint. I’ve imported all of Richard’s accounts into Mint so I can get a complete sense of our spending as a unit.
Shared expenses – Related to the shared tracking, we no longer do our 50/50 split expenses because everything is showing up in Mint. This has been nice, because doing the calculations for our split expenses and then adjusting the categories in Mint did take a bit of time each month.
Shared goals – We still need to formalize this one a bit more, but now that we’re treating everything as ours, we have shared financial goals. Priority number one for both of us is still to pay off my loans. The rest is a little up in the air depending on how much job situation turns out and how quickly I can start working when we arrive in Hamburg.

A shift in mindset

For me, the biggest thing about combining finances has been trying to shift my thinking around the cost of things. When we were doing split expenses, I was definitely thinking in terms of what I had to pay for a certain thing. So if a piece of furniture was $100, I would mentally calculate the cost at $50, since that’s ultimately what was coming out of my pocket.

Now, it’s a little different. The $100 is coming out of our pocket, which probably doesn’t sound all that different, but it feels different to me. It’s almost like the cost of everything has doubled overnight! It hasn’t though, so I’m hoping that viewing things from the lens of their entire price will help curb some of our random spending on things.

A liminal state

One of the things that is weird about our first few months of marriage is that we’re actually preparing for a huge move to another country. We’re also dealing with a terminally ill pet. And we’re also trying to take care of some of our own health items before we leave. This means that our spending is not at what I would consider normal levels.

We’ve been spending a ton on pets and healthcare, and will be spending a ton on moving items in the next month or two. We’re also facing the possibility of me being without a job for a month or two. I’ll probably provide an update on this after we get to Germany, because we’ll undoubtedly have some changes as a result of switching currencies and moving to a more cash-based country.

What do you and your significant other do?

March 27, 2017 by Nicole

Cost Estimates & Breakdowns, Moving

Should I ship or sell all of my stuff when moving abroad?

One of the big questions for moving abroad that has been plaguing me for a couple months now is: What should we do with all of our stuff? Should we sell it all and start fresh in Germany? Or should we try to ship it over?

I’ve been trying to make this decision from a couple of lenses:

Cost
Effort
Logistics

There are different levels of options: we can sell most things, we can bring most things, or we could find some happy medium. First, let’s start with what amount of stuff we’re even talking about.

What We’d Bring (or Sell)

We currently live in a 750 sq ft 1 bedroom apartment. We have a small storage unit down the hall from our apartment and also keep a number of items stored at Richard’s parents’ house. I like to think that we don’t have too much stuff, but things can really add up when you start to investigate what is in all of your drawers and nooks and crannies. A few months back, I did a sweep of our stuff after reading the Life Changing Magic of Tidying Up. We got rid of a lot of things, but there are still many items that probably could go.

What we won’t bring

There are a number of items that we know right off the bat that we will not bring with us when moving abroad, due to various reasons:

Electronics with plugs – Germany and the U.S. have electrical systems that run on different voltages. That’s why you need converters and adapters when you go over to Europe on vacation. Our TV (which is super old anyways), kitchen electronics, scanner, hair dryer, straightener, air purifiers, printer and lamps will not be coming with us. We will sell most, but store a couple of items like our KitchenAid mixer, CrockPot, and wine fridge.
Cars & motorcycle – Each of us had one car plus Richard has a motorcycle. We won’t be bringing any of these. We’ve already sold one car and plan to sell the other two vehicles before we leave. We figure that it is not worth the hassle or cost to bring them over. Plus, we are moving to a city that has excellent public transportation. We’ll be living the car free life for a while.
Couch – We have a fairly compact couch that we purchased from IKEA when we moved to Virginia a few years ago. We like it, but we have no idea what our new apartment is going to look like. We don’t want to risk moving a fairly inexpensive couch that we might not be able to fit into our new place.
Childhood mementos and most photo albums – I’ve been lugging a few boxes around with me that include childhood momentos. Richard is working on whiddling his down to a couple boxes as well. These will be safe and sound at Richard’s parents house while we are exploring Europe.
Plants, flammables, and other restricted items – There are a number of things that you aren’t allowed to bring with you to a new country. Plants and flammables are the most relevant to us. Firearms and porn are also on the list of prohibited items, but those don’t really apply to our situation.
Consumables, personal care items and cleaning supplies – We don’t need to bring toilet paper, cleaning supplies or things like shampoo with us.

What we will definitely bring

Original university degrees, transcripts, birth certificates, marriage certificates and other documents – Germans are big on actually seeing your flesh and blood documents. We’ll bring these with us.
Pet – Zeke will be coming with us to Germany! Unfortunately, Stella has a terminal illness, so she won’t be making the trek with us. Now let me go cry a million tears…
Plates, flatware, and glasses – We just received some new kitchenware as wedding gifts and we have quite a collection of wine glasses. We’re planning to bring these along with us since they are rather compact and mean a lot to us.
Clothes – We’ll probably trim down to the necessities, but we have no plans to trash what we’ve got and start over. We’ll slowly assimilate to dressing like Germans as we buy new items there.
Computers and small battery- or USB-based electronics – We’ll be able to bring our computers and a number of small electronics like our cell phones, electric toothbrushes, and a few other items.

What we’re still deciding on

So we have a number of things that will come and a number that won’t, but we also have a number of things that we’re not sure about yet. We couuuuuld bring them, but we could not bring them.

Dressers and other small furniture
Picture frames and other decor
Bookshelves
Office chair and desks
Bicycles
Extra mattress and bedframe
Books, DVDs, and other media
Wine
Mattress, bedframe and bed linens
Dining table

Our Moving Options

So that’s all of the stuff we’re talking about. We basically have a few options for moving things:

Move stuff by sea in a 20 ft container
Move stuff by sea in a small cube (200-300 cu sq ft)
Pack everything in suitcases and bring as excess baggage on the plane
Ship items in one off boxes through USPS, FedEx or UPS

These options vary in terms of their cost, ease of coordinating here vs. there, and timing that we would receive our options. Let’s take a closer look at each option.

