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

Tuesday, July 23, 2013

Student Loan Progress - July 2013

As I was preparing to write this post, I was starting to feel a little burnt out about my debt again. But I have to realize that I'm making progress and keep pushing towards my goal to be debt free. I'm treating it like like as much of an emergency as possible with every last dollar going towards my goal! Since I've started this blog I'm doing much better and trying to put a minimum of $2,000 towards the loans each month.

This is where I stood at the end of June:

 Loan Amount 
Interest Rate
Private 1  $ 26,053.92 7.92%
Private 2  $ 19,971.82 7.92%
Private 3  $ -   7.92%
Private 4  $ 3,532.69 7.35%
Gov 1  $ 22,118.82 5.22%
Gov 2  $ 7,566.56 6.80%
Total  $ 79,243.81

You may remember that I was a little disapointed that my government loans had switched providers, so I was not able to make any payments on them last month. This led to me only putting $1,500 towards my private loans when in reality I could have put a full $2,000. I also thought my expenses would be higher last month with my camping trip, but I think they will actually up being high this month. Go figure!

Here are the payments I made for July:

 Loan Amount 
Interest Rate
Private 1  $ 24,485.37  $ (1,568.55) 7.92%
Private 2  $ 19,919.49  $ (52.33) 7.92%
Private 3  $ -    $ -   7.92%
Private 4  $ 3,506.12  $ (26.57) 7.35%
Gov 1  $ 3,773.04 3.40%
Gov 2  $ 3,309.66 6.80%
Gov 3  $ 5,200.81 4.50%
Gov 4  $ 2,010.27 6.80%
Gov 5  $ 5,270.84 5.60%
Gov 6  $ 2,129.04 6.80%
Gov 7  $ 4,312.47 6.00%
Gov 8  $ 3,322.53  $ (356.72) 6.80%
Total  $ 77,239.64  $ (2,004.17)

As you may have noticed, my new provider has now split all my government loans up individually. I'm not sure if this is a good or bad thing, but may be more helpful in the long run. I'll be able to target each loan individually in order of highest interest rate and it will be more of a psychological victory as I eliminate each one.

I paid about $2,500 in total towards my loans this month. I'm still working on completely paying off Private Loan #1 and I'm slowly making progress on that. The $356 you see for the government loans is in total, next month I will be able to show each individual loan. The $2,000 towards the principal was good progress compared to last month. Hopefully next month will bring more of the same!

Friday, July 19, 2013

Why Aren't We Graduating From College?

A recent article on the Harvard Business Review blog discussing the current state of college education. Their summary? It's not looking pretty. A little over half of students are completing their four-year degrees within 6 years, and only 26% (!!!) of people getting two-year degrees finish within 3 years [1] . That means that a large portion of the second half of those students at four-year colleges aren't even graduating and most likely still have some amount of debt and no degree.

I don't necessarily think it's that students are becoming dumber or lazy, but many college students are simply unprepared for such a decision. You have just turned 18 years old and high school didn't really prepare you for this. All of a sudden you need to decide what you want to do the rest of your life, oh and by the way, if you make the wrong decision you will have to work anyways because you will have $35,000 in debt!

Students and parents need to become more involved in this process, do your research ahead of time! What do you enjoy doing? What are your passions? Figure out what schools you can go to, how much they will cost, and then how much someone in that field can expect to make after graduation. Will you be able to pay off the debt in a reasonable amount of time on that salary, or will you be stuck in debt forever?

If you are currently in college my advice would be: you definitely need to work your ass off. You are the one paying for your education, so don't waste your money. GPA is also not the end all that some people make it out to be, but it can really be a determining factor in screening canidates to be selected for interview. Don't freak out if you don't have a 4.0, but many companies do set a threshold of say a 3.5 in order to be able to interview with them. After your first job though, GPA becomes largely unimportant.

Use your time wisely too, you don't need to spend every waking minute studying or doing homework but you want to set aside enough time to be succesful. There will still be plenty of time to party - do you really need to wake up hungover every morning? More importantly, you need to network. Internships and co-op positions are extremely valuable experience and a good way to make connections. You could be the smartest person at your school but if you don't know anyone, have no experience, and lack communication skills you may get passed over by an "above average" student that has been building their resume. Your college should have a ton of resources at your disposal, get to know your career development office very well and any professors that have industry experience.

