Month 40 Update – Navient $15,402.70, NMAC = $13,409, $401k – $9,516, Roth IRA – $2,956

40 Months – Jeez has it really been that long? Sheesh. At least my hair isn’t turning gray yet. ūüėõ

Currently owe $15,402.70 to Navient @4.25%.
Been allocating more money in the emergency fund. $600 there.
Credit card balance is ~$1900. Plan to have it paid off by the time the next bill is due.
401k balance is at $9516.
Owe $13,409 to NMAC at 0%.

This is a period where I have to just stick to my plan. Have had a few temptations but succumbing to them will not end up well for me. Been some big changes at my job but I did get a raise. Double the percentage¬†I got last year so that’s a good thing.

Got my next to last check from the townhouse refinance. $1k left to go. This one is going straight into my emergency fund. My ex just bought a new house for close to $275k. I’m not jealous, he can certainly afford it on his income w/ a 30 year note. The townhouse we lived in together is in the process of being sold. Sad in a way, but this is also the start of a new chapter for him. Mostly good memories in the house. He wasn’t interested in the huge amount of repair work for a house that isn’t his dream home. I can’t blame him though, $15k+ in work needed between the driveway, cracks in the wall, possible foundation work, plumbing, air conditioner out. Better to get rid of it now than live in a house you’re lukewarm about with¬†all that work is going on.

Still thinking about when / if I will buy a home again.¬†At 150k, 20% down would be $30k. Plus I’d want to have 6-12 months of expenses set aside. If I do it the right way it looks like that’s still 4 years away. Maybe my numbers are off. Will save that for another post… ūüėõ

I’m sleepy so short post this time around.

Wrong Path?

This post I decided to dedicate to the topic of people in my life making poor financial decisions.

Situation 1

One of my friends recently moved from out of state to the DFW¬†area. She has¬†been looking for work for the past few months. Thanks to her connections, she will likely be getting a well paying job within the next few months. The couple took out a 401(k) loan that they plan to pay back over the next few¬†months. Without the 401(k) money as a resource they would be on seriously shaky financial ground. Flash forward to today, they just moved into a luxury apartment for the rent is $1300 dollars per month (my apt is a comparable size,¬†in a slightly less desirable location but still 5 minutes away and¬†$773). Eventually they plan on purchasing a house, but today she doesn’t have a job and for all intents and purposes he doesn’t have a job.

A few years ago they owned a home in another state that went through a short sale because of the downturn in the real estate market. For as long as I’ve known them the husband has not had a full-time job to help support his wife, instead he chose to pursue his passion for theology which doesn’t really pay well and he earns nothing from. I think most people would have a come to Jesus moment where they would work a job that is not ideal but helps their family hit¬†their financial goals. This has¬†not been the case.

The wife is also providing financial assistance to her¬†parents and brother. My guess is this has amounted to over $100k over the past decade. It’s very noble that she’s cares so much about her family, but I don’t think she is concerned enough about herself.

It’s not my place to cast judgment on my friends, but I wish I was able to impart wisdom on them. They haven’t realized it now but I think they’re setting themselves up for financial failure in the long run.¬†looking¬†at the power of compounding, the importance of having a sizable nest egg and not living beyond your means, They’re failing on multiple¬†counts. On the bright side I think she will be back on target in the next 2-3 years. I have tried to help the husband with finding a job but haven’t been so successful at that. He doesn’t seem very motivated and I can’t force someone to be driven. Sure I believe in the power of faith but also that god allows us to help ourselves.

Situation 2

One of my other friends recently confided in me she has over $120,000 dollars in student loan debt. At what interest rates you might ask? Between 5-9%. Currently she is on the income-based repayment plan, commonly referred to as IBR.¬†She quit her stressful corporate job and instead works as a babysitter. Although she’s well paid for what she does, she’s making minimum payments on her loans¬†while interest accrues. Combined she and her husband grossed over $100k last year. Gross vs net though, two very different things.

Let’s look at a compounding. Starting out with a $120k balance and paying $300/mo. I don’t know exactly how much she pays but it’s probably less than that. I used this calculator¬†so no idea how accurate the numbers really are.
Year 1 : $127,505
Year 2 : $135,713
Year 3 : $144,692
Year 4 : $154,512
Year 5 : $165,254
Year 6 : $177,004
Year 7 : $189,856
Year 8 : $203,914
Year 9 : $219,290
Year 10 : $236,109

Luckily in her case she is set to inherit 2 houses in the US¬†and another in another country. Down to road she could sell those and be student¬†free. Not everyone has this luxury and what does that leave her with? An underfunded retirement plan, no real estate and probably some hefty tax bills. She’s given up hope and is just paying what she can for now.

My father died with serious debt. Over $50k as I recall, mostly from medical expenses. I wasn’t blessed with a silver spoon in my mouth. I’m not perfect. I love my friends and family and wish the best for them. Seeing my father poor from the age of 2 up until I was 20 left a lasting impression on me. He didn’t have any much control over his situation, due to his renal failure. As long as I am able to I’m gonna fight damn hard to learn from all of this. To do otherwise would just be plain ignorant¬†Life is more than money, but a few poor decisions can haunt us for a lifetime.