Moving Stuff by Sea

The first two options involve putting all of our belongings onto a ship and sending them over to Germany by sea. The initial quotes that I’ve received have been anywhere from $2,000 – $6,000. The final cost depends on how much you send, what services are included, and various port and agent charges. Logistically, there are some important things to consider:

Timing – It can take a long time to ship items by sea. We would need to go a period of time before we leave and after we arrive without the items that we ship. This may not be a big deal for some items that we ship that we don’t use everyday. However, for an item like a bed, that would mean we would have to figure out where to sleep for 6 to 8 weeks. The time estimates are also not guaranteed. Your stuff could arrive earlier than expected, but it could also arrive later than expected.
Packing – Packing and inventorying of our items is included in the price. If we ship our stuff, we want to leave the packing up to the professionals. There are a lot of rules and regulations of how you need to document your items for customs officials, so it will be infinitely easier and more efficient for someone else to handle that dirty work.
Flexibility for Volume – You have a lot of options when it comes to how much you can ship. We can ship a few of our items or we can ship a larger load in our own 20 ft container. This gives us some flexibility around choosing the most cost efficient option for us.
Cost – $6,000 is a lot of money! Plus, if you lug it there with you, you will eventually need to bring it back to the U.S. Do we really think the things we’re planning to ship are worth the $12,000 it would cost to bring them there and back? For the most part, we’re still in the IKEA phase of our furniture lives, so this is a very legitimate question. There can also be fees that spring up when the items get to the new country with customs and the port.
Finding a Vendor We Can Trust – If you’ve ever googled an international moving company, you’ll understand that these websites are like the wild west. It’s impossible to get a straightforward quote. No one has positive reviews. It’s confusing. I’m really nervous about picking a mover and then having it turn out poorly because I didn’t think to ask the right question or I just got unlucky.

Bringing Excess Baggage by Air

If we want to completely get around finding an international mover and dealing with all of that, we could try to bring our stuff with us on the plane as excess baggage. Like sea, there are important things to consider with this method of moving:

Timing – Our stuff would be with us, so we wouldn’t have to worry about not having the items to use while they are in transit.
Cost – Excess baggage can be expensive, but depending on how much we bring with us, it could still be less than the cost of shipping things by sea.
Lugging our stuff – Our plan is to fly into Frankfurt and take a day to settle down. Then we will take the train from Frankfurt to Hamburg. We are doing this because we will have Zeke with us and we figured that they will want a break from travel before we make it to our final destination. If we bring our items on the plane with us, we will need to lug them on the train with us. This may prove to be rather difficult, because I do not think any of the trains in Germany have baggage cars.
Flexibility for Future Trips – We have the option of bringing a few luggage items with us and then having visitors bring additional ones for us at a later time. This will possibly be a good option for the items that we are fine living without for a few months, such as decor items and other nice to haves.
Safety of stuff – A major risk with bringing stuff with us on the plane is that baggage handlers aren’t exactly known for their light hand with handling luggage. If we bring fragile items, we are at the mercy of the baggage handlers who may or may not be throwing our luggage around while we’re not looking. Do we want to take the risk of trying to pack our silverware, plates, and wine glasses in our luggage or just trust them on the open sea?

Cost Analysis

I mentioned that we want to make a decision about what to do based on cost, logistics and sustainability. Cost is easily going to be the biggest predictor of what we do. So how do we measure the final cost? Well, that’s what is a little unclear, but I think I can figure it out. First, let’s start with our known and set costs.

Things We Know We’ll Need to Buy

There are things that we won’t bring with us, so there are things we know we’re going to need to purchase when we get to Germany. Here are some high level estimates to get us started. Most of the prices came from IKEA and Amazon.de.

TV – ~$1,000 depending on what model we want to get
TV Stand – $100
Couch – $600 gets us a similar IKEA couch to what we have now
Toaster Oven – $75
Hair Dryer – $35
Air Purifier – $400
Lamps – $200
Consumables & cleaning supplies – $200
Bathroom accessories & toiletries – $100
Laundry basket & rack – $40
Clothes hangers (wood & plastic) – $50
Trash cans – $50
Wall & alarm clocks – $20
Side tables – $60
Wardrobe – $600 Apparently a lot of apartments in Germany do not have a closet. We may need to purchase ourselves a wardrobe. Hopefully we won’t need one of these, but it’s on here just in case.
Coffee maker & grinder – $100
Drinking glasses – $20

Total: ~$4,000 (I rounded up because I tend to underestimate these types of lists)

Things We Might Need to Buy

Dressers – $500 will get us a nice set of Hemnes if we decide we don’t want the bottom of the barrel IKEA options.
Desk & Chair – $300 will get us a nice desk chair and a simple IKEA desk
Litter box unit – $200 to replace the cat litter station I built for Zeke when we moved to Virginia
Bookshelf – $100
Night stand – $40
Dining table – $200
Dining chairs – $200
Mattress & bedframe – $2000 for a comparable mattress and bedframe if we decided to just start over
Bicycles – $300 assuming we can get some decent secondhand bicycles
Rug – $50
Decor and other items – $200 to get us started
Pots & pans – $300
Towels & other linens – $200

Total: ~$4,500

So, what’s the best way of estimating this? I’m not actually sure to be honest. It’s not a clear 1-to-1 on what we will bring vs. not bring and what we will need to buy vs. not buy. We have the option to sell some of our items here in the U.S., which will affect our overall net cost. We also are not planning to replace every item that we sell or leave behind in Germany.

Scenario 1: Ship ~200 cu ft of items

Let’s assume we decide to ship the following:

Mattress, bedframe, bed linens
Dining table
Plates & flatware
Wine glasses
Pots & pans
Winter items
Extra pet items
Some decor
Physics books
Computer
Speakers

Total cost of shipping: $5,000 (excluding insurance)

We would bring the following with us on the plane:

Clothing
Toiletries
Pet items
Living essentials

Let’s assume all of these items fit into two large and 1 small checked bag, 1 carry-on, 1 pet carrier, and 2 bookbags.

