Financial stuff

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.

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 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.

The fact that I have almost no desire for stuff makes it easy for me to be frugal. It isn’t a sacrifice to not buy stuff that you don’t want in the first place. An example of my lack of desire for stuff is being unable to spend Kohl’s Cash. Last month I had $10 in Kohl’s Cash to spend from buying stuff to resell. The Kohl’s Cash was expiring soon and I couldn’t find anything to resell so I decided I would just buy something for myself. I couldn’t find anything in the store I wanted and ended up letting the Kohl’s Cash expire unused. This month I received another $10 in Kohl’s Cash for my birthday.  There still wasn’t anything I wanted to buy. I ended up buying a pair of pants even though I already had enough pants. I have very little closet place so when I get something new I need to get rid of something old. I did have one pair of pants that are over 10 years old and looking kinda grungy. They weren’t acceptable to wear to work, but I could wear them when I wasn’t concerned about my appearance. (Which is most of the time.) Since I got the new pants, I retired the old pants. Even though the pants were over 10 years old and I only paid about $10 for them it still seemed wasteful to get rid of them.

Although this lack of desire is a positive when it comes to spending money it is a negative when it comes to earning money. Making more money doesn’t seem to have much benefit for me. Last year I made about $20k and this year I will make about $40k. Doubling my income seems like it should lead to a better lifestyle, but I can’t think of anything I can buy now that I wanted to buy before and couldn’t afford.  Most of the additional money I’ve made this year has gone towards paying down my student loans or retirement savings. Those are both things that should benefit me in the future, but they don’t improve my life right now.

I actually think my quality of life was better last year with the lower income. Although I had less money I had a lot more time. Perhaps I put too much value on my time. It isn’t like I am doing much with my free time. Yet, once I have made enough money to pay for what I consider my necessities I have almost no desire to work for more money. During tax season there are plenty of opportunities for overtime and I rarely work overtime since I’d rather have the time off then the extra money. That is basically like paying $30 an hour for my extra free time. Since there isn’t anything I want to buy with that $30 an hour though, using it for more free time seems like a reasonable deal.

I’ve been trying to think of things to spend my additional money on that would improve my quality of life. The additional money has led to me spending a lot more money on restaurants and fast food.  That isn’t really leading to an increase in my quality of life. In fact, eating all of the fast food contributes to health problems that could end up killing me. And once I’m dead my quality of life will be nil. I need to find something else to spend my money on. If you have any ideas I would love to hear them.

One of the ways I used to make extra money was through doing surveys. My favorite survey company was Pinecone Surveys. When I first started using them they paid $5 per survey. They have since reduced the survey payout to $3 per survey. I did surveys with them at both pay levels and never had any problems getting paid.

It has been a few years since I did a survey with them though. It takes about 20 minutes to complete a survey and you don’t qualify for many of the available surveys. I decided that the payout was no longer worth my time since I always have other things to work on that should result in a better return on investment of my time. That being said, these surveys are a fairly easy way to make a little extra money. If you do them when you’re watching TV or otherwise would be wasting time they can be a reasonable use of your time.

If you would like to see if you are eligible to participate in Pinecone Surveys use the affiliate link below.

Pinecone Surveys Sign Up Link