Andy Hough

October Income – $3122.32

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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

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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?

Three Ways to Live Cheap and Achieve Your Dreams

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Have you ever dreamt of retiring before 40? Or maybe your dream is to take a year off and travel the world. Whatever your dream life involves, living frugally can help you get there that much sooner.

Cut housing costs

Housing is one of the biggest expenses people have. Instead of living in a two-bedroom apartment, consider getting a one-bedroom or a studio. How much time do you really spend at home anyways? Spending 30% or 40% of your income on a place to go fo a few hours a day and to sleep is not wise. Reducing your housing costs can go a long way towards meeting your financial goals.

Take the bus

If you can, move into an apartment on a bus or subway line and give up your car. Not only will you be saving hundreds of dollars a month by not having a car payment, you’ll save on insurance, registration costs and gas. Plus, using transit means you won’t be stuck behind the wheel of a car, giving you an opportunity to walk to and from transit (hello gym membership savings!) and to listen to music or podcasts while being transported.

Get out of debt

Debt repayment is another large expense that takes up a lot of most people’s disposable income. Rather than wage war against your credit cards with sky-high interest rates, look into consolidation loans. Using the money from these loans, you can pay off your high-interest debt and have manageable monthly payments. Paying off these monthly payments reduces the debt, saves you on interest costs and, more likely than not, raises your credit score which allows you to get even cheaper debt in the future.

Life is pretty hard. If you’ve got big financial dreams you might look around and wonder how some people can seem to afford everything while you can’t afford anything. Their secret is living frugally. By maintaining a frugal lifestyle with regards to your housing, transportation and debt repayment expenses, you’ll find yourself with lots of disposable income to put towards your financial goals. With so much disposable income, you might even decide to treat yourself to a luxury or two along the way to your financial dreams.

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

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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

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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.