Total baggage fees: $100 (our first 2 checked bags are free)

With with both scenarios, we know we’ll likely be buying up to $4,000 worth of items, regardless if we ship a lot or a little. Additionally, we would need to purchase dressers, desk, computer chair, litter box unit, bookshelf, night stand, dining chairs, bicycles, rug, and additional decor. This will likely run us another $2,000.

In total, shipping, luggage fees, things we’ll buy regardless, and things we’ll buy because we won’t ship them will be about $11,100.

Scenario 2: Checked luggage and boxes

Let’s assume we aren’t shipping anything by sea. That means we’ll need to bring everything in checked bags. On the way to Germany, let’s assume we bring 1 carry-on, 2 bookbags, 1 pet carrier, and 2 large checked bags, 1 medium checked bag, and 1 small checked bag.

We’d be able to bring the following.

Large checked bag 1

Household items

Large checked bag 2

Richard clothing
Sports stuff
Pet food, litter and supplies

Medium checked bag 3

Nicole clothing
Toiletries
Towels

Small checked bag

Household items

Carry-on 2

Flatware

Bookbags 1 & 2

Laptop
Chromebook
iPad
Critical documents
Other electronics
Travel pillows
Kindles

Boxes to Ship

Computer
Speakers
Wine glasses
Physics books

To bring four checked bags, we will spend $200. The cheapest shipping seems to be with USPS. We can ship 50lb boxes to Hamburg for $150 each. Let’s assume we need to ship 5 boxes. That’s puts us at $750.

When we arrive in Germany, we would have a lot of things we would need to buy. We’d need to buy all of the things that we know we need to purchase regardless, which will be $4,000. Additionally, we’d need to buy all of the things in the “we might need to get these” category, which is around $4,500. That puts us at $9,450 to bring what we can in checked luggage, ship a couple of boxes and buy the rest when we arrive in Germany.

Next Steps

We’ve decided to move forward with Scenario 2. We’re going to load up as much as we can in our luggage and then ship a couple of boxes with the rest of our stuff. The cost is cheaper and we have more flexibility to keep the price low (and possibly lower than what I estimated above). Logistically, it will also be easier, because we’ll have our stuff with us and we can bring it through customs rather than having to deal with a port and all of the logistics that come with that. From an effort standpoint, we probably have a little more work since we’ll have to back our shipping boxes ourselves and really make sure we are able to sell, store or donate everything that doesn’t fit in our luggage plus a couple of boxes.

Moving abroad is going to be quite the adventure!

March 20, 2017 by Nicole

Budgeting, Money

Monthly Budget: October 2015

Long time no see on the budget front! I took a bit of a break from the budget breakdowns, since I was traveling in September, but I’m ready to get back at it!

Looking Back: August & September Monthly Budgets

August and September seem so far away. I was on vacation for 2 weeks in early September and then went away for work for a week in September.

The Budget Good

Groceries: In both August and September, I did well with groceries. Part of this is due to increased attention towards my grocery spending, but part of it is due to the fact that I was on vacation for two of the four weeks in September.

The Budget Bad

Clothing: I purchased a number of items to get ready for my trip in August. This included a rain jacket, bathing suit, and cover up. As such, as usual, I went over my clothing budget.

August & September’s Net Income

Since I’m pretty vague about what my actual income is (on purpose), I decided to add another piece of information to give you a sense for how my spending mapped to my income for the month: net income. You can usually tell how well or poor a month went by how much you spent vs. how much you brought in. In August, my net income was $733. In September, my net income was $4,374. This large net income amount for September is due in part to receiving my bonus. This means that I was in the green two months in a row!

My October Monthly Budget

Now that I’m back from vacation, it’s time to get back to a normal budget.

Rent: $1075 (my portion of rent – not split exactly 50/50 but almost 50/50)

Utilities & Non-Discretionary

Natural Gas (my portion): $25
Electric (my portion): $55
Internet (my portion): $28
Cell Phone (my portion): $56
Employer-Sponsored Health Insurance: $108

Car & Transport

Expected Car Expenses: $70 (deposited into a savings account for car insurance and repairs when needed)
Metro: $80 (taken directly out of my paycheck and applied to my Metro card)

Food

Groceries (my portion): $350
Restaurants (my portion): $200
Work Lunch: $40

Debt

Each month, I pay a total of $775 to minimum loan payments. Not that I’m counting or anything, but this expense is second only to rent in my monthly budget.

Student Loans Minimum: $565
Car Loan: $215

Shopping & Miscellaneous

Pets, clothes and home supplies all come up at infrequent intervals, so I set aside an amount each month to contribute and if I don’t spend it, it rolls over to the next month. Everything else is everything that doesn’t fit into a neat budget. I’ve increased my everything else budget to account for some one-off expenses.

Pets (my portion – rolls over monthly): $60 (plus $19 from rollover)
Clothes (rolls over monthly): $200 (rollover reset to $0, again)
Home Supplies (my portion – rolls over monthly): $3 (due to being $17 over last month and only budgeting $20 per month)
Everything else: $400

Total Expenses: $2,455 (minus savings and extra student loans)

And don’t forget…

Savings & Extra Student Loan Payments: I generally contribute 25% of take home pay. All of the money that goes to savings and extra student loans is split up in a 30:70 ratio with 30% going to savings and 70% going to student loans. I now have a fully-funded 3-month emergency fund, so I’m holding off on trying to boost that higher while I pay off the rest of my student loans. I have increased my short-term savings to give myself a little more wiggle room and to establish a dedicated vacation fund.

Retirement Contributions: I contribute 6% to my employer-sponsored 401(k) each pay period.

Notes About My Monthly Budget

“My Portion”: You’ll notice that there are a few “my portion” indicators next to my monthly budget line items. This means that it’s an expense that Richard and I split. For 99% of the things we split, we split right down the middle.

Rolls Over Monthly: This year, I’ve been trying to become more purposeful in how I budget and allocate my money. In some categories, my expenses are sporadic. Two examples of this are pets and clothing. We are proud parents to two senior pets – as a result, we’ve decided to set aside some money every month to cover those inevitable vet costs. For clothing, I prefer to do big shopping trips a few times a year rather than shopping in smaller spurts more frequently. By rolling over my budget each month, I make sure I’m accounting for the inevitable expense.