If you are looking to go to college or know someone who is and they are unsure of what they want to do, don't waste those years at an expensive 4-year college. Go to community college and save the money, take some classes there and figure out where your interests are first. It would be much better to "waste" that time there, especially because if your grades were good enough in high school many times community college can be free or close to free. Many states also have transition programs to state colleges afterwards that are similiar in nature. If you woul prefer something more hands on, you may be able to skip the college route all together - research some technical and trade schools in your area as well.

Photo Credits for this post: 
aprilbell [1]
1060 [2]

yirsh [3]

Saturday, July 13, 2013

A new way to approach student debt?

It looks like Oregon is on it's way to attempting to solve the student loan crisis in their state. But just how feasible is their solution? The basic concept of the plan is that you would not receive any traditional loans and you would not pay any tuition. You heard that right: no student loans. What you would do upon graduation is pay the University 3% of your income for 25 years. Essentially it would put everyone on an income based repayment plan that you currently get through federal loans.

I definitely agree with this program in principle, but I think it needs a few modifications for it to actually succeed. Let's look at a few examples of how much each person would be paying over the course of those 25 years:

30,000 Salary: $22,500
50,000 Salary: $37,500
75,000 Salary: $56,250
100,000 Salary: $75,000

As you can see, obviously the higher salaries would be "subsidizing" the the cost of lower paying degrees and you know what? I'm actually OK with that with a slight modification. If you are able to pay more than the 3% of your income, you should be be able to pre-pay your "loan" amount up to a certain max amount. Maybe something like the cost of tuition + $1,000 to cover any extra expenses? That would seem pretty fair to me.

You may also argue that students would not be motivated to pursue higher salary jobs because they would pay more back, but I think that is what the payback cap would be if you start to pre-pay your loan back instead. We also don't see the increase in taxes really stopping anyone from taking that $100,000 salary job compared to the $50,000 salary job.

If we use the example of Oregon State University, the cost to attend in 2013-14 in Tuition and fees is $8,538. So that means over the course of 4 years your total would be $34,512+$1,000. That means that everyone making over $50,000 a year would most likely want to pay more than the minimum. You would obviously have the choice of what to do, and for people making less they would still be able to use the IBR method to pay a lower total amount.

The only thing that it seems may be a problem is with the program itself, and how the funding will work. Australia already does a similar thing, so there must be some way to make this work! If we assume that there are about 4000 freshman entering Oregon State University each year the costs for the state would rise very quickly.

Year 1: 4000 Students * $8,538 = $34,152,000 Cost
Year 2: 8000 Students * $8,538 = $68,304,000
Year 3: 12,000 Students * $8,538 = $102,456,000
Year 4: 16,000 Students * $8,538 = $136,608,000

Total cost: $341,520,000

So the total cost at this one university before they even begin receiving a cent of income from the program would be around $341 million! I didn't even factor in people not completing their degree or dropping out - and what do you do to them? Still charge them 3% over 25 years or until they pay back how much they were "loaned"? Those are more rules and situations that Oregon would also have to account for.

The other side of the program, or the income assuming that the average student graduating with a bachelor's degree will make $40,000 a year.

$40,000 Salary * 4000 Students * 3% = $4,800,000 Income/Year

fast forward 4 years to when they are making the "full amount" each year...

$40,000 Salary * 16,000 Students * 3% = $19,200,000 Income/Year

and then 24 years later when they have the "maximum" amount of students paying...

$40,000 Salary * 96,000 Students * 3% = $115,200,000 Income/Year

So while the school would technically be able to break even on a per-student basis, it would probably take many years to actually generate a positive cash flow (if they even do?) and that is a huge, huge cost upfront. You also have to take into account students that become unemployed, or students that eventually leave the workforce to start a family. Obviously there would be a lot more complex calculations going into this, but I like the sound of this program at it's face value with a few tweaks. I'll leave the technicalities and funding to someone much more knowledgeable on the program than me!

Wednesday, July 10, 2013

Living Paycheck to Paycheck

There was recently an article on CNN Money that a staggering 76% of Americans are living paycheck to paycheck, something that was very disheartening to read. About 16% of Americans are considered to be below the poverty line in America [1], so it's crazy to think that 76% of people are also living paycheck to paycheck. One would think that this number should be lower?

