debt Archives - Page 9 of 10

A Terrific, Terrifying Article About Poverty

Today, I happened upon a wonderful article about what poverty is like. After reading it, I knew I needed to share it with you all. Poverty, debt, and working till you drop are all terribly interlinked. The following are a few highlights:

Rest is a luxury for the rich. I get up at 6AM, go to school (I have a full courseload, but I only have to go to two in-person classes) then work, then I get the kids, then I pick up my husband, then I have half an hour to change and go to Job 2. I get home from that at around 1230AM, then I have the rest of my classes and work to tend to. I’m in bed by 3.

Nobody gives enough thought to depression. You have to understand that we know that we will never not feel tired. We will never feel hopeful. We will never get a vacation. Ever. We know that the very act of being poor guarantees that we will never not be poor.

I make a lot of poor financial decisions. None of them matter, in the long term. I will never not be poor, so what does it matter if I don’t pay a thing and a half this week instead of just one thing?

Poverty is bleak and cuts off your long-term brain.

Read the article in its entirety here (it’s worth a read): Why I make terrible decisions, or, poverty choices.

The Goal: Defeating Student Loan Debt

By Frugaling 4 Comments

Student Loans Defeat Debt — *Photo: flickr/sniffen*

Since I started this site in May of this year, my student loan debt has continued to rise. This could be seen as a failure, but you’d be missing the bigger picture. Amidst this rise is an effort to change everything and get back to zero debt – fast.

Reducing Student Loans

For starters, I’ve only taken out $3,500 this semester for graduate school. I worked hard last year to secure more hours at my on-campus job, and the monthly paycheck is now helping balance my budget. On top of that, I’ve paid back all of the interest gained on my student loans from the very beginning.

Last week, in a matter of two electronic deposits, I paid off $1,000 of my current debt. This leaves me with $32,700 is student loan debt. Now, while this excludes the complication of having a car loan (and the more than $6,000 liability that brings), I believe my student loans are the biggest concern to tackle.

Where I Was Headed

At 6.8%, my student loans gain a little less than $200 in interest every month. I’m lucky, a portion ($8,500) is subsidized by the government and non-interest bearing. Unfortunately, the government stopped subsidizing graduate students’ educations, and now the vast majority of my loans are rapidly accelerating. Compounded interest is truly frightening – sometimes it keeps me up at night.

If I hadn’t redirected my course, I was looking at $70,000-80,000 in student loan debt by the time I graduated. This burden would cripple me for years. I probably wouldn’t be able to pay it all back until my mid-40s. Two decades of interest and principal payments scared me into changing course.

The Goal: Payback

This semester I adjusted my loans down from the nearly $15,000 I was offered to a scant $3,500. But with recent financial successes with this website and smart financial planning, I may be able to pay the bulk of this debt before I graduate.

Even if I can’t pay everything off, I’m looking forward to beating this number. It provides a clear goal to work towards with a regained hope about my future freedom. I’m sick of this large liability and don’t want to owe the government or big banks.

Ever heard of someone paying all their student loan debt in graduate/professional school? Is it possible?

Who Are Your Financial Role Models?

By Frugaling 2 Comments

I’ve always looked to role models for inspiration, hope, and comfort. In high school, I watched CNBC anchors and admired people like Jim Cramer for their expansive knowledge of the markets. Dreams of Wall Street and financial gain motivated me to graduate high school; all while investing in stocks and different sectors between class periods. I loved having and making money.

When I entered college, I realized that money alone felt meaningless. I lost the drive to become an investment banker or financial analyst. Alone, I would continually feel like giving back – that I wasn’t doing enough. Shortly after entering school, I switched to psychology. There, I sought out motivated students and leading faculty in psychology. Meeting and working with these inspiring people led me to graduate school.

In the past, as you may notice, these role models were oriented towards my future career paths. Now, as I’m on a solid career path, I’m looking for new goals and people to provide support in this journey. Financial goals outweigh many others at this point: To pay off nearly $40,000 in debt (shared between student and car loans). The Catch-22 is that I’m in graduate school and still accruing debt. I’m experimenting with some odd-ball income sources to stem the tide, but the interest keeps gaining.

These days I’m looking for new models that work to keep me financially fit and spiritually active. To me, being frugal is about minimizing waste, reducing expenses, and maximizing my income. I’m a firm believer that this is a vital piece of the puzzle. If you want to accomplish any goal, seeing and talking with those who’ve accomplished similar goals is important research.

Here are my three major role models that inspire me to continue to write about frugality, save money, and pay off my student loans:

1. Leo Baubata, Zen Habits

Twitter: @zen_habits – Website: ZenHabits.net

Leo Babauta is the creator and writer of ZenHabits.net. The site grew to become a leader for buddhist thought, organization, getting things done, peaceful wisdom, and removing clutter from your life. I follow Leo on Twitter and subscribe to his RSS feed.

He calmly explains the delicate intricacies between inner peace and reducing the urge to buy. One of his most provocative new articles is about “A Year of Living Without.” In this article, he outlines a year of month-to-month challenges where he removes things he regularly uses (e.g., coffee, alcohol, Internet access, and cell phones).

Leo is a tremendous role model because of his own journey tackling debt and becoming a wealthy individual – spiritually and financially.