October Challenges

I’m hoping that August will be the calm before the storm that is my Wild West trip in September. That in and of itself will be a challenge.

Pets: Zeke is due for this 6-month well-cat visit. Stella needs more flea and heartworm medication. I have a feeling the pet costs are going to be high this month!
Clothing: I’m in the market for a new pair of leather boots and a nice fall jacket. Not sure if I’ll find the right ones, but they’ll likely be expensive.

How did you do sticking to your budget in last month? What are you budgeting for this month?

October 13, 2015 by Nicole

Cost Estimates & Breakdowns, Life, Money, Moving

The Cost of Moving Locally

I’ve been in Arlington for what seems like not that long, but has actually been a while! It’s almost time to resign my lease, so I figured it would be a good time to see what the cost of moving locally might be. I really don’t want to move, because I like my current apartment a lot, but I could potentially be convinced to move if it worked out well in my favor financially AND my new place has all of the same pros as what I currently have.

Expenses Involved in Moving Locally

First, I want to see what the costs of moving locally will be. Then, I’ll look at how those map up with the pros and cons of my current apartment. Here are the major costs that I foresee coming along with a local move:

Move Out & In Fees: Most of the buildings in this area charge a move in/out fee to reserve the elevator and loading dock, which generally is in the $400 to $500 range. That means I’m going to have to pay $1,000 to move somewhere. If I were to move apartments this year, I would need to pay this fee twice: once to move out of my current apartment and once to move into my new apartment.
1 Day of PTO & Time: In addition to paying a fee to move out or in, I would need to take a whole day off of work in order to do so. Many apartment buildings have restrictions on when you can move in. Spoiler alert: it’s usually on a weekday, hence needing to take a day off from work. Packing and unpacking is also a huge time suck. Hopefully it wouldn’t be too difficult this time around, but these things always take so MUCH time!
Security Deposit: Knock on wood, I should get all or most of my security deposit back when I move out of my current apartment. However, you don’t generally get your security deposit back until after you move out and you need to provide one for the new apartment before you can move in. That means that I’ll need to front some additional cash until I get back my current security deposit. My next security deposit could be anywhere between $2000 and $3000, depending on the cost of our new apartment.
Pet Deposit: In addition to a security deposit, I’ll also need to provide money for a pet deposit and/or fee. Some places have a non-refundable pet fee while others have a refundable pet deposit. Either way, this will be another $300-$500.
Movers: I’ll be damned if I have to move myself again, despite it not being the most frugal move one could make. After such a rough move last year, I’ve sworn to myself that I won’t be doing it on my own again. Renting movers for an afternoon would likely cost somewhere around $500-800.
Moving Supplies: We don’t have any boxes or moving supplies left after our last move, so we would need to do that whole shebang again. We were able to save money by picking up free boxes from our local liquor store and would try to do that again, but it’s likely we could spend around $100 on other moving supplies. Things we might spend money on are wrappers for the furniture, bubble wrap, and packing tape.

So, when all is said and done, it could cost anywhere between $1,900 and $2,400 to move locally. On top of that, I could need to front $2000 to $3000 for the new deposit depending on how much my new apartment costs.

Weighing the Pros & Cons of Moving Locally

It will be a big chunk of change to move, that’s for sure. However, could it be worth it? Let’s take a look at the pros and cons of my current apartment.

Pros

Easy Commute for Nicole & Richard: On the best days, I’m only 20 minutes from work. I have the option to take the Metro which is less than 3 blocks away or I can ride my bike to work in about 15 minutes. Richard drives to work, but he’s typically able to do so in about 30-45 minutes, depending on traffic.
Pet-friendly: We have two pets and do not pay extra for them on a monthly basis. I did need to pay a pet deposit.
Easy Access to I-395/I-95: We are only a couple of minutes’ drive from the highway, which means Richard can easily get to work, we can easily drive to Richard’s parents’ house, we can easily drive to the nearest Wegman’s, and we’re able to easily get to our rock climbing gym.
Reserved parking: We have a reserved parking spot that is included in our rent and Richard is able to rent an additional space to park his motorcycle.
Building amenities: We have excellent building staff, an ample gym, and a rooftop pool. The gym is a huge benefit, because Richard doesn’t need to have a gym membership anywhere else.
In-unit laundry: We have in-unit laundry, which is really convenient.
1st floor unit: It wouldn’t be the end of the world to be on a higher floor, but being on the first floor is really convenient for taking out our dog. It saves a few minutes each day, which is nice.

Cons

No private outdoor space: In a perfect world, I would like to have a balcony attached to our apartment.
Not 100% hardwood: With two pets, we’d prefer to rent an apartment with 100% hardwood. Our bedroom is carpeted, which isn’t too bad.
No den or second bedroom: We make do with 1 bedroom and only 750 sq ft, but it would be so much better to have just a little bit more room for a den or second bedroom.
Only 1 bathroom: In the same vein as above, we are in a tight space, so we only have 1 bathroom. In a perfect world, we would have at least 1.5!

Neutrals

Neighborhood: We live in Clarendon, which is a pretty upscale neighborhood in Arlington. We are VERY close to lots of restaurants, bars, and shopping. We even are really close to some of the doctors and dentists that we’ve acquired since moving here. We really enjoy living in Clarendon, but it would be nice to check out other neighborhoods now that we’ve been here for a bit. We could look in Ballston, Virginia Square or Rosslyn if we wanted to stay in VA, but have (potentially) cheaper rent without going too far away from my work or Richard’s work. Alternatively, we could try looking in DC proper as well, but I’m unsure if we would be able to find something in our desired price point that would be as convenient for our commutes.

What would it take for me to move?