If we dig into the article a bit more, I think a more accurate way to display the information that is presented in the article is that 27% of Americans have no savings at all. That is what I would qualify as living "paycheck to paycheck" - which still isn't that great of a rate. But it isn't as drastic as the headline that lures us into the article and that actually lines up pretty well if you factor in the people living right at the poverty line or slightly above it.

We can also see that 22% of people have less than $100 in savings, while 46% have less than $800 in savings. I think that in this case we are actually dealing with two groups of people. There are the people working hard just to pay their rent, feed their families, and pay the bills. There is no way this person or family is going to be able to save money without increasing their income and there is a legitimate reason they are working paycheck to paycheck.

We then have a second group of people who are making enough to live comfortably but nothing extravagant, but spend every last dollar of their paycheck on stuff they might not really need. They keep up with the latest iPhone, they have an unlimited data plan, and they might get a more expensive car than is really needed on a loan. They probably also have a large amount of credit card debt as a result of living "paycheck to paycheck" and splurging on going out every night or buying expensive furniture and clothes.

And while the second group definitely does exist and is a sizable amount, I don't think it's as bad as the article makes it out to be. I think they use the 76% statistic to draw you in right away, and while almost half of the people not having at least a three-month cushion there was another half that at least did have an emergency fund. I think if you wanted to really stretch, you could say that half of all Americans are living paycheck to paycheck and make a valid argument for it.

What do you think of these statistics? Was there a time in your life when you were living paycheck to paycheck? Was it out of need or overspending?
Photo Credits for this post: aeropw

Monday, July 8, 2013

Monthly Budget Review - June 2013

Sorry that this post is a little later than usual, but I was down at the beach for a long July 4th weekend with the girlfriend :) You will also notice that I ditched the weekly spending posts - I had only planned on doing that to see how my spending was going on a running basis. After realizing it's pretty much in control and much lower than I was expecting (maybe it was posting it on the internet that did this?), I've decided to just stick to monthly budgets. If I notice my spending inflating or starting to get out of control again I will bring back the weekly spending posts for myself.

Now let's move onto the numbers, so here is what my budget for June ended up being:

Item Budgeted Actual Difference
Income $2,800.00 $3,300.00 $500.00
Rent -$100.00 -$100.00 $0.00
Car Insurance -$110.00 $0.00 $110.00
Cell Phone -$20.00 -$20.00 $0.00
Gas -$100.00 -$120.00 -$20.00
Gym -$20.00 -$20.00 $0.00
Dining Out -$50.00 -$20.00  $30.00
Entertainment -$100.00 -$100.00 $0.00
Total Income After Fixed Expenses $2,300.00 $2,920.00 $620.00
"Extra" Spending $0.00 -$92.00 -$92.00
Total Income Before Student Loans $2,300.00 $2,828.00 $528.00
Student Loan Payments -$2,000.00 -$1,500.00 $500.00
Total Remaining $300.00 $1,328.00 $1,028.00

As you may have noticed, I had additional income this month compared to the usual $2,800. After talking to my grandma about student loans in general and then my student loans, she wanted to help me out with my loans this month for my birthday - and would not take no for an answer. I feel extremely fortunate to have her help and I am very thankful and grateful that I have someone in a position like that to help me. I absolutely do plan on putting all that extra money I received towards my loans next month after the confusion this month with my federal loans switching services.

You will also see that because of my camping trip, I ended up spending more on gas than was budgeted for that category - but I expected that because of all the extra driving. I also ended up spending more on my entertainment and extra spending categories, from buying groceries while camping as well as buying my Dad a gift for Father's day. I managed to only spend $20 going out to eat this month - I didn't include the groceries in this category as I considered them to be entertainment and extra spending to go along with camping.

I really don't think I broke my budget too bad if any at all. I went over by $20 in gas and over by almost $100 in my extra spending category. But I also saved $30 on going out to eat this month, and I still didn't have to pay car insurance which will continue until next month. I'm pretty satisfied with my spending this month, especially with the camping trip being included! I expect next month to be about the same with our trip down to the beach this past weekend, but it may look "negative" after using the extra $1,328 from this month to pay even more on my loans in a few weeks.

Tuesday, July 2, 2013

Cutting out that morning coffee? Congress sure isn't!

