Update and dilemma. . . .

Hey there folks!

Long time no blog!  This summer has flown by - I'm still working like a dawg, but I can sense that the end is nigh!

I now owe $29,318 on my student loans!!  Here's a more organized update (and then I'll explain my dilemma):

Here's where things stand now, in early-mid September 2012:

Second Mortgage Debt: $31,400::::$25,176

Student Loan Debt: $61,762::::$29,318

Primary Mortgage Debt: $167,500::::$154,209


Here's what it looked like in late May 2012:

Second Mortgage Debt: $31,400::::$25,442

Student Loan Debt: $61,762::::$39,070

Primary Mortgage Debt: $167,500::::$155,191


That second mortgage really needs to DIE, by the way.  The balance never goes down!

So here's the dilemma:  I find that with the current stock market (which is doing pretty well, all things considered) I could sell ALL of my stock and pay off ALL of my remaining student loan balance.  As in, TODAY (or, end of the week, assuming that kind of thing takes a few days).

I was intending to pay down my loans to $20,000 by January 2013 (totally doable) and then use $20K of the stock to pay the rest of it, thereby retaining about $8K for future use (or if I needed it to pay taxes).  Assuming, of course, that the stock market doesn't tank between now and January.

Psychologically, having a bit of stock left over makes me feel all warm and fuzzy inside, though logically I know that the stock is NOT going to gain 8.25% a month as my student loans do.  Or 8.9% a month as my second mortgage does. So the smart thing to do is pay the student loan off now, and take the tax hit this year  Since it's considered capital gains (I think), it would be 15% on the 'gain' regardless of how much other income I bring in this year (and I'm closing in on $100K this year so my income taxes will be high).  (BUT WAIT:  I just had a thought.  Since my student loan rate is 8.25% and the taxes are 15%, won't I pay more in taxes than I will in interest if I sell up now? ARGH!  Why didn't I major in Accounting or Finance?).

So essentially my logical self is battling with my emotional self about this.  I know what Dave Ramsey would say:  Sell now and get out of debt - then start on the second mortgage.  My new-to-saving self wants a little nest egg, though.

Also, and I don't think I've mentioned this, but I also picked up an auto loan in the last year.  My 15 year old beater finally bit the dust - I'm not worried about the car loan (2.9% interest) mostly because I bought a used, reliable, low-mileage, in-demand car that will keep its value for years should I choose to sell it.  And with my current extra income I can pay off that car loan in about 4 months.  No worries there. 

Anyhoo, here are my options as I see them:

• Sell ~ $28,000 in stock now and pay off all (or almost all) of student loan debt; would then need to spend the rest of the year saving for taxes;
• Sell ~ $20,000 in stock now and pay off almost all of student loan debt, using the rest of the year to pay the rest of it off.  Downside:  have to pay capital gains tax for 2012 when I'm already having to save for extra federal and state taxes;
• Pay down the student loan debt to $20,000 by January 2013 and then sell $20K in stock and pay the capital gains in 2013 when I may be making less money (and therefore won't have to save as much for my 'regular' taxes).

What would you do?

Interested in interest. . . .

Oh!  I forgot to mention one thing yesterday:  it has been very, very gratifying to see that a greater percentage of my student loan payments are applied to principle as opposed to interest.

For example, you'll see in the table below that in late 2010, when I started making payments, only 67% went to principle payment while a whopping 33% went to interest!  Now that my overall balance is shrinking, 93% is going to principle on average, while only 7% goes to interest.  Hallelujah!

	Total Paid	Principle	Interest		%P	%I
2012	$11,125.00	$10,371.82	$753.18		93%	7%
2011	$ 12,482.00	$ 10,289.33	$2,192.57		82%	18%
2010	$   2,410.00	$   1,615.01	$   794.99		67%	33%
	$ 26,017.00	$ 22,276.16	$ 3,740.74		86%	14%

A mid-year update. . .

Whew!  I know, I know, it's been awhile!  In fact, it's been so long that Blogger has a completely new format and I'm not sure I know my way around anymore. . . .

However, I have some news!  My student loans are now down to $39,071!!!!  I started the year at around $49,300 so I think I'm doing well for being five months into the year.

My goal is to pay my loans down to $20,000 by the end of the year (an ambitious goal, for sure) so in January I can sell my stock and pay it all off once and for all!

What that means, though, is that I'll have to pay at least $3,000 per month towards my student loans for the rest of the year.  Not an easy feat, especially when you consider that I am only averaging $2200 per month at the moment.

The good news is that I am on schedule to make more from my assorted part time jobs than I do at the full time job (now do you understand why I've not had the time or energy to update my blog more frequently?)  However, my earnings fluctuate monthly depending on how much teaching work I am offered - so I can never really predict until the month before how much money I will bring in.  This creates some anxiety for me, though I am simply grateful for the extra work most days!

Though it is a tough road and my friends and family are still wondering if I'm nuts (I must admit I wonder myself as I go from job to job to job), I can finally see that I may actually be free of student loan debt in early 2013!! 

So for those of you out there who are in debt up to your eyeballs (or armpits, or belly button. . . ) this CAN be done.

It requires sacrifice, though.  A LOT of it.  I have a friend who is in the same boat that I am (or was) in.  The difference is that she is not willing to work more hours to make a dent in her student loans - she is deferring right now.  She will have that debt for years because, like me, she works in a field in which people almost never get 'rich'.

I chose to sacrifice my time now to knock it out more quickly.  That doesn't mean my decision is any more 'right' than hers is, but it is so difficult to watch someone fritter their time away in front of mindless cable TV shows while lamenting the state of their finances.

So here's a wrap-up of where I've been and where I am (the mortgages are still KILLING me):

Here's what it looks like now, in late May 2012:

Second Mortgage Debt: $31,400::::$25,442

Student Loan Debt: $61,762::::$39,070

Primary Mortgage Debt: $167,500::::$155,191

Here's where my debt stood at the end of 2011:

Second Mortgage Debt: $31,400::::$25,763

Student Loan Debt: $61,762::::$49,438

Primary Mortgage Debt: $167,500::::$156,344

And here's where I was in mid-October:

Second Mortgage Debt: $31,400::::$25,888

Student Loan Debt: $61,762::::$51,881

Primary Mortgage Debt: $167,500::::$156,757


Ciao, friends!  I'll definitely update at the next milestone, whatever that is (hopefully soon at $29,000 student loan balance). . .

An update to celebrate the new year. . . .

Greetings! We we begin the new year, I wanted to update my debt repayment status. I've made a dent in my student loan debt, though it has come at the cost of my mortgage debt, unfortunately.

Even so, I'm happy with the progress I've made and am excited to watch my student loan debt decrease even more quickly in 2012. I can't imagine the relief that I will feel when this burden is removed from my life forever!

See my last post for my 2012 goals, while you're here!

Here's where my debt stands now, at the end of 2011:

Second Mortgage Debt: $31,400::::$25,763

Student Loan Debt: $61,762::::$49,438

Primary Mortgage Debt: $167,500::::$156,344

And here's where I was in mid-October:

Second Mortgage Debt: $31,400::::$25,888

Student Loan Debt: $61,762::::$51,881

Primary Mortgage Debt: $167,500::::$156,757

Clearly, my first and second mortgages are primarily interest payments, which is truly painful to see. I am hopeful that when my student loan debt is repaid, I can throw some extra money at these bills to ensure that they decrease more quickly than they have over the last year.

I hope to update more frequently this year, though can't make any promises given my hectic work schedule. Have a wonderful start to 2012!!