Wednesday, August 28, 2013

My Blog Has Moved!

My blog has moved to it's own domain at It's a bit of an upgrade :) Hope you will join will be automatically transferred shortly!

Tuesday, August 13, 2013

FedLoan Servicing is Terrible: Part III

I'm starting to think that this is going to be a never ending saga! I arrived home yesterday to find a letter in the mail from FedLoan Servicing about my payment for this month, so they now have even more surprises up their sleeve for me! My payment for this month is now just a grand total of $113.16 due on 08/21/2013. I'm completely shocked - I literally do not know what to say. Before I even researched this I had a gut feeling it wouldn't even be enough to cover my interest and sure enough it proved to be right later on. My previous minimum payment was $343 and you see all the problems I am having with that, how is this payment going to solve anything?

If I total my accrued interest on all my loans as of today, I come up with:

$8.43+$14.79 +$15.38 +$8.98 +$26.33 +$9.51+ $26.52 + $14.85 = $124.79 in unpaid interest

That means that by the time my payment is even due, that will be closer to $200. If I make that $113 payment it will just cause my loans to increase and that interest will be added to the balance of my loans. It seems like instead of a 10-year payment plan that FedLoan Servicing has me on the 'forever' payment program. Aren't there rules against minimum payments being this low and having loans just constantly accrue interest? It doesn't seem fair, and if someone was only making minimum payments and not paying attention they could really get screwed over here.

I'm going to try and use their annoying formula to calculate my minimum payment on one of these loans:

M=P/[[(1/(1+O/P)) X (1-(1/(1+I/12)T))]/[(1-(1/(1+I/12)))]]

 Where M= Monthly Installment, P= Principal Balance, I= Interest Balance, O= Outstanding Interest, T= Total Number of Installments (120 for a 10 year repayment plan)

M=5200.81/[[(1/(1+15.38/5200.81)) * (1-(1/(1+15.38/12)120))]/[(1-(1/1(1+15.38/12)))]]

Unfortunately I'm not really sure what the difference between outstanding interest and interest balance is. To me that would be the same thing on these loans? Outstanding interest is the only thing I can seem to find on their website. It's obviously something else because I get my monthly payment to be $129 which does not make any sense. I think I will have to ask them about that.

When I went to reference some of my payments though, I realized that some loans don't actually have a monthly payment though! It seems like they have just arbitrarily decided to decide the monthly payments each month on which loan should be paid and which shouldn't:

As you can see, one loan actually has a monthly payment while the other loan does not even have a monthly payment due! Yet interest is still accruing on it. And not to mention that neither loan has a next due date according to this section of their website. Once again I'm starting to get that strange feeling that I'm on the 'forever' payment plan and that something weird is going on here. I absolutely plan on calling them either today or tomorrow in an attempt to figure this out.

Does anyone have any idea what is going on here? Am I reading into this wrong?

Sunday, August 11, 2013

FedLoan Servicing is Terrible: Part II

I honestly still have no idea how FedLoan Servicing calculates how payments are distributed between loans, but I'm definitely trying to figure it out! My frustration with FedLoan Servicing grows as I'm still unable to find the information I'm looking for or at least some explanation of why my $600 payment (which was $257 over the minimum payment) was not able to cover all the interest. Well technically it was, but FedLoan Servicing had other ideas with it.

I received an e-mail response from FedLoan Servicing through their secure 'contact us' system and I will say that the responses were pretty much received within 2 business days. They used the full amount of time but they did respond to me. I received mostly generic responses ranging from just saying how the payment system worked, how interest is calculated, etc etc.

I did receive two responses that did attempt to answer my question but still pretty much ignored the major point of the issue. Their website states that "Any interest or fees that have accrued on your loans will be paid first before reducing your principal balance" like I had said before but they seem to ignore this issue in each response, and they are definitely ignoring the fact that I paid $0 into principal on two of my loans.