Right now, you can see that the pros of my apartment far outweigh the cons. Looking briefly at what’s out there, I’m pretty sure it would be difficult to beat our current situation. We currently pay $2,075 per month in rent and Richard pays an additional $75 for his motorcycle parking. Our rent cost includes a reserved parking spot as well as our 2 pets. There are three situations that I could see us deciding to move:

Extreme rent increase: After doing the math, I know that it could cost up to $2,400 to move locally. That means that any rent increase below $200 could end up being the same as it would be to move locally, if we were to find an apartment with the same rent that we pay now. If our landlord increases our rent by MORE than $200 per month, that is when I will likely start looking at other options.
Super deal: I have my eye out at some of the apartment listings just to be aware of what’s going on. If I find a super deal that is either $200 less than what we pay per month or $100 less (assuming rent goes up by $100), it might be worth considering to move as well.
No choice: Lastly, a reason I might choose to move is if we don’t really have a choice. We rent from a landlord who owns a condo unit. I think it’s unlikely, but she could always choose to stop renting our her unit.

Fingers crossed that none of the three situations above happen! I’m rooting to stay in the same apartment for another year!

Have you moved locally recently? How much did it end up costing? Why did you decide to take the plunge?

August 11, 2015 by Nicole

Budgeting, Money

Monthly Budget: August 2015

The year keeps going! It won’t stop! It’s time for another budget update.

Looking Back: July Monthly Budget

We aren’t that far into August and I already feel like I’ve forgotten what happened in July! I did better in July than I did in June from a spending perspective, but I still ended the month with a negative net income. August is my month to get back on track, as I will be going on vacation for a week and a half in September.

The July Budget Good

Work Lunch: I was a dollar over my work lunch budget ($40 for the month), so I’m pretty happy with how well I’ve been estimating and spending in that category.
Home Supplies: Similar to my work lunch budget, I went over only by a couple of dollars. I think $20 per month has been a good estimate/reflection of my spending habits in this category. Now if only all categories could be estimated so well!

The July Budget Bad

Restaurants: My restaurant spending was a bit out of control in July. I spent $400 when I budgeted for $200! This is probably due to a couple of factors: 4th of July festivities and a couple of evenings out after work. I’m going to try to be more mindful this month, in preparation for my trip in September.
Everything Else: The one-off expenses added up in July. I signed up for a half marathon in September and have not yet received the 50% reimbursement from my work’s health subsidy. I also paid some deposits for my upcoming trip. Finally, I had a number of hair/makeup expenses as I was running low on shampoo and some makeup items.

July’s Net Income

Since I’m pretty vague about what my actual income is (on purpose), I decided to add another piece of information to give you a sense for how my spending mapped to my income for the month: net income. You can usually tell how well or poor a month went by how much you spent vs. how much you brought in. In July, my net income was -$625. This means that I spent more than I earned last month. This was a great improvement over June, but I’d still like to see it in the green for the next couple of months. Two items to note: The money that one of my friends owes me for her share of our trip and the reimbursement for my fitness subsidy aren’t accounted for in this number.

My August Monthly Budget

Now that I know how July went, I know how I can improve this month.

Rent: $1075 (my portion of rent – not split exactly 50/50 but almost 50/50)

Utilities & Non-Discretionary

Gas (my portion): $25
Electric (my portion): $50 – Bumping this up by $10 due to it being summer.
Internet (my portion): $28
Cell Phone (my portion): $56
Employer-Sponsored Health Insurance: $108

Car & Transport

From now on, I’m removing fuel from my budget. Since Richard is now driving to work as opposed to working from home, he is driving more than me. Since our shared fuel costs are typically low, we decided he will cover all fuel.

Car Insurance (rolls over monthly): $66 (plus $198 from rollover)
Metro: $80 (taken directly out of my paycheck and applied to my Metro card)

Food

Groceries (my portion): $350 – Moving this back to $350. Seeing if I can get it closer to $300 though.
Restaurants (my portion): $200
Work Lunch: $40

Debt

Each month, I pay a total of $775 to minimum loan payments. Not that I’m counting or anything, but this expense is second only to rent in my monthly budget.

Student Loans Minimum: $565
Car Loan: $215

Shopping & Miscellaneous

Pets (my portion – rolls over monthly): $60 (rollover set to $0) – I’m setting the rollover to $0, because keeping track of the vet expenses from April & May wasn’t really helping me keep track of my current spending.
Clothes (rolls over monthly): $200 (rollover reset to $0) – Bumping this up again due to the fact that I keep going over and I was beginning to realize that $100 doesn’t get you very far when you need to account for shoes AND clothes.
Home Supplies (my portion – rolls over monthly): $20 (plus $2 rollover from last month)
Everything else: $400

Total Expenses: $3,538 (minus savings and extra student loans)

And don’t forget…

Savings & Extra Student Loan Payments: I generally contribute 25% of take home pay. All of the money that goes to savings and extra student loans is split up in a 30:70 ratio with 30% going to savings and 70% going to student loans. Some of my savings is short-term – I save for the irregular one-off expenses that I know will come up throughout the year. I put the majority of my savings into my long-term emergency fund though.

Retirement Contributions: I contribute 6% to my employer-sponsored 401(k) each pay period.

Notes About My Monthly Budget

August Challenges

I’m hoping that August will be the calm before the storm that is my Wild West trip in September. That in and of itself will be a challenge.

Travel/Trip Prep: We should not have any additional accommodation expenses prior to leaving, but I have purchased a couple of items that I will need when we are on our trip (e.g. backpack, rain jacket).
Food: I need to get a handle on food spending (still).

How did you do sticking to your budget in July? What are you budgeting for in August?

August 7, 2015 by Nicole

Budgeting, Food, Money

Deconstructing the Grocery Budget

If you’ve paid any attention at all to my monthly budget updates, you’ll know that I plan to spend $350 per month on food costs for me only. Since Richard and I split food costs, this means we are budgeting for $700 in food for both of us per month. Clearly, this isn’t a small sum of money. Lately, I’ve been thinking that there is likely a way for us to work to decrease spending in this category. I’ve also been thinking that the number that I’ve put together is pretty arbitrary.

Grocery Desires

Before I get to the numbers, I wanted to articulate what is important to us when we go to the grocery store. I often see people online claiming they spend like $400 for a family of four per month on groceries. As someone who spends wayyy more than that for a household of 2, that seems pretty extreme. It also makes me question: What are you buying? What kind of food are you even making?