One problem that I have never had to deal with is having to rush to make sure to get my morning coffee at Dunkin Donuts or Starbucks. And it's not because I make my own coffee either, it's because I'm really just not a coffee person at all. It's strange as both my parents are pretty big coffee drinkers, as well as there parents. I tried it few a times and just never really saw the need for it. Even throughout college I probably only drank it one or two times, and it's not like I even replaced it with energy drinks or tea.

I only really drink hot tea when I'm feeling sick or have a sore throat, and while I used to drink a large amount of iced tea it wasn't for the caffiene kick. I just enjoy iced tea, though I have largely replaced that by just drinking water now.

When looking to cut personal spending, many people look towards reducing the money they spend on going out to eat, including the purchase of coffee. Unfortunately when it comes to Congress they seem to have a different idea. As you can see from this article and video, Congress spent over $2 million in 2012 on coffee and food! And I'm not a fan of either party, and not trying to get into political issues here - this crazy spending is happening on both sides of the line. As the sequester effects millions of Americans, we see more and more examples of just how wildly incompetent Congress really is.

And while you technically can control where Congress is spending your money with your power to vote, right now those efforts seem to be fruitless - every single member of Congress is spending your tax dollars. So let's turn our focus to a more positive subject that we can control which is exactly how much money can you save by cutting out or reducing your morning coffee.

If we assume that there are 47 weeks in the year to get coffee while taking into account for days off, vacation, and the days where you are running late and don't get coffee that gives us 235 days to get coffee.

For the Dunkin Donuts and Starbucks pricing, I just used estimations. Obviously depending on the type and size of beverage you get the price may vary as well as your location. Often Starbucks will run at a slightly higher price premium. For the fast food and gas station estimates, I just went off the fact that many of these chains offer coffee of any size for 99 cents.

For the cost of K-Cups, I went with a 96 count of green mountain coffee at amazon which comes out to 47 cents per cup. Obviously with K-Cups there are brands that are cheaper but the lowest I was able to find was 33 cents per k-cup and some people will also end up buying more expensive brands as well. For the cost of drip coffee, I just went with a tub of Folgers that you you should be able to get in the store for around $10 or even less if you buy in bulk online. They claim you can get ~270 cups of coffee at 6 ounces, but lets say that you can only get around 180 cups as most people aren't drinking a 6 ounce coffee. This comes out to around only 6 cents per cup! I added 5 cents per cup to both of these to factor in milk/cream and sugar. I also added in another cent to the drip coffee to factor in the cost of filters. You will also have to remember that both of these solutions have an additional expense of buying the coffee machine initially.

Type Of Coffee Cost Per Cup Cost Per Year (1 Cup a Day) Cost Per Year (2 Cups a Day)
Starbucks / Dunkin Donuts $2.00 $470.00 $940.00
Fast Food / Gas Station $1.00 $235.00 $470.00
K Cups $0.52 $122.20 $244.40
Drip Coffee $0.12 $28.20 $56.40

As you can see from the above analysis, it's these really small victories in the short term that can add up to be large victories for your wallet over the long term without sacrificing too much. If you absolutely have to have that coffee, definitely consider making your own as opposed to going out to get it which will save you hundreds each year. Drip coffee is the cheapest solution, although you can find re-usable K-Cups as well that cut the costs down towards drip coffee. Maybe your work offers free coffee that you can start to take advantage of? Or maybe you can work on cutting the cost of coffee all together?

Photo Credits for this post: 
Peter Griffin [1]
ABC News [2]
Petr Kratochvil [3]

Monday, June 24, 2013

Student Loan Progress - June 2013

Another month, another round of student loan payments. Unfortunately this month ended up being a little strange in my student loan payments, due to circumstances beyond my control. I was not able to put as much money towards my loans as I was expecting. But first I'm going to start off with where I left off last month so you can get a frame of reference.

