One Size Fits All

When the year began I was very ambitious with my goals. Well…I think I promised all sort of things to my readers at the half way point. So here is an update on the financial goals. For those of you (meaning me) with poor memories, here are the goals with my explanations.

1. Retirement: Contribute about half of the max: $2,500 - Well since husband quit his nice paying job because of reasons that will be described below, I as the family beancounter (with agreement) have decided to modify this a bit. We’ll still probably reach this goal because we’re upto about $1,896 right now.

2. Savings: Fund the EF fund at$4,000 each - We’ve reached $5,023 total. So there is another $2,976 to go before we reach the goal. The figure is based on what it would take for us to live for 6 months on a barebones budget (rent+bills+food)..I think I rounded up the numbers to get a nice figure.

3. Medical: Evaluate feasibility and cost of tube tying - I am currently saving up for this. I think I have convinced the husband to tie up his end…but who knows. I am not sure I will be able to do this before our move to California however. I also thought about the cost of being child free a few months back.

4. Move: Save up for moving and deposit on next apartment - This referred to the move within the city when our lease ended in June. I didn’t feel like moving so I asked my landlord to give us a month to month lease until the end of August. Which he did. So we didn’t have to spend money on moving for a short while. Despite the crappy neighborhood and all the other problems associated with living here, I really didn’t want to move again. We did look at apartments with short term lease in May but everything had something wrong with it. There is just too much going on to deal with two moves in one year. I am still preparing myself for the cross country move.

5. School: Save up for cost of the MCAT exam and study materials and cost of applying to med school and probably traveling to the med school for an interview, etc - The big victory. That is, I’ve convinced my husband to drop this (idiotic) plan of going to med school. For one, he hates medicine and he is doing this because its what the family has always wanted. And lets not even talk about the debt he will have to sign on to nor the widow I will turn into with him being away all the time. And since I like my husband I want to spend my free time with him. There was also a host of other emotional baggage he was carrying around which I got him to drop. He is now back to being my little slacker husband that I love.

6. Debt: Eliminating all student loans by December 2008 - If my husband had stuck with his old job that he quit this would have been reached. But…now it looks like we are on a three year plan to finish paying this off. Also depending on how the job situation works out…this might get bumped again. I have a little over $6,000 in student loans to pay off. The interest on the subsidized portion began accruing three days back. The interest rate is 6.25% and they are all from one lender. I have been shopping around to see if I can refinance the thing but apparently because of all this financial melodrama its going to be difficult despite my fantastic credit.

Back to the retirement goal. We’ve decided to temporarily reduce the contributions to just get full matching and put the Roth contributions on the back burner. We thought to start putting our savings into the forefront so we can purchase our bit of land (or condo or house or suburban mansion which may be obtained for a song in a few years). 

Random aside on land. I’ve been thinking about land. In accounting it cannot be depreciated. I wonder how and if tax is assessed on land. If it isn’t I guess its just a one time cost? What if we build something on it…is the land worth more now? 

So that is the update on the financial goals. I’ll try to read my January archives to see what other random things I was ambitious about.

I am just happy that for once I am happy about our financial situation.  

U.S. Paying Down Debt

With the advent of surpluses, the United States has begun to make real progress in paying down its debt. During 1998–2000, debt held by the public fell from $3.8 trillion to $3.4 trillion—a $363 billion drop. By the end of this year, more than $200 billion in additional reduction is due to be achieved.

The President’s plan will accelerate this trend to record rates by retiring an historic $2 trillion in debt over the next 10 years. Under the President’s budget, the national debt will be only seven percent of Gross Domestic Product (GDP) in 2011, its lowest share in more than 80 years.

I began my undergraduate degree in the Fall of 1999. My parents paid the first semester’s tuition bill by taking on debt. The next three semesters (and two summer sessions) were paid with parents taking on debt, me getting a scholarship and me paying tuition with a credit card.

I then quit college for two years.

When I returned to college in 2003, I switched majors and essentially started from scratch. But this time I was paying the tuition bills out of pocket.

The first semester I could only afford one class. I was making $28,000 (salary). The second semester I was able to afford one class again. But from then on, as my salary went up (all the way to $40,000 in 2006) I took as many classes as I was able to afford. In the spring of 2006, I was a full time student and full time employee.

Since my job had nothing to do with my major, I quit (along with some other reasons), and obtained an internship in my field. Working part time, I was back to taking on one class per semester. I then decided to take on some student loans so I could finish up and get my degree.

Earlier this year, I decided to go into debt and took out loans. Earlier this year, I also found another internship with an organization where one of the perks was tuition reimbursement (up to four classes per fiscal year). So I was able to avoid taking on 4 classes worth of debt.

I hope to graduate toward the end of the year with about $8,320 in student loan debt of which $5,500 will be subsidized student loans.

One reason I decided to take on debt, in addition to wanting to graduate this year was because I was having trouble impressing potential employers with my debt free lifestyle. I assumed that as an accounting major, the fact that I was paying for tuition out of pocket would be impressive to people. But it wasn’t. I interview fairly regularly as I think its a good habit, and finding that no one single potential employee was impressed with my ability to avoid debt was very much of a downer.

If I had to do it all over again and I magically had good circumstances surrounding me, would I change anything?

Probably not. As I think the lessons I’ve learned about money to date will serve me well for the rest of my life.

Our debts:

Hubby’s student loan (consolidated at 4.125%): $41,456.78

My Visa: $110.00
My Mastercard (0% APR) : $1,390.92
My Line of Credit (LOC at13.99%): $1,121.46
Student Loans Subsidized (due in June 2008): 2750.00
Student Loans Subsidized/Unsubsidized (not yet disbursed due in June 2008): 2500.00+ 2750.00+320.00 = $5,570

Goal is to be debt free in 5 years. If we can pull this off it will be very significant, because neither of us will make a combined income of more than $70,000.