The quality of what we are eating is pretty important to both of us, so if $200 is getting us a lot of processed items per month, I’d rather continue paying the $700. So, what is important to us?

Minimally processed foods
High protein, low carb diet
Minimal added sugars
No artificial sweeteners (ever!)
High quality coffee
Quick and easy recipes that can be cooked in double batches
Some organic items, but not really a necessity

It actually seems like a pretty simple list, but I know it’s harder to translate these wants into a lower grocery budget.

Staples

Each week, we purchase a number of staples that aren’t necessarily incorporated into specific recipes. A typical week (and costs) for our staples includes:

3 half gallons of almond milk – $8.97
3 packages of dry Roasted Edamame seeds – $5.37
Wheat fajitas – $2.79
Peanut butter – $5 (every few weeks)
1 to 2 packages of crunchy snacks (e.g. roasted chickpeas, lentil chips) – up to $10
8 oz of coffee – about $10 per week

So, each week, we are spending about $40 on staples. Assuming 4 weeks are in a month, we spend $160 on staples. We already get the store brand for almond milk and don’t always get crunchy snacks. The one area I know we can cut back on is coffee. The only problem is that we really enjoy good coffee and haven’t quite found a good place to get whole beans at a reasonable price. The one good thing we have to look forward to is the fact that Richard recently started a new job and isn’t drinking as much coffee at home, which will help reduce our coffee drinking.

Meals Needed

We strive to eat most of our meals at home and try to eat out only one night a week (although, depending on what is happening, it sometimes turns into two nights per week). Now that I’m thinking of trying to really tune our budget and make sure our budget is actually grounded in reality, I figured I would start by figuring out how many meals we need to make from our groceries per month.

Okay, so to break it down, this is the number of meals I need to account for each month:

Breakfast: 7 days x 2 people x 4 weeks = 56 meals
Lunch: 5 days x 2 people x 4 weeks = 40 meals
Dinner: 6 days x 2 people x 4 weeks = 48 meals

For lunches, I assumed that we need to account for 5 lunches per week to account for each of us having the option to buy lunch an average of once per week and having a weekend lunch out. If we eat all breakfasts at home and have dinner out once per week, we need a total of 144 meals per month.

Costs Per Meal

Now that we know how many meals we need and what our staple costs are, we can figure out what our cost per meal should be. Once I know what our per meal costs should be, I can start to figure out two things: a) what our budget should be and b) which recipes will help stay within budget.

Even Cost Per Meal

Our currently budget is $700 per month. Our staples cost around $150 per month. If we assume that the rest of the budget is going to meal costs and all of those meals will cost the same, we should aim to make recipes that cost less than $3.81 per serving.

To give an ideal of how the cost per serving might be affected by different budgets:

$700 – $160 = $540 or $3.75 per serving
$600 – $160 = $440 or $3.05 per serving
$500 – $160 = $340 or $2.36 per serving
$400 – $160 = $240 or $1.66 per serving

Right now, I’m a little skeptical of the $500 and $400 per month budgets. Trying to stay under $2.50 per serving seems a little unrealistic for all meals considering we do eat meat and value high quality ingredients. But hey, this is still in thought experiment and I might find myself surprised by the number of recipes that I find that meet our grocery needs/desires list.

Breakfasts Cost Less

Another approach we could take is assuming that breakfast costs will be less than lunch and dinner costs. This seems like a reasonable way to plan things, since our breakfasts tend to be hearty but lighter than our lunches and dinners. In general, breakfast ingredients also tend to cost less. Lunch and dinner will always have the same per serving cost, because we do not make special lunches. We simply bring leftovers from dinner for lunch the next day.

If we assume that average breakfast costs will not exceed $2.50 per serving on average, we can figure out what our costs can be for our other meals. If we have 56 breakfasts that cost us $2.49 each on average, that will cost a total of $140 per month. Let’s see how that affects the dinner and lunch per serving costs:

$700 = $160 staples +$140 breakfasts (56) + $400 (88 meals); $4.54 per lunch/dinner serving
$600 =$160 staples + $140 breakfasts (56) + $300 (88 meals); $3.40 per lunch/dinner serving
$500 =$160 staples + $140 breakfasts (56) + $200 (88 meals); $2.27 per lunch/dinner serving
$400 =$160 staples + $140 breakfasts (56) + $100 (88 meals); $1.13 per lunch/dinner serving

Comparing the two sets of estimates, if we get breakfast down to $2.50 on average, we are given a little more leeway for lunch and dinner when we spend either $700 or $600 total on groceries. However, if we are spending $500 or $400 on groceries, we would actually be spending less on lunches and dinners than we are on breakfasts per serving.

Redefining the Grocery Budget

Now that I have a better idea of what different budgets can get me, it’s time to go out and find some recipes that will help us actually get us there. The most opportunity that I currently see for reducing our grocery budget is in the lunch/dinner category and potentially the breakfast category. I think regardless of where we end up, figuring out the per serving costs of our recipes will be a good gut check for whether or not we should decide to make it and whether or not it aligns with our goal to try to reduce our grocery spending (or at least make it more predictable).

How much do you spend per month on groceries? What do you do to reign in spending?

July 21, 2015 by Nicole

Budgeting, Money

Monthly Budget: July

The year keeps going! It won’t stop! It’s time for another budget update.

Looking Back: June Monthly Budget

June was an interesting month, because a number of things went on: I had two of my wisdom teeth removed, Richard ended his old job and started a new one, and we went to Phildelphia for the weekend. This meant that there were a number of one-off expenses and I ended up needing to pull from my short-term savings (which is why I have short-term savings in the first place).

The June Budget Good

Not a lot! To be honest, there wasn’t a lot of good going on with my budget last month. That said, I did stay under my work lunch budget, which is a good thing!

