Why I’m Not Concerned About My $120,000 Student Loan Debt

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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?

 

July Income – $1226.91

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Here is a breakdown of my income for July.

Online Income

 $371.75

Interest/Dividends

$32.36

Extra Job

$606.39

Cash Back

$11.59

Bank Bonus

 $10

Mystery Shopping

$189.50

Sell Stuff

$5.32

Total

$1226.91

My overall income was up a bit due to working as an extra.  If I were to deduct the cost of my motel stay and gas expense to get to Atlanta and back though, I would barely make any money from the extra job.  My online income was down once again.  This was the first month in over four years that I didn’t get a payout from Adsense.  I barely missed making the minimum for the Adsense payment and made more than enough in July so I’ll have a larger payment this month.  I also didn’t receive any affiliate income in July, but I made some income that will be paid this month.  I can already tell that August will be a better month than July for online income.

My other sources of passive and alternative income don’t add up to much and that probably won’t change this month.  I did almost no mystery shopping in July since there are very few jobs where I’m currently staying and with the poor MPG of my van it doesn’t make sense to travel very far for a shop.  I might sell more stuff this month.  That depends on whether I’m hired for the job I interviewed for yesterday.  If I get the job I’ll have a significant increase in income.

July Expenses – $1245.87

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Here is a breakdown of my expenses for July.

Household

$44.21
Entertainment

$100.41

Transportation

 $621.66

Food

$112.59
Shoes $21
Travel $263.06
Phone

$26.81
Health

$56.13

Total

 $1245.87

My expenses were down slightly from June. The biggest expense was for transportation, but it was quite a bit lower than last month.  I didn’t spend any money on gas after the 16th.  I did use a lot of gas though to drive to Atlanta and back and to visit my brother in South Carolina.  I’m hoping I can cut down on the miles this month.  I have a trip to Kansas City today so I’m not off to a good start.  My food expense is low because I spent the last half of the month at my mom’s.  I still spent money on meals out and some food though or that expense could have been even lower.  The travel expense was for working so I’m ok with it.  Entertainment was the main category I could have cut back on.  It should be lower this month.  This is probably about the level my expenses will be until I pay off my van.  I’m still going to try to get them a little lower though.

The $100 Weight Loss Challenge

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I set a goal of losing 50 pounds this year and have made almost no progress towards that goal. To provide myself with some more motivation I am launching the $100 weight loss challenge. If you have been reading this blog for a while you may remember the $500 weight loss challenge, which was a complete failure. I think the reasons that I failed at that challenge was because the goal was too big and the end of the challenge was too far off. This allowed me to keep procrastinating until it was too late to meet the challenge.

The $100 challenge will be a short term challenge. My goal is to lose 5 pounds by August 15, 2012 or I’ll pay $100 to the readers. This deadline is soon enough that I should realize I need to start working on it immediately. My current weight is 217.8 pounds. My goal weight will be 212.8 pounds. This should be easily doable.

My weight is down from 220.4 pounds on Sunday. It seems that having a slow carb breakfast is leading to weight loss. It is hard to believe that having bacon and eggs for breakfast would cause me to lose weight but I haven’t otherwise changed my diet or exercise habits. For the challenge I’ll be making a second meal a day slow-carb and doing my version of the kettlebell swings from The 4-Hour Body. I might also try cold showers and ice packs.

To participate in the challenge leave a comment on this post. The first 20 people to leave a comment will receive a $5 Amazon gift card or $5 PayPal cash if I don’t meet my weight loss goal. That is the stick approach. For the carrot I’ll be allowing myself to spend $100 on something for myself guilt-free if I meet the goal.

I won’t have an extra $100 on August 15th unless I earn some more money before then so the challenge should also motivate me to make more money.

The Minimum Effective Dose and Blogging

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I recently read The 4-Hour Body by Tim Ferris and it had several ideas in it that I found interesting. One of them is the minimum effective dose. The book explains that the minimum effective dose is the smallest dose that will produce the desired outcome. Applying the MED to exercise Ferris determines the least necessary to maximize size gain. According to him less than 30 minutes of gym time per week is needed. I’m more concerned with weight loss than size gain so I will test that at a later time.

For weight loss the book tells how a woman was able to lose 100 pounds with 20 minutes of exercise twice a week. The MED for weight loss is just 40 minutes of exercise a week. That seems easily achievable sounds so I’m going to do it and see how it works. She also had a slow carb breakfast. I’ve been doing that since I haven’t been able to stay on a complete slow carb diet, but just having a slow carb breakfast is easy. I’m not sure that will be enough for me and am thinking of switching to two slow carb and one carb meal a day. That will depend on my results with the current setup.

If the MED actually works it would mean I could achieve one of my major goals without too much effort. Since I like the idea of doing the minimum I’m trying to think of how to apply the MED to blogging. I’m not sure if the MED applies to blogging since you can do a lot of work before it ceases to be effective. Currently I’m not even doing the minimum so I need to determine what the minimum is. I’m thinking of setting a goal of writing one post a day. I have three blogs this is a minimal amount of writing for them. I’m still thinking of other ways to apply the MED to blogging. How would you apply the MED to blogging?