May 2013:

Loan  Loan Amount  Interest Rate
Private 1  $ 27,131.22 7.92%
Private 2  $ 20,037.32 7.92%
Private 3  $ -   7.92%
Private 4  $ 3,561.09 7.35%
Gov 1  $ 22,118.82 5.22%
Gov 2  $ 7,566.56 6.80%
Total  $ 80,415.01

Here's what my loans look like this month after my payments were made in June:

Loan  Loan Amount   Change  Interest Rate
Private 1  $ 26,053.92  $ (1,077.30) 7.92%
Private 2  $ 19,971.82  $ (65.50) 7.92%
Private 3  $ -    $ -   7.92%
Private 4  $ 3,532.69  $ (28.40) 7.35%
Gov 1  $ 22,118.82  $ 0   5.22%
Gov 2  $ 7,566.56  $ 0   6.80%
Total  $ 79,243.81  $ (1,171.20)

As you can see from the above, I have started to tackle Private Loan #1 as my next big target, but not quite as much as I would have liked to this month. I set up an auto-payment ahead of $1500 towards my three private loans ahead of time. This was because it was due when I was on vacation. I didn't want to put too much because I was unsure of what my expenses would look like this month. In hindsight, I definitely could have bumped it up this month but I guess I can do that next month instead.

You may have also noticed that I did not make any payments towards my government loans this month, which is one of the reasons things were beyond my control. That would have been another ~$400 or so, bringing me close to $2000 total for the month. Unfortunately it did not work out this way because for the 2nd time in a little under a year - my government loans have been sold to a different provider! Apparently nobody wants to take my money from me? They can really pay it off in full if that's what they want...

But I did receive an e-mail that my loans had been transferred to Previously I had been using, and I forgot the name of the one that my loans started out with. I received that e-mail on June 11th and they told me it can take up to 15 business (!!) days for my loan to transfer and show up. I'm going to hate to see how bad the interest on my loans look like once this is finished processing. After screwing up the payment last month, and now over a month of interest accruing it will not be pretty. Needless to say, I'm still waiting for the loans to show up. They were shown as fully paid on my previous account right away on the 11th, so not sure what the hold up is here. I also have no idea when this new payment will be due, but I'm hoping that it is later in the month like it was on the previous website.

The only advantage that I'm going to be enjoying is that this new loan service does provide a 0.25% interest rate discount if you set up an automatic debit. I plan on setting up automatic debit that is slightly higher than the minimum payment, as long as it does bring the principal down. If not I will configure my own "minimum" payment to do exactly that. This will be helpful as I continue to put the majority of my money towards my higher interest private loans.

Here's to hoping that next month brings more significant progress and less confusion!

Friday, June 21, 2013

Robert H Treman State Park Camping Review

This post is going to deviate slightly from the normal theme of my posts on here, but it's definitely going to stick to the theme of trying to save money. As you may have seen from my previous weekly spending posts, I had made a few purchases in preparation for a camping trip. My girlfriend and I took a week vacation by renting a cabin at Robert H Treman State park in Ithaca, NY. I know we both like to research where we are going so I figured if there are any camping enthusiasts (or looking to get into camping) in the area I would be able to assist in your own research!

First I'd like to start out by saying that neither my girlfriend or me are expert campers, and we are definitely not talking about backpacking or parking at a trailhead and camping into the forest. The extent of our camping knowledge is just with car camping. For those not familiar, this is where you pack as much as you can into your car and usually pull into a designated camping site at a park with your car with your tent pretty much right next to it (or close enough). Since we were going for a week this time, we decided to upgrade a bit this time and get a cabin so that any potential rain would not be as much of a hinderance.

After first entering the park, we checked in at the park office. The ranger was very friendly and showed us exactly how to drive to our cabin, where the bathrooms and showers were, as well as pointing out how to get to the start of the trails and how to purchase firewood in the camp. The entrance to the camping area is pretty cool, as you actually get to "ford" your car across a tiny little stream. There is a central parking area for all the cabins and they supply wagons to bring all your stuff to the cabins.

When we arrived at the actual cabin, it was locked with a padlock and the doors slide open kind of like barn style doors. Behind that is a pretty heavy duty screen door. Maybe our expectations going in were kind of low for the cabin, but it was actually really clean. The inside cabin consists of 4 beds, lights, a (small) full refrigerator with freezer, 4 shelves to put things on, and 6 outlets to charge everything or plug whatever you bring in. The outside of the cabin has a porch, a bench, a picnic table, and an open picnic style grill.

Pictures of the Cabin At Robert H Treman State Park

If you are looking for a secluded campsite, this is not the place to go. You are definitely within shouting distance of your neighboring cabins - but don't get me wrong - at no time did me and my girlfriend feel like we didn't have privacy. They are a reasonable distance from each other. There are plenty of taps to get water from scattered about, and our cabin was pretty close to the bathrooms with some cabins being further than others. The bathrooms were cleaned daily and always stock with soap & toilet paper. The bathrooms by the cabins are cold water only and unfortunately don't have showers.