The June Budget Bad

Groceries & Restaurants: I rolled off of a good food month into a pretty terrible food month. I went over both groceries and restaurants. A brunch day out with friends and going to Philadelphia seemed to be the culprits for the restaurant part of it. Groceries… I don’t even know. I’m going to try to start really reining that budget in, as you’ll see in a number of upcoming posts.
Clothing: Last month, I said I wouldn’t shop until August, but my lack of summer work clothes makes that difficult to accomplish. I also needed to get a new pair of sandals after my trusty pair of Rainbows bit the dust last year. I look forward to not having to buy another pair of sandals for at least another 5 years! As you’ll see below, I’m planning to up my clothing budget and forgive my clothing budget rollover debt, since I haven’t been realistically budgeting.

June’s Net Income

Since I’m pretty vague about what my actual income is (on purpose), I decided to add another piece of information to give you a sense for how my spending mapped to my income for the month: net income. You can usually tell how well or poor a month went by how much you spent vs. how much you brought in. In June, my net income was -$1,106. This means that I spent more than a earned this month, as I already alluded to with having to dip into my short-term savings. Please note that I count saving to my emergency fund as an expense, which helps me mentally treat that money as money that has already been spent and thus not available for use unless in an emergency situation.

My July Monthly Budget

Now that I know how June went (and we’re halfway through July), I know how I can improve this month.

Rent: $1075 (my portion of rent – not split exactly 50/50 but almost 50/50)

Utilities & Non-Discretionary

Gas (my portion): $25
Electric (my portion): $50 – Bumping this up by $10 due to it being summer.
Internet (my portion): $28
Cell Phone (my portion): $67 – This will be bumping down to $55 after this first joint billing cycle.
Employer-Sponsored Health Insurance: $108

Car & Transport

Car Insurance (rolls over monthly): $66 (plus $132 from rollover)
Fuel (my portion – rolls over monthly): $10 (plus $37 from rollover) – Bumping this down from $20 to $10, since we haven’t been driving that much recently.
Metro: $80 (taken directly out of my paycheck and applied to my Metro card)

Food

Groceries (my portion): $300 – Bumping this down by $50 as a challenge to reduce our grocery budget this month.
Restaurants (my portion): $200
Work Lunch: $40

Debt

Each month, I pay a total of $775 to minimum loan payments. Not that I’m counting or anything, but this expense is second only to rent in my monthly budget.

Student Loans Minimum: $565
Car Loan: $215

Shopping & Miscellaneous

Pets (my portion – rolls over monthly): $0, but regularly $60 (pet budget balance is currently at -$380 due to overages from April & May)
Clothes (rolls over monthly): $150 (rollover reset to $0) – Bumping this up due to the fact that I keep going over and I was beginning to realize that $100 doesn’t get you very far when you need to account for shoes AND clothes.
Home Supplies (my portion – rolls over monthly): $20 (plus $2 rollover from last month)
Everything else: $350

Total Expenses: $3,264 (minus savings and extra student loans)

And don’t forget…

Savings & Extra Student Loan Payments: I generally contribute 25% of take home pay. All of the money that goes to savings and extra student loans is split up in a 30:70 ratio with 30% going to savings and 70% going to student loans. Some of my savings is short-term – I save for the irregular one-off expenses that I know will come up throughout the year. I put the majority of my savings into my long-term emergency fund though.

Retirement Contributions: I contribute 6% to my employer-sponsored 401(k) each pay period.

Notes About My Monthly Budget

July Challenges

July is already half over and I know there are going to be a number of challenges coming up:

Travel: I have started to book my travel for my Wild West trip in September and some deposits are due already.
Food: I need to get a handle on food spending.
Shopping: Again, clothing is a thorn in my side right now.

How did you do sticking to your budget in June? What are you budgeting for in July?

July 14, 2015 by Nicole

Budgeting, Money

Monthly Budget: June

The year keeps going! It won’t stop! It’s time for another budget update.

Looking Back: May Monthly Budget

May was a fun month because it was a three paycheck month! That means I was able to put more towards my student loans than usual. It was also fun because I went to Denver not once, but twice for work!

The May Budget Good

Phone: Richard and I decided to go on a family plan for our cell phones. This didn’t hit the May budget, but I should be seeing a lower cell phone bill in the months to come.
Groceries & Restaurants: This was a weird grocery month for us. We had friends visit the second week of May so we went out to eat a number of times with them. Then I was traveling for work two weeks and Richard traveled for work one week. This resulted in my share of the groceries only costing $77 of my budgeted $350. Of course the flip side of this is that my restaurant spending was much higher than I budgeted for. I spent $274 (excluding my food purchases during my work travel) on restaurants. So my combined food budget was $550 and I only spent $351. Win!
Dentist: I had to postpone my two dentist appointments due to traveling for work. This meant that I pushed off those expenses until June.
Student Loans & Savings: With my extra paycheck, I was able to throw a big chunk at my loans and at my savings account.

The May Budget Bad

Clothing: I made three trips to the store for clothes this month. It added up! I ended up spending $388 on clothing. I purchased a few outfits that I will be able to wear at work and some warm weather workout gear. I had $108 in rollover plus my $100 for May, so I really only exceeded my budget by $180. Since I’m on the rollover budget plan, I plan to keep my clothing purchases minimal until August. Unfortunately, I still feel like my wardrobe is playing catch-up after spending so much time working from home. I feel like I stocked up in the fall on items that are good to wear to work for fall and winter but now that we’re transitioning seasons I’m back to not a lot to wear. I’m trying to be smart about it, but it’s crazy the amount that is needed to put together a good wardrobe!

May’s Net Income

Two items of note: some of my student loan and savings payments are actually being tracked as happening in June due to being paid on the last day of the month. I also count my savings as spending for the purposes of tracking in Mint, because that helps me with my budgeting.

My June Monthly Budget

Now that I know how May went, I can look ahead to June and hopefully improve. I’m pretty pumped that the good outweighed the bad last month.