On my most recent response I'm not really sure what to make of it. They gave me a nice, simple formula that is used to calculate how much each loan payment is:

M=P/[[(1/(1+O/P)) X (1-(1/(1+I/12)T))]/[(1-(1/(1+I/12)))]]

Where M= Monthly Installment, P= Principal Balance, I= Interest Balance, O= Outstanding Interest, T= Total Number of Installments (120 for a 10 year repayment plan)

So if M is the monthly installment, that's just how much I have to pay each month? That's not really helpful to me - I paid way over the monthly installment for each loan. I'm trying to figure out how they divided each payment and how they decided to give smaller loans more money and larger loans less money. The monthly installment for those loans is in fact smaller, so I'm not sure why the extra money wouldn't be weighted in the same way?

They also tried telling me that any extra money I put towards my loans in July would contribute to a payment in August. So basically any extra money is only pre-paying the next month - which is annoying. I wanted to pay extra in that month, not just pay in advance. Nowhere on their website does it state that when making a payment. I've sent another response to their support, but it really looks like I'm going to need to get on the phone with them and see if I can get anything sorted out. This is getting a bit ridiculous I think!

Tuesday, August 6, 2013

FedLoan Servicing is Terrible

If your student loans happen to get bought by FedLoan Servicing I have one word of advice for you: run! Run far, far away! But you probably have the same stories about your loan servicing company, so is there anywhere you can actually run to? It has been nothing but headaches since I first found my loans were being bought by them from Direct Loans.

The first thing that happened was that I logged into my Direct Loans account and realized that I suddenly had all my loan balances at zero. At first I thought I might have been the lucky winner of a computer glitch or some kind soul had decided to pay all my loans in full. After about 30 seconds, I remembered reading about this several times before. I knew my loans had been sold to another provider. The question was, who?

The next day I received a letter in the mail learning that my new provider would be FedLoan Servicing. Seemed like a pretty standard name and company, and what was the big deal? That was the last time I would think that about them. I signed up for an account with them using my Social Security number and other information, but for some reason I had no loans in my account and my payment was supposed to be due in a few days.

I filled out the contact us form asking about my accrued interest as well as my loans not showing up and when I would have to make a payment. I received a generic response that it could take up to 15 (!!) business days to process the transfer of my loans and that I wouldn't have to make a payment until 7/21 instead of my 6/21 payment. They dodged the interest part of my question, but that was whatever at that point.

So then the time came for my 7/21 payment, and I realized that interest HAD been accruing the whole time. Two of my loan balances are actually higher than the started out. That is partially my fault from the time with Direct Loans, but I had corrected that by paying extra the next time. But now they had gone right back up to where they were before and then some.

I decided to make a $600 payment on my minimum payment of $343. I figured that should clear all the extra interest no problem and reduce the principal a little bit in each loan. I would start from a "clean slate" since I was making great progress with my private loans and this just didn't seem worth the headache to deal with.

Fast forward to a few days ago where I decided to just review my payment, as that took a few business days to process itself. When I looked at the results I was absolutely stunned and I could feel my blood pressure rising instantly! It seems that they had largely decided to arbitrarily put my payments however they felt it - there was no weight based on the size of the loan, and they ignored the accrued interest. The payments weren't even spread out evenly!

(Note: I'm totally a dude, but this picture perfectly sums up my feelings right now)

A direct quote from their website is: "Any interest or fees that have accrued on your loans will be paid first before reducing your principal balance" but apparently this only applies when this is in their interests, like when the other loan has a lower interest rate. They would rather let the higher interest rate keep accruing interest and not even touch the principal.

Here is an example from part of my payment last month:

Loan 1: Balance: $3,322.53
Here is the last payment I made on this loan:

Loan Type Principal Paid Interest Paid Late Fee
DIRECT SUB STAFFORD LOAN $31.61 $50.91 $0.00

Loan 2: Balance: $4,312.47
Here is the last payment I made on this loan:

Loan Type Principal Paid Interest Paid Late Fee
DIRECT SUB STAFFORD LOAN $0.00 $48.24 $0.00

As you can see, the second loan balance is actually higher than the first, yet nothing reached the principal. I have even smaller loan that they decided to put $120 total towards and another loan that had $0 principal paid as well as the one above. Both of those loans still had unpaid interest, yet here their system was putting $31 towards the principal on this loan and $70 on another and then paying just a portion of the interest on another loan. This is not how they say their payment system is supposed to work!

