Financial stuff

While I was in law school I racked up about $100,000 in federal student loans.  Since I finished law school my debt has risen to about $120,000 due to accumulated interest.  Going into this much debt wasn’t smart, but I’m not concerned about the debt.

The reason I’m not concerned is because I am on the Income-Based Repayment Plan.  You can read more about the this plan at IBRinfo.org Income-based repayment caps monthly payments at 15% of your monthly discretionary income. Discretionary income is defined as the difference between adjusted gross income (AGI) and 150% of the federal poverty line based on where you live and your family size.  Based on my current income I’m not required to make any monthly payments.  That will probably change next year since I will be single.

Under IBR payments are made over a period of 25 years.  Any debt remaining at the end of 25 years will be forgiven.  That means I have about 22 more years until my loan will be paid off or forgiven.  There is also a 10 year public service loan forgiveness option that I could use if I were to obtain a public service job. This program rewards those who go into public service fields like nursing, law enforcement, and public interest law services by creating a sliding scale that determines how much I would pay each month. The amount that I would end up paying every month depends on my overall financial situation and the size of my family. Under this program, I would pay a reasonable amount every month and the rest of the payment amount is forgiven. To maintain eligibility for public service loan forgiveness, I would need to have a federally insured student loan, hold a public service job for 10 years, and make 120 payments during those years.

Some might think I should be doing everything possible to pay off this debt.  I’m not concerned about the debt though since the payments are capped at 15% of my discretionary income.  Therefore, the payments should always be easily affordable.  I’m not deliberately keeping my income low to avoid paying back the debt, but I’m not going to take just any job to pay off the debt either.

There is a risk that I will end up paying more on my debt under the IBR than using the Standard Repayment plan.  This is because the payments are spread out over 25 years resulting in a lot more interest.  I think this risk is acceptable considering the current benefits of this plan.

Do you think it is smart to use the IBR plan or do you think it is stealing?  What do you think?

I’m on my way back to Missouri to complete my inaugural road trip in my new van. I spent five days on the Appalachian Trail doing some short hikes. I’ve done most of the AT from Springer to PA but there a few small gaps that I skipped before that I want to hike now so I can complete the AT.

Van Customization

You can see what little I have done to make my van better suited for sleeping and living.  I took out the two captain chairs that were where the front of the cot is now.  The rear bench seat folds down to a bed but it is much too small of a bed for me to be able to comfortably sleep on it. That is why I bought the cot to sleep on.  The cot actually has three legs and the middle leg luckily fits in the gap between the two parts of the rear seat.  The cot is roughly the same height as the rear seat.  The height is close enough to allow me to sleep but it is hard on my back.  I’m going to remove the rear seat as well so I can sleep better and to create more room in the van.

The main other thing I need to do is improve the privacy of the back of the van.  As you can see the van has shades over the windows already but I still need to cover the back window and screen the back of the van from the front windows.  I’ve been using jury-rigged solution for both of those right now but need to come up with a more permanent solution.  Also, the shades on the side windows are fine for providing privacy but they still allow a lot of light in the van.  I’m planning to make panels that will fit in the rear window and side windows which should block all the light and provide even more privacy.  I want to make a privacy curtain or partition to install behind the front seats.  This will be a little complicated because the sliding door is on one side and I have to avoid where the hardware for the door slides and it will be difficult to attach anything to the plastic around the sliding door hardware.  I’m sure I can figure something out though.

Gas Mileage

I have tracked three tanks of gas in the van so far and I have gotten 17.2, 17.5, and 17.9 MPG.  The strange thing is the lowest MPG was the tank that was almost all interstate driving.  This makes me think the van gets worse gas mileage at 70 MPH than driving around town.  The van is rated at 15 MPG combined and 18 MPG highway which means I’m getting about the expected mileage.  I’m going to try to improve that though.  Removing the heavy rear seat should help a little.  Once I have a little extra money I’m going to buy a ScanGauge or similar fuel economy computer. There will be a future post on my efforts to improve gas mileage.

I have spent way too much on gas since buying the van. I’m going to have to get much smarter on planning my daily errands and reduce or eliminate unnecessary trips. Also, any future road trips will be at a much slower pace so the money spent on gas per day will be reduced.

Part two should be up tomorrow.

This is a guest post from Jana at Daily Money Shot, a blog about money at the intersection of life, pop culture and everything in between.

I don’t know what a rich person is supposed to look like. When I see celebrities or people I think are rich, I don’t notice anything special about the way they’re dressed or the way their hair looks (except at awards shows when the jewelry is worth more than my entire neighborhood). I can’t tell the difference between a $400 white t-shirt and a $14 white t-shirt. Rich people don’t talk any differently and I certainly wouldn’t know if they spent their Saturday nights dining at some expensive restaurants or crashed on their couch watching old reruns of “Cheaters”. I’m fairly certain that, even though their bank accounts are way bigger than mine, they’re not all that different.