Rent: $1075 (my portion of rent – not split exactly 50/50 but almost 50/50)

Utilities & Non-Discretionary

Gas (my portion): $25
Electric (my portion): $40
Internet (my portion): $28
Cell Phone: $50 (my portion – estimated, since we haven’t received our first joint cell phone bill yet)
Dentist: $350 (wisdom teeth removal and fillings)
Employer-Sponsored Health Insurance: $108

Car & Transport

Car Insurance (rolls over monthly): $66 (plus $66 from rollover)
Fuel (my portion – rolls over monthly): $20 (plus $43 from rollover)
Metro: $80 (taken directly out of my paycheck and applied to my Metro card)

Food

Groceries (my portion): $350
Restaurants (my portion): $200
Work Lunch: $40

Debt

Each month, I pay a total of $775 to minimum loan payments. Not that I’m counting or anything, but this expense is second only to rent in my monthly budget.

Student Loans Minimum: $565
Car Loan: $215

Shopping & Miscellaneous

Pets (my portion – rolls over monthly): $0 (pet budget balance is currently at -$309 due to overages from April & May)
Clothes (rolls over monthly): $0 (clothing budget balance is currently at -$180)
Home Supplies (my portion – rolls over monthly): $2 (we exceeded our $20 per month home supplies budget by $18 in May)
Everything else: $350

Total Expenses: $3,564 (minus savings and extra student loans)

And don’t forget…

Savings & Extra Student Loan Payments: I generally contribute 25% of take home pay. All of the money that goes to savings and extra student loans is split up in a 30:70 ratio with 30% going to savings and 70% going to student loans. Some of my savings is short-term – I save for the irregular one-off expenses that I know will come up throughout the year. I put the majority of my savings into my long-term emergency fund though.

Retirement Contributions: I contribute 6% to my employer-sponsored 401(k) each pay period.

Notes About My Monthly Budget

June Challenges

May was not as expensive as April, thankfully. In June, I have a couple of things that I think will pose challenges:

Rollover Spending: In April and May, we exceeded a number of our “rolls over monthly” categories. As a result, spending in these categories will be low (we needed to stock up on pet food this month) or nonexistent (no more clothing until August). This might prove to be trickier than expected.

How did you do sticking to your budget in May? What are you budgeting for in June?

June 10, 2015 by Nicole

Paying off $55k of student loans in 2 years

Money, Student Loans

Gut Check: Will I pay off my student loans by age 30?

I turned the big 2-8 last week. That means that I have two years left to acheive my longstanding goal of paying off my loans by the time I turn 30.

As of right now, my balance hovers around $55,000. Oof. That’s a lot of loans to pay off still. On the flip side – let’s celebrate the fact that I’ve paid off over $35K in principal on my loans since I started paying them off in late 2011!

Considering that I’ve only paid off $35K over 3.5 years and I want to pay off the remaining $55K over 2 years, it seems like it might be a tight two years. So, let’s look at the numbers.

What Paying Off $55K of Student Loans in 2 Years Looks Like

I decided to pull out my trusty debt repayment calculators, Unbury.us, to do a quick and dirty calculation of how much I need to contribute each month (on average) to achieve my goal.

Minimum Payments Only – Debt Free by July 2024

If I were to only pay the minimum each month, I would be paying on my loans until 2024. That means I would be 37! That’s 7 years longer than I’m aiming to pay. Also notice how much interest I would be paying. I could buy myself a modest used car with that amount of interest!

Debt Free by May 2017 – $2500 per month to student loans

Minimum payments isn’t the world I live in though – I’ve been paying extra each month to help me achieve my goal. My quick calculations suggest that I need to contribute $2,500 per month to student loans in order to have them paid off by May 2017.

Unfortunately, my student loan payments aren’t anywhere near $2500 per month at this point. Here’s a graph of my student loan payments over time since May 2011.

As you can see, I generally hover around a set amount per month with some months where I contribute a bigger chunk. Last year, while I was preparing to move, I took a break from paying extra and only contributed the minimum. Now that I’m settled in a new location with a higher paying job, I’ve been upping my payments again.

Moving Forward

I’ve been struggling for a long time with the basic debt reduction calculators that I’ve found online because they don’t give me the flexibility to choose the exact order I want to pay my loans off in and they don’t allow me to enter/account for one-off payments.

Much of my strategy, as you can tell from my chart above, has been to have a hefty payment each month and pay bigger chunks when I can (e.g. tax refunds, bonuses, etc.). Luckily, I finally found the answer I was looking for – the most comprehensive debt reduction calculator ever from Vertex42. It allows me to choose what order I want to pay off my loans and most importantly, it allows me to account for what they call “snowflaking” – adding in one-off payments above what I generally pay.

My Strategy for the next two years

Overall my strategy for paying off my loans will be this:

Maintain base level of overpayment each month
Increase base payment when my compensation increases (hopefully by $300 per month this year and then again next year in September when our salary increases go through)
Contribute 70% of windfalls (bonuses, tax refunds, etc.) to student loans in addition to my regular monthly payment
Treat third paycheck in three paycheck months (2 per year) as a windfall
Pay off my private loans (since they are higher risk) then move on to a snowball avalanche approach where I’m paying off the lowest balance of the highest interest rate first

A Note About Assumptions

Planning out two years of payments is a tricky game. I’ve tried to be conservative but also realistic at the same time in my estimates. So much of my ability to pay off these loans in two years will be determined by a few key details such as my compensation (I’m assuming it will increase, but I do not know by how much) and my windfalls (I’m assuming I will receive windfalls of a general size, but I won’t know until I receive them).

For example, when I plug my numbers into the debt reduction calculator/spreadsheet, I’m able to finesse them to get me to a May 2017 payoff date. However, it’s still wildly unclear how accurate those windfalls and numbers will be.

Will It Happen?

So, in sum, it’s looking like it’s in the realm of possibility, but it will be tough for me to pay off my loans in two years time. It’s really all going to come down to how much my income increases and how much I will get for bonuses and such. The good news is that it’s not a “hell no” at this point. I just need to keep on keeping on as I have been for the last few years by paying what I can regularly and pumping extra money into my loans when I come across it.

Hopefully, if you’re in the same or a similar boat as me you find these calculators useful for estimating how and when you’ll get all of your debt paid off.

What are your debt repayment goals?

June 1, 2015 by Nicole

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