I have submitted two requests through the contact us form, but I will absolutely be amazed if I receive anything more than a generic response. The form says that they will respond within 2 business days, and tomorrow will be around 3 so I should probably get a response by tomorrow.  It seems like I'm going to have to waste time on them with the phone and probably get told they can't fix payments that have already happened. I apologize if this entire post sounds too rant-y in advance, but I don't like these shady business practices that FedLoan Servicing is pulling on me here.

Has anyone else had similar experiences with FedLoan Servicing or even any other student loan servicer?

Photo credit: Don Hankins / Foter / CC BY
Photo credit: Evil Erin / Foter / CC BY

Thursday, August 1, 2013

Monthly Budget Review - July 2013

I expected this month's budget to come in a little higher than I would like, and I think that is probably going to be true once we take a look at the numbers. So without further interruption here is my budget for July...

Item Budgeted Actual Difference
Income $2,920.00 $2,920.00 $0.00
Rent -$100.00 $0.00 $100.00
Car Insurance -$110.00 $0.00 $110.00
Cell Phone -$20.00 -$20.00 $0.00
Gas -$100.00 -$167.00 -$67.00
Gym -$20.00 -$20.00 $0.00
Dining Out -$50.00
Entertainment -$100.00 -$100.00 $0.00
Total Income After Fixed Expenses $2,420.00 $2,566.00 $146.00
"Extra" Spending $0.00 -$225.00 -$225.00
Total Income Before Student Loans $2,420.00 $2,341.00 -$79.00
Student Loan Payments -$2,200.00 -$2,600.00 -$400.00
Total Remaining $220.00 -$259.00 -$479.00

As you can see I came in over budget this month but that was partially planned. I had about $1300 of 'unspent' money from last month from my student loans switching providers so if that gets factored in I actually still came in under budget for this month. I paid $2600 total towards my student loans this month, and as you saw from my July results about $2000 of that ended up going towards principal. I at least did not spend more money than I earned and I haven't dipped into my savings account. I'm starting to think it might be time for that though - it's way too much money to be sitting in the bank with my huge student loans.

My parents gave me a break this month on my "rent", which was pretty awesome. I was thankful for that as it gave me a little extra money to put towards vacation. Some of it balanced out, because I did have to buy some groceries while my parents themselves were away on vacation for a week - but that was more like $15 worth of food compared to the $100 I normally give them each month for that. This will also be the last month without a car insurance payment, those will start up again next month.

Gas money was much higher this month which was from all the extra travelling, as well as the increase in gas prices throughout the month. At least it's started to flatten out and go down a few cents the past week. The rest of my extra spending and entertainment budget mostly consists of spending on vacation, concert tickets for later in year, and a waterpark ticket. I also spent money on some computer games this month, it was the Steam Summer Sale and I couldn't resist! I never buy games at full price though, I'm usually the last person to play that particular game.

My dining out this month consisted of getting pizza one night, and the rest would be food purchased during the ride to and from Ocean City. We actually only ate for dinner on the 4th of the July. We packed lunch to the beach and ate in for breakfast and dinner the rest of the days from groceries we bought beforehand or while down there. I'll be heading back down for a week in August so I expect my spending to be a little higher next month as well.

Saturday, July 27, 2013

Frugal Tips: Dorco USA Review

One of the things that I see as a necessity, but used to hate paying for was razors and razor blades. They seem so simple to make, they have been around forever, and are obviously mass produced. Yet they always seemed to cost a fortune! If you go into your local CVS or Walgreens, you may even find that the razor blades are locked up because they are so damn expensive. That seemed a little ridiculous to me.