If you want to shower, you will have to walk a bit of a distance to the camping loop for that. It didn't bother us too much, and if you really wanted you are able to park right outside this set of bathrooms. These bathrooms also contain larger basins for doing your dishes and all the showers and faucets in this facility contained hot water. The showers were relatively cleaned, and you could tell these bathrooms were cleaned daily too. Everything was well maintained for a state park and we had no complaints there.

For people with kids, there are two playgrounds with one being in the day use area and an almost brand new one in the camping area near the cabins. There is also a swimming area with a diving board that is right below the falls! You will definitely need some sort of watershoes though, as the bottom is rocky. There are quite a few other state parks in the area as well. We took day trips to Buttermilk Falls State Park, Watkins Glen State Park, and Taughannock Falls State Park. There is more waterfall swimming at Buttermilk Falls, swimming right on Cayuga Lake at Taughannock Falls, and a olympic sized swimming pool at Watkins Glen. There is also plenty to see within the city of Ithaca if you get a day that doesn't have the greatest weather. 

The trails at Robert H Treman State park are really nice, as well as all of the state parks in the surrounding area that we visited. I think our favorite trails would have been the gorge trail at Robert H Treman State Park as well as the gorge trail at Watkins Glen State Park. All of the waterfalls and the gorges themselves were amazing. None of the trails that we walked were overly difficult, but The trails definitely require some stamina if you plan on doing the whole "loop" at a park, with some being around 5-6 miles in total and having hundreds of steps. Most of the time we hiked our way up the trail, had a lunch we packed at the top at a picnic area, then hiked our way back down.

If anyone plans on going to this park or anywhere nearby, feel free to leave a question and I'll try to answer the best I can!

Tuesday, June 18, 2013

Getting a Raise

Well it seems that I have stumbled upon some good luck as of yesterday, getting notice from my boss that I would be receiving a 6% raise. But I'd like to think it was also having to do with all the hard work I've put in, after all we do create our own luck, don't we? My salary will now be bumped up to $53,000 from the $50,000 that I had started from. Needless to say, I'm still thrilled - just the $50,000 I had started at was more money than I could have ever imagined to be making in one year in my life and I know I am extremely lucky to be in the position I am in, even if it includes all of this debt.

So what effect will this have on my finances? I'm thinking that it wont be too big of an effect - but it definitely will be large enough to notice. My current monthly net income is around $2,800 and now I estimate it will be at around $2,900 after receiving this raise and making a few changes. The raise will take effect starting the month of July and I receive two paychecks a month, one on the 15th and one at the end of the month. That should be around $100 more a month, or $1200 a year. Maybe it will end up going to my student loans?

The few changes that I plan on making are towards my 401k contributions with my employer. I'm currently contributing 6% of my salary pre-tax to my employer 401k, and they match 50% up to 6% - so I'm taking full advantage of that 3% free match. I've decided that because of this raise I'm going to up my contribution to 8%. I'll still only receive a 3% match, but I figure I'm still getting a raise this way and contributing more to my future at the same time. My take home pay might have been closer to $3,000 a month without increasing my contribution rate, but I don't mind this at all in my current situation.

You might argue that it would be smarter to keep putting as much money towards my loans at the current interest rate they are at, the chances of me earning more on the market in my 401k are slim. Paying off my loans are guaranteed interest. The reasonable side of me would definitely tend to agree with you! Unfortunately the psychological side of me does not agree with that...I enjoy seeing my loans go down, but I also like to see my wealth grow on the other end of the scale too.

It already kind of sucks watching most of my paycheck going to pay most of my loans instead of being able to take advantage of the years of compound interest, so this is my compromise to myself. I'm working on getting my huge "emergency" fund down, maybe the next step will be to increase my loan payments even more! I'm definitely trying to target $1500+ to my loans each month though, and will stick to my budget. For now I'll just enjoy my raise, and stick to the new plan I have outlined - saving more money and maybe putting a little extra towards my loans as well.

Photo Credits for this post:

Sunday, June 16, 2013

A Note on Student Loans

 A few weeks ago I had wrote a post on the current state of interest rates in the student loan market, and right now I wanted to do a follow-up post on that. We are quickly approaching the July 1 deadline for student loan rates (from the government) to all jump to 6.8% if Congress does not act by then.

