October Income – $3122.32

Here is a breakdown of my income for October.

Interest $1.55
Amazon FBA $521.63
Bank Bonus $50
Credit Card $350
Cash Back $18.94
Online $82.5
Job $2506.15
Total $3530.17

 

September’s income was pretty good. My job income went down quite a bit, since October had the usual two paychecks rather than the three I got in September. I was able to make over a $1000 from my non-job sources of income which helped get my income almost back to September’s level. I won’t complain. Having income that is about three times as much as your expenses is pretty good. Although I’m not including my house purchase expenses in my current expenses, when you add those in the reality is that I’m spending all of my income and then some. Once the house purchase is through I will have an actual surplus again.

 

October Expenses – $1059.57

Here is a breakdown of my expenses for October.

Household $35.88
Rent $435
Entertainment $16.45
Transportation $107.53
Food $176.93
Travel $0
Phone $23.93
Health $263.85
Total $1059.57

 

October was a fairly good month for expenses. I would have made my monthly goal of $1000 if it were not for the two dentist appointments I had during the month.

My monthly food expense was way too high. If I had kept that expense to a reasonable $100, I would have made my $1000 goal. Since I ate out about 25 times during the month it is no surprise that my food bill was high. I plan to cut the food budget way back this month. I’ll do a post about that next week.

I also have spent about $1000 on an appraisal and inspection of the house I’m buying. I’m leaving those costs out of the monthly budget since they will skew the numbers. The closing costs and down payment I’ll have to pay later this month will also be left out of the monthly budget. Once the house purchase is complete I will have high expenses for the next few months as I buy stuff for the house (I’m living in a 120 square foot apartment right now so I don’t have much stuff) and do a little remodeling. I think those expenses will be worth it. Once I’m a homeowner the $1000 monthly expense target will no longer be realistic so I’ll adjust that accordingly.

How was your month?

I’ve Paid over $43k on my $107k Student Loan and Now Owe Over $116k

While poking around on the Navient website the other day I discovered they had records of all of my payments since they started servicing the loan. They weren’t nice enough to total the payments for me. I had to copy all of the payments into a spreadsheet and get the total that way. I was rather surprised to see that I had made over $43,000 in payments on my student loan. That is a big chunk of money. It is more than I have saved for retirement. That total doesn’t include the payments I made during the two years before Navient became my loan servicer. My payments were $0 or $5 during that time so they wouldn’t have made much of a difference in the total.

The sad thing is that after making $43,000 in payments my student loan is almost $10k larger than when I started. The monthly interest on this loan is a killer. It makes it extremely difficult for me to make progress paying down the loan. If this had been an interest free loan I’d have the loan over 40% paid off.

I sometimes get comments saying how I’m a thief or ripping off the government using income based repayment and  not having paid off my student loan.  My loan is eligible to be forgiven in about 18 more years. If the numbers continue as they have so far, then I will have paid far more than the original balance of my loan by the time it is forgiven. In addition the loan balance that will be forgiven would at the time be over $200,000, possibly way over. That would result in a humongous tax bill. Combining the tax bill and all the payments I will have made I’ll end up paying way more with income based repayment then I would have under the standard ten year repayment plan.  Of course, there is no way I could have afforded to make the required payments on the ten year plan, but that is not the point. The point I’m trying to make is that using the income based repayment plan isn’t allowing to me to get away with anything. It is just spreading the financial pain over a lot more years.

Financially,, it would probably be smartest for me to just continue with the income based repayment plan and not make any more extra payments like I have been doing the past few years. I don’t like having the student loan hanging over me though and I would really like to have it paid off. Now that I’m buying a house, it will probably be impossible for me to refinance my student loan which would have been a huge help in getting the student loan paid off. To have any hope of paying off the student loan now I would need a gigantic increase in my income. I’d probably need to at least double it. I don’t foresee that happening.

I’ve also got to consider that I need to save for retirement. If thing went very well and I was able to pay off my student loan in ten years I would have $0 debt, but also very little in retirement savings at age 60. That doesn’t seem too smart. Considering I’ve developed some health problems the last few years, I can’t count on being able to work well into old age. So saving for retirement needs to be a priority.

After writing all of this the conclusion is I’m not sure what to do about the student loan. For the next few months  all of my money will be going towards buying my house, buying stuff for the house, and hopefully maxing out my IRA. After getting those done I’ll consider what to do about the student loan again.

Don’t Use My Sofi Affiliate Link

A couple of years ago I applied to refinance my student loans with SoFi.  They offer loan rates much lower than the 6.875% I pay on my federal student loans. They promptly rejected my application due to my debt to income ratio. I don’t blame them for that. I wouldn’t make a six figure loan to someone with my level of income either.