I know they are always coming out with the latest and greatest razor blade that has an extra blade, extra close shave, etc - but I really never noticed a difference between most of the razors to be honest. I started doing some research, and then I finally stumbled across the following Youtube video:

It was humorous but also immediately made me want to check out the website to see what 'the great shaving ripoff' was all about, which then eventually led me to the official Dorco USA website. This was around last Summer - you can see the video itself was posted in April of 2012 so the Dorco website was almost brand new. There weren't many reviews on the website, maybe 2 or 3 per razor. Now there are 100s of reviews, youtube reviews, and they even sell on Amazon too.

When I saw the prices I was simply amazed! I could get 16 razor blades for around $20, it seemed too good to be true. The blades looked like standard Gillette or Schick razors but at 30-40% of the price. I decided to take the gamble, these razors couldn't be too bad, could they? I decided to pick up one of their 'Frugal Dude' packs which at the time I believe contained 1 razor, 16 blades of 2 types, and 2 disposable razors. It was just over the price of free shipping ($25) and seemed like a great value to me. Fingers were crossed that they would actually work though!

I received my razors about a week later and decided to give them a try one morning. I started off with a 4-blade cartridge and I was pleasantly surprised. I have pretty sensitive skin so shaving is never that great of an experience for me, so I was pretty skeptical from the start based on the price. You get what you pay for, right? Wrong in this case - this worked just as well as any Schick and Gillette razor that I have used and I just use standard Edge shaving gel. A week later I even received a thank you letter from the CEO for my purchase along with another complementary disposable razor. Can you tell this company is dedicated? (I was also a very early purchaser like I had said, guess I had good timing)

The blade lasted about 2 weeks worth of shaving, which is pretty standard for me. Obviously that will depend on the person but I didn't really notice them lasting any longer or shorter than Gillette or Schick. I also received 6-blade razors with this bundle, and while they provide a great shave I did notice some tug with them for sure. I finished all the blades up as it's not like I was cutting myself any more often than usual, but I've been sticking with the 4-blade razors ever since.

If you are still using Gillette or Schick products I would 100% recommend at least giving Dorco USA a try, it's worth the money you will save if you get the same results I did. Maybe the next step will be ditching wet shaving completely and trying out the trimmers, but we'll see :) I pretty much got a years supply for a little over $20 so I have no complaints.
Photo credit: David Robert Wright / Foter / CC BY-NC-ND

Thursday, July 25, 2013

New Student Loan Agreement on the Horizon

It seems like Congress is finally closing in on an agreement to and while it doesn't solve the underlying problem (the easy source of money giving colleges an incentive to keep increasing tuition), they claim it will solve the problem of certain interest rates jumping from 3.4% to 6.8%.

This agreement will tie the interest rates to the market rate, or the 10-Year Treasury note plus 2.05% in interest rates which should set the rates at 3.85% [1]. At face value this seems fair, but I personally think it should really be a 1% increase over the 10-Year Treasury. The less graduates are paying on interest, the more money they can potentially spend in the economy sooner - things like cars and houses. Someone making large monthly payments towards student loans are highly unlikely to be getting a mortgage anytime soon.

The interest rates would be capped as well at 8.5%, 9.5%, and 10.% for undergraduates, graduates, and parents respectively. It would be nice if these caps were lower, but at least students will be paying the "market" rate instead of 6.8% while mortgages are at an all time low. If the Fed continues to keep interest rates at all time lows, student borrowers in the near future should be able to hang onto these low rates.

The part about this plan that I don't like is the fact that students are being used for profit by the government. It already sucks that private loan companies exist to do this, but hey that's what business is designed to do right? The federal government should not be doing that! The aim for this program, in it's current existance, should absolutely to be to break even or make minimal profit as a buffer.

This will generate about $184B in revenue for the federal government, coming directly from students. There will also be an estimated additional $715M in revenue that is specifically going to be used for reducing the deficit [2]! Due to Congress' own stupidity, they are going to be using us to pay for their budget mistakes from the same people they should be investing in - not taking from. Maybe Congress should stop wasting our money first before taking more money?

I guess we will have to wait and see what Congress ends up doing and if this plan actually does get approved. Unfortunately for future students I think it may take the Student Loan bubble bursting for the actual source of the problem to be solved.
Photo credit: Nastassia Davis [] / Foter / CC BY-NC