I don’t know what a poor person is supposed to look like either. In fact, I wouldn’t even know how to tell if someone was poor, for a lot of the same reasons I mentioned above. And, given the amount of celebrity shoplifters, there’s no way to tell if a rich person or a poor person, or even a middle class person, is going to steal. Apparently, though, a security guard at a jewelry store near my house does have that keen of an eye.

A few years ago, my husband and I went into the store to get my engagement ring and wedding ring cleaned. We were dressed in jeans and coats (it was winter, sometime in January) and had our infant daughter with us (who was in a stroller). We didn’t look any different than anyone else in the store, yet the guard targeted us as the thieving type (I assure you, we’re not). He then proceeded to follow us around the store for the entire time we were there. It was awkward, uncomfortable and made me feel awful. To this day, I refuse to go back to that store. I don’t ever want to feel like that again.

So why am I telling you this? I’m not really sure, quite honestly. Maybe it’s to point out that the old adage “you can’t judge a book by its cover” is completely true. While the guard at the store may have thought we looked like shoplifters, we sure weren’t. Taking it one step further, someone may look rich, but that doesn’t mean he is. And when we start comparing ourselves to people we think are one way without knowing the real story behind it, that’s when we enter, to quote the great Kenny Loggins, the danger zone.

The danger zone is where we start spending money we don’t have on things we don’t need, not just to keep up with the Joneses, but to surpass them. It’s where we look at our friends and family and, not knowing the intricacies of their finances, start getting ourselves into debt to impress and outdo them. They went to England for a week? We’re going on a 15 day cruise of the Greek Islands! They bought a 50” TV? We’re buying a 65” TV! He proposed on the beach? My finance proposed on a glacier! It goes on and on. The competitiveness is sickening. And a financial time bomb.

Why do we do it, then? Is it some need to keep up with what we think rich people do? Is it a need to seem “better” than our friends or wealthier than our friends? Perhaps we’re insecure and this is the way we can feel superior or envied. We want people to think we have money so we structure our purchases to look like we do. It’s a self-fulfilling prophecy that, at the end of the day, leaves us still feeling insecure and with an emptier wallet.

I’ve been guilty of spending for those reasons. I did it a lot in my 20s. But as I get older, I realize how foolish it actually is. I’ve learned that most people who look “rich” aren’t rich at all. They’re just like everyone else.

Because really, what does rich look like?

Author bio: This is a guest post from Steve who writes about personal finance from his unique perspective at Money Infant. Once you are done here head over there and say hi. Tell him Tight Fisted Miser sent you!

It’s a silly question really. Credit cards aren’t like people, they can’t let us down. They are simply pieces of plastic used to access a line of credit granted to us froma bank or other lending instituition. Credit cards aren’t good or evil, they are simply another tool in a large arsenal of financial tools. If anything it is us who have let ourselves down through our poor understanding and use of credit cards.

What is a Credit Card Really?
A credit card is a card issued by a financial institution that gives the holder the ability to charge goods and services (borrow money) usually at the point of sale. Credit cards are meant to be used for short term financing and as such typically charge high interest rates. Borrowing limits are set by the financial institution issuing the card and are determined based on a set of criteria including FICO scores, current outstanding credit, outstanding credit line used and other factors.

Why We Feel Let Down
Many of us are carrying large amounts of credit card debt and feel as if we can’t escape from the credit card treadmill that we find ourselves on. I know exactly how this feels because I was once on the same treadmill. You feel loss of control, overwhelming frustration and as if the credit card company let you down. The problem is we didn’t understand the proper use of credit cards – short term financing. The credit card didn’t let you down, you let yourself down by using this tool incorrectly.

Proper Credit Card Use
To enjoy the benefits of credit card use (ease of payment, cash back and points programs, increased credit score and financing options, lowered interest rates) we need to learn how to use them properly. It really isn’t difficult if you can simply keep in mind that credit cards are meant for purchases that will be financed for 30 days or less. Typically it is after 1 month that interest begins to accrue, so if you pay your card off before this you avoid the hefty interest charges and using your card isn’t really any different from cash.

No matter how betrayed by your credit cards you may feel the truth is they are there to help you if you can understand them and use them the way they are meant to be used

This is a follow-up to Wednesday’s post, “If You’re Separating…Or Thinking About It.”
The answer is clear, in spite of today’s burgeoning divorce rate. A strong, solid marriage — and I am lucky to have spent 30-plus years with my spouse, the Brick —  is a great joy.

It makes you a better person collectively than you would have been alone. It gives comfort — someone to watch the latest movie together, or commiserate over political foolishness. (Just don’t expect that you’ll always agree…) On cold winter days, someone else is making coffee, or warming up the bed before you crawl in. (if you’re lucky, they’re making both!)

It gives stability. With bills to pay and kids to care for, there are two people, instead of just one, to bring in extra income, make a run to the grocery store, or pick up Junior after school.

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