Earlier this year I thought I would apply to SoFi again. Since I’m a blogger, I signed up for their affiliate program with the thought that I could do a post documenting my application process and include some affiliate links. That way I could save money from getting my loan refinanced and make money with the affiliate links. That didn’t work out. They promptly rejected me again. This time I didn’t even fill out a full application. I assume that is because they used the previous information they had. On the plus side, they didn’t even pull my credit so there was no hard pull on my credit. Since I only filled out part of an application, I wasn’t able to document what the application process would be like for a first-time applicant. Thus, there was no post and no affiliate links.

That isn’t the reason you should not use my SoFi affiliate links though. If you sign up using one my SoFi affiliate links like this one -> Find My Rate No origination fees or pre-payment penalties. I’d get $100-$150 commission and you would get nothing but a refinanced loan. If you signed up through this referral link, I’d get a $300 bonus and you would get a $100 bonus. The referral link is better for both of us than the affiliate link. That is one reason you wouldn’t want to use my SoFi affiliate link That still isn’t the only reason why you shouldn’t use my affiliate link though.

The reason you shouldn’t use my SoFi affiliate link or my SoFi referral link is because there is an even better deal out there. If you go to Mr. Money Mustache’s SoFi review he has a referral link that will give you a $300 bonus. Since a $300 bonus is better than a $100 bonus that is the referral link you should use when you sign up. Although I want to make money with my blog I can’t recommend anyone use my affiliate link paying you $0 or my referral link paying $100 when I know there is a $300 referral link out there. If you are too lazy to click over to the SoFi review, you can use Mr. Money Mustache’s referral link right here. https://www.sofi.com/mrmoneymustache/

If you still want to sign up for SoFi using my affiliate link or referral link I appreciate it, but I don’t think it is very smart.

I’m Buying a House

I am in the process of buying the house that you should see pictured to the left of this text. This was somewhat of an impulse decision. There have been several times in the past few years that I considered buying a house, but I decided not to try since I figured I wouldn’t be able to get a mortgage with only having seasonal employment. Now that I have a full-time job that isn’t seasonal that isn’t a problem anymore. I hadn’t really been planning on buying a house this year though. If I had been, I wouldn’t have paid so much towards my student loans and would have delayed contributing to my IRA and 401k. All of that money would have been helpful to have for the down payment and closing costs.

The house I’m buying cost $98,000 and I’m putting 5% down. Since I’m only putting 5% down, I will have to pay PMI and my mortgage rate is a little higher. Unfortunately, 5% is all I can afford to put down since I was paying down my student loan and putting money in retirement savings rather than saving up a down payment. I considered taking $10,000 out of my IRA since I’m allowed to take that amount out penalty free as a first-time homebuyer. I decided against it since I’m 50 years old and I don’t have that much in my retirement savings. I’d rather have a larger mortgage than deplete my retirement savings. Hopefully, this house purchase will prove to be a good financial decision.

I am taking out a 30-year mortgage on the house. That seems like an awfully long time considering I’ll be 80 years old (or more likely dead) by the end of the mortgage term. The lender seemed to think that the payment on a 15 year mortgage would be too high for my income. If rates stay low I’ll consider refinancing in a few years once I’ve built up some equity and/or have a higher income. My monthly payment will be about $660 with insurance and taxes. That is more than I pay for my apartment, but a lot cheaper than it would cost me to rent a house.

The house is rather small at 780 square feet. It has two bedrooms, one bath, living room, dining room, kitchen and an unfinished basement. The bedrooms are pretty small. The dining room is bigger than the bedrooms which seems backwards to me. Unfortunately, I can’t easily turn the dining room into a bedroom. Although the house is perfectly livable as is, there are a lot of things I want to change about it. I’ll worry about those after the home purchase is completed. I’ll be pretty broke once I’ve paid the down payment and closing costs so there won’t be any big changes for a while. Although a 780 square foot house is small, I’m living in a 180 square foot apartment so I’ll need to get some furniture for the house. I’ll probably be spending almost all my money on the house and house related purchases for the rest of the year. Spending all of that money is tough for a tight-fisted miser, but it will be worth it to have my own home.

October 2017 Net Worth Update

penniesIn order to keep track of my financial progress or lack of progress I have decided to calculate my net worth a few times a year. I’ve been doing it every month, but I think after this month I’ll return to doing it quarterly or semi-annually.

My net worth as of 10/1/2017 is as follows.

 

Assets
Cash – $3264
IRA – $29,176
Roth IRA – $1684
Solo 401k – $3165
Car/Stuff – $3200

Liabilities
Student Loan – $115,846

Net Worth = $- 75,357

My net worth improved almost $1000 last month.   This was mainly due to receiving three paychecks from my full-time job. It seems like it should have improved more with the extra paycheck and all my investment accounts making at least a little money. It is better than going backwards so I won’t complain. Hopefully, I can keep the positive trend going the rest of the year.

I’ve been using Personal Capital (affiliate link) to help track my net worth. It keeps track of all of my financial accounts and my student loan making it pretty easy to calculate my net worth each month. It is free to sign up. If you would like to sign up I’d appreciate you using my link. All blog income, including affiliate income, goes to paying down my student loan.

Personal Capital