Student Loan HellMouth

It’s not about the size of the debt, it’s about debt management.

I pay off my credit card balances every month, always have. My wife took a car loan one time, we hated it and paid it off in 3 months. I do not like debt, it feels like bondage to me. That being said, there is no way to be poor and go to law school without debt.

Undergrad, no problem. I got partial GI Bill and worked 3 jobs. Thank You PELL grants, I will never question what my government has ever done for me. Degree in 4 years, no debt. Wife was helped by parents when they could, but also worked all through Undergrad, minimum debt (maybe $4k)

But then;

LAW SCHOOL, $20k a year for 3 years, EACH of us. Plus they tell you not to work a job on the side 1st Year, so you have to live off your loans as well.

Stafford Subsidized $8,500 per year, plus Stafford UnSubsidized $10,000 per year, plus Perkins $6,000 max (interest capped at 5%). Then you start to take private loans at variable interest rates. The pain, the Pain.

Graduate, get a decent job. The Loans are in a grace period while you are in school, interest accruing mind you. Terrorists fly planes into buildings, interest rate collapses. Consolidate Government loans at 3.5% (me) and 4.5%(her) respectively.

Total price tag, touch over $100,000 for me and the same for then girlfriend, now wife.

I refer to it as her REVERSE DOWRY. We are over $200,000 in debt. Luckily our jobs are steady and decent. Time to make a plan.

So it’s like we had a mortgage payment of $1,200 a month, we just didn’t have any house to go with our mortgage payment.

We chose to not consolidate our private loans, why, because separate they all had different smaller balances than if we had lumped them together. This way you can target and kill off the smaller weaker loans, or those with the worst rates.

We did this until we were down to 2 sizable Department of Education loans of the $65-68k range and 1 large private loan for me at $ 45k

Perkins loans got paid off by the government because we stayed Government employees instead of going after the big money. We kept the Government Stafford loans going because they had low fixed rates and next targeted the $45k private loan because of its variable rate.

Remember this Guy’s weakness?

Whenever we got extra money, there it went until November 2008 when we finally killed it.

As for what is left, we pay 2 loans a month, $348/month for wife’s loan at 4.5%(which is down to $45,000 owed) and $307/month for mine at 3.5%(which is down to $43,000 owed)

We are about to come into some money for the sale of a house which we own. But I am thinking I will only pay off Her loan, here is why. With the same 43,000 I could use to pay off my remaining student loan I could get 126/month in dividends(3.5%) or save $130/month in interest(3.5%) to the government. This is close to a wash and therefore OK to string out in case something happens to ALL student loans under this new administration.

The math with my wife’s loan is different. We would save $170/month in interest to the government, but only garner $133 in dividends, so we will pay it off.

UPDATE 04/10/2017 – We Closed on the House, I have paid off $45k worth of student Debt in one fell swoop! Read about the rest of where the money went HERE

It’s not about the size of the debt, it’s about debt management.