2. Joshua Fields Milburn and Ryan Nicodemus, The Minimalists

Twitter: @TheMinimalists – Website: TheMinimalists.com

Joshua and Ryan are the founders of The Minimalists. Both left jobs and lifestyles that modeled the idea of success. They were climbing social ladders and fighting for the American dream. Their spending, like many, escalated with income. This lifestyle inflation led to a cycle of overspending and overworking – never getting enough.

As the two exited the traditional working world, they took to the ideas of minimalism and simplicity. Eventually, they founded their website and have been writing short stories ever since. For me, they are role models for both writing and minimalism. They model their stories (articles) after no expected length – some short and some long.

Joshua and Ryan are leaders in the simplicity movement, and their continued work inspires reductions in my own life.

3. Philip “PT” Taylor, PTMoney.com

Twitter: @PTMoney – Website: PTMoney.com

Philip founded PTMoney.com in 2007. He’s the most financially experienced of my role models. As a Certified Financial Planner (CPA) and founder of FinCon (the financial bloggers conference), he embodies a spendthrift personality with an admirable entrepreneurial spirit.

His website is continually updated with new, strong content that actually helps people become financially savvy. From investing to saving more to earning what you deserve, PT and his fellow writers help people reach their financial goals.

Beyond this writing and business prowess, at a personal level, I’ve been shocked by PT’s kindness and willingness to help new bloggers like me. He’s already featured two of my articles on his site, too.

Who are your financial role models? Who and what inspires you to save and earn more?

Living In A Van Down By The School

By Frugaling 4 Comments

Update: Ken Ilgunas, a van dweller and featured in this article, recently published his experiences in a wonderful, detailed book called: Walden on Wheels: On The Open Road from Debt to Freedom.

Seemingly borne from Walden Pond, a new movement that converges minimalism with frugality is upon us. More and more students are choosing to live in cars, vans, and automobiles to skip the rent and save a boatload. In this era of debt and student loan worries, saving $400 to $700 per month looks plenty appetizing, but should you consider it?

“I am convinced, that if all men were to live as simply as I then did, thieving and robbery would be unknown. These take place only in communities where some have got more than is sufficient while others have not enough.”

-Henry David Thoreau

Over the years, I entertained the idea of moving into my car (or buying a van) to avoid the monthly punishment of the rent check. A variety of factors prevented me from ever going through with it. The biggest concern was for my safety. If somebody found out you were living in a van or saw what was inside, they may be tempted to rob the vehicle (whether you’re inside or not). On top of that, it can be legally questionable to park a vehicle and live out of it.

About a year ago, a college friend started sharing on Facebook about his recent decision to move into a van for his senior year. Now, he’s a week away from graduating and saying goodbye to the lifestyle. The crazier piece: He’s not alone (Read the Thor-eauvian van-dwelling experiment in NYTimes). This is a movement towards extreme debt reduction and an attempt to attack the status quo of poverty via education.

With the debt collector ready to pounce, maybe it’s time to get proactive. College is only getting more expensive, as state budgets are being slashed and the students’ share of tuition becomes more burdensome. But before you go for it, here are five points to consider:

1. Big Savings

No doubt, this is the biggest reason to extricate yourself from the bounds of four walls. Utilities and pointless tchotchkes be gone! As mentioned earlier, this could save you anywhere from about 400 to 700 dollars per month (depending on where you live), plus electricity costs. Even cooking costs plummet, as your options for food diminish. Most van-dwellers have some sort of backpacking and camping experience. Knowing how to use a portable, backpacking stove or gas can is key to cooking warm meals. And while you can cook, most of it will likely be soup. Get used to it. Most of the furniture we fill our homes with won’t fit. Selling the extras and/or avoiding the purchase can keep more money in your pocket.

Savings: $400+ per month.

2. Little Space

This would obviously depend on the “living quarters” that you choose. I can imagine campers being a relatively easy way to live, but many are choosing cheaper options. For about 1,000 to 2,000 dollars, students can buy a beat up, junker, passenger van. While they may not be reliable or start whenever you like, you can usually fit a bed, chair, food, and clothing inside.

Cost: $1,000-2,000 (one time).

3. Questionable Hygiene

Living in a van down by the school might suggest shower-free weeks and body-odor-ridden clothing, but that doesn’t necessarily have to happen. Campuses tend to have great recreational facilities that have showers. Usually, if you’re a student, you can just swipe your ID and you’re free to shower and prep for the day. Laundry facilities tend to dot the landscape of college towns, and as long as you can transport your laundry to one of them, you’re fine. By using public facilities for showering and cleaning, you’ll be saving money and being green, which would otherwise go to utilities.

Savings: ~$50-60 per month.

4. Mostly Safe

Living in an unguarded shelter is a daunting task, and seems to attract more men than women (perhaps for obvious reasons). In a way, a vehicle is no different from an apartment – someone could break into either one of them and rob you. But a vehicle is open to dangers from police, crooks, and environmental (flooding, storms, etc.) considerations that you generally avoid in formal housing.

Cost: Possibly your sanity.

5. Sometimes Connected

Being connected means far more than having Wi-Fi, Internet, and electricity. Fundamentally, it’s about human connection and the comforts of a social life. By choosing this lifestyle, it might preclude certain friendships and relationships from developing. It’s hard to invite guests over to your van for more than just the voyeuristic spectacle. As for mail, getting a P.O. box or choosing a friend’s address can work. Going to campus or the library can be your perfect way to study and surf the web, as well.

Cost: As low as $14 (for P.O. Box).