There are several plans outlined, but I wanted to highlight Elizabeth Warren's plan in this post. I recently came across a petition for supporting Elizabeth Warren's plan started by her. At the time of writing this, the petition has over 450,000 (!) signatures on it. While I may not fully agree with her plan, I think her method of attacking it and bringing the issue out into the open is the important part here.

If we can show Congress how important this issue really is by getting as many signatures as possible on this petition, I think it could really spark a debate or at least get the news talking more about this. I know that sometimes online petitions have a bad rap, and many times they are ignored - but in this case Senator Warren plans to deliver the petition to Congress.

You can sign the petition right here:

Photo Credits for this post: Mother Jones

Tuesday, June 4, 2013

Monthly Budget Review - May 2013

This is the fun part where you get to see how exactly I spent my money this month, and how well I stuck to my planned budget. I will also show how much 'extra' money I spent outside of my allotted entertainment budget that could have went to my student loans instead.

For now my budget is set to have $0 remaining at the end of the month, with every extra dollar going to my student loans but this will not be an exact science. My student loan payments are due not quite at the end of the month, so it will be hard to be perfect with this but I'm going to stick to the plan and try to throw as much money as possible at the student loans.

This month will also look a little weird as I told you in a previous post, I wanted to completely eliminate one of my smaller, high interest loans. I did this by pulling money out of my sizable 'emergency fund' as I try to bring it down to a more reasonable level of 6 months worth of income. I'm currently living at home, so I think the amount I have sitting in my savings account is way too conservative for now.

Here is the breakdown for my budget this month:

Item Budgeted Actual Difference
Income $2,800.00 $2,800.00 $0.00
Rent -$100.00 -$100.00 $0.00
Car Insurance -$110.00 $0.00 $110.00
Cell Phone -$20.00 -$20.00 $0.00
Gas -$75.00 -$97.00 -$22.00
Gym -$20.00 -$20.00 $0.00
Entertainment -$100.00 -$100.00 $0.00
Total Income After Fixed Expenses $2,375.00 $2,463.00 $88.00
"Extra" Spending $0.00 -$357.00 -$357.00
Total Income Before Student Loans $2,375.00 $2,106.00 -$269.00
Student Loan Payments -$2,200.00 -$3,900.00 -$1,700.00
Total Remaining $175.00 -$1,794.00 -$1,969.00

I ended up being over budget by almost $1,800 - but this was done on purpose. I took that extra money out of my savings account and extra large emergency fund to completely pay off one of my private loans. I plan on doing this for a few months until I am able to get my emergency fund down a reasonable level, I do not want to actually spend more than I make in a normal monthly situation.

As you can also see the rent, cell phone, and gym payments will not change. There was no car insurance this month as I made my last payment for the 'year' last month and now I will have a few months where it will not have to be paid. I think I'm going to have to up the budgeted amount for gas money to around $100. It will end up being higher than my current budgeted amount most months with gas prices seeming to always be going up. With my current drive to work and visiting my girlfriend at college, it was too conservative.

I used up all $100 of my budgeted "entertainment" money for this month, and unfortunately because of the car problems I had this account for a significant amount of my extra spending. I also plan on adding in a $50 budget line item for dining out, that way I can see how much I use on that instead of just placing that into 'extra spending' after my $100 "entertainment" budget is all used up.

If you take out the $300 I had paid in fixing my cars, my entertainment budget was out $157, which is only $57 over my budgeted amount. I can't complain with that at all. I definitely thought I was doing much worse, but maybe keeping track of all my spending helped me remind myself not to throw my money away! I would have still ended up with about $118 left over if I had not pulled extra money out of my savings account for the month. Once I add in a $50 item for eating out, I think that this will definitely be a more realistic budget that I can target going forward:

Item Budgeted
Income $2,800.00
Rent -$100.00
Car Insurance -$110.00
Cell Phone -$20.00
Gas -$100.00
Gym -$20.00
Dining Out -$50.00
Entertainment -$100.00
Total Income After Fixed Expenses $2,300.00
"Extra" Spending $0.00
Total Income Before Student Loans $2,300.00
Student Loan Payments -$2,000.00
Total Remaining $300.00

Photo Credits for this post: Charles Rondeau