Travel challenge?

[Float On]

Excellent and tough question! I appreciate you having the candor to ask.

I have a massive amount of student debt ($165k). Yes, that is true. But the way the Public Service Loan Forgiveness program works I pay a set amount each month ($250). I pay this every month for ten years. Then the remainder of the loan is forgiven.

I am 3 years in.

If I pay more than $250, then that money goes into a black hole. It does not speed up the PSLF program. I can't finish in less than ten years.

One of the reasons I am a minimalist is so I can do some cool stuff -- like go to Uruguay. I live simply to enjoy doing other things.

Does this make sense? If you have more questions, let me know. I am happy to discuss.

I think to me it's the math thing and the unknown future. What if the program fails in year 9 and you've only paid 27,000 of your 165,000 debt. What is the percentage of your $250 going towards principal and interest? What if you lose your current job, will a new job qualify or does it start over? Your "black hole" could be a savings account or investments in mutual funds. Then at the end of the 10 years and if all the stars aligned and you actually still qualify for the loan forgiveness that "black hole" fund could be a good kick-ass year spent traveling/living overseas. That would be a cool reward.

I'm not passing judgement or anything. I'd travel if I could (I'm working on some debt payoff myself) but no big trips till I'm done.

[Ultralight]

I think to me it's the math thing and the unknown future.

In many senses, the future is always unknown.

When you are deep inside the student loan crisis you learn all sorts of little details that regular folks are not privy to. So I will try to explain these details, but in ways that don't bore you to sleep.

What if the program fails in year 9 and you've only paid 27,000 of your 165,000 debt.

The PSLF program does not really work this way. Granted, in year 9 it could go poof. That would mean I would go onto the 25 year plan, which means I would pay the $250 (which is based on my income -- income goes up, so does payment; income goes down, so does payment). If it went poof after 9 years, then I would have 16 more years to the 25.

What is the percentage of your $250 going towards principal and interest?

Again, this is not how the PSLF program works. Imagine it this way: It is like paying a fine.

I screwed up and took out way too many loans. The government realizes I am in over my head. They came up with a plan to punish me but not financially burn me at the stake. So they base your fine on your income. And you pay that fine once per month for ten years. Then your punishment is complete and you record is expunged. Make sense?

What if you lose your current job, will a new job qualify or does it start over?

Any government job (Federal, State, County, Local, City, etc.) and any job with a 501c3 with qualify me for the PSLF plan. The job has to be full time, 35+ hours. Let's sat I get laid off from my job for a year. I notify the government at my layoff. My payments get reduced to $0, or a get a forbearance of some sort. Then let's say I get another government job. Okay, I pick right back up where I left off with my PSLF program. But that year I was out of the program would not count for anything.

Your "black hole" could be a savings account or investments in mutual funds. Then at the end of the 10 years and if all the stars aligned and you actually still qualify for the loan forgiveness that "black hole" fund could be a good kick-ass year spent traveling/living overseas. That would be a cool reward.

The black hole I was referring to was if I gave more money to the government than my monthly payment. Remember, my payment is more like a fine. So the rules of debt you are accustomed to just don't apply. Principal and interest and such don't come into play.

I'm not passing judgement or anything. I'd travel if I could (I'm working on some debt payoff myself) but no big trips till I'm done.

If I have more traditional debts -- which I had until about 3 years ago -- I would not indulge in travel. Like when I had my car payment I just paid like crazy and ate rice and beans.

[Alan]

I screwed up and took out way too many loans. The government realizes I am in over my head. They came up with a plan to punish me but not financially burn me at the stake. So they base your fine on your income. And you pay that fine once per month for ten years. Then your punishment is complete and you record is expunged. Make sense?

My mortgage company punished me by forcing me to pay back what I borrowed, with interest. Bastards!

[Williamsmith]

In many senses, the future is always unknown.

When you are deep inside the student loan crisis you learn all sorts of little details that regular folks are not privy to. So I will try to explain these details, but in ways that don't bore you to sleep.



The PSLF program does not really work this way. Granted, in year 9 it could go poof. That would mean I would go onto the 25 year plan, which means I would pay the $250 (which is based on my income -- income goes up, so does payment; income goes down, so does payment). If it went poof after 9 years, then I would have 16 more years to the 25.



Again, this is not how the PSLF program works. Imagine it this way: It is like paying a fine.

I screwed up and took out way too many loans. The government realizes I am in over my head. They came up with a plan to punish me but not financially burn me at the stake. So they base your fine on your income. And you pay that fine once per month for ten years. Then your punishment is complete and you record is expunged. Make sense?



Any government job (Federal, State, County, Local, City, etc.) and any job with a 501c3 with qualify me for the PSLF plan. The job has to be full time, 35+ hours. Let's sat I get laid off from my job for a year. I notify the government at my layoff. My payments get reduced to $0, or a get a forbearance of some sort. Then let's say I get another government job. Okay, I pick right back up where I left off with my PSLF program. But that year I was out of the program would not count for anything.



The black hole I was referring to was if I gave more money to the government than my monthly payment. Remember, my payment is more like a fine. So the rules of debt you are accustomed to just don't apply. Principal and interest and such don't come into play.



If I have more traditional debts -- which I had until about 3 years ago -- I would not indulge in travel. Like when I had my car payment I just paid like crazy and ate rice and beans.

In other words, it doesn’t in the least bit resemble capitalism and has more than a coincidental similarity to socialism. You are beholden to government for most of your productive years. And as long as you work for the government...it’s all good. But maybe you lose your full time job and the economy goes to crap and we go to war with some 3rd world country with rogue nukes and the government runs out of volunteers to fight for Uncle Sam. You think maybe that debt might be held against you are perhaps in exchange for 2 years of service....they might just forgive you again? Just one example but a scary one. Canada might even reject you then.

[Tammy]

I totally agree with how you are managing the student loans. You are 3/10 done and your traveling makes life worthwhile during this decade of working to get it paid of.

[Williamsmith]

I think Float On addresses the issue many will have cross their minds but might not confront you on. It worth putting forth your philosophy. In my own mind, I can justify some mortgage debt and a car loan while at the same time traveling or just buying things that are not necessary so who am I to judge you one that.

I don’t recall, you may have mentioned Leon Logothetisis, he travelled around the world relying on the kindness of others and has an amazing story to tell. I’d like to challenge you to do something like that. If I were in my twenties again, I’d be a high risk for something like that.

[iris lilies]

Oh I disagree about needing a phone. DH’’s cell phone didnt work anyway in Europe. Unless UL is going to some popular place at peak season, and I doubt that he is, he can always find accomodations although granted, with Air BNB now it is easier for tiny rooms/cheap accommodation and you need web connectivity for that.

We did use wifi in hotels, but that connectivity was not essential to our trip.

UL If you have a yen for Europe, i highly recommend Central Europe such as Bulgaria, Croatia, Transylvania in Romania. I dont know how cheap it is compared to where you have been but it is much cheaper than Western European countries like Switzerland, Germany, and the UK.

[Teacher Terry]

Poland is cheap and really beautiful!

[Ultralight]

Poland is cheap and really beautiful!

Tell me more...

[Teacher Terry]

Krakow is a beautiful city with many historical buildings, churches, castles, etc. The people are nice and if something costs a dollar here it costs 4 of their currency so your $ goes a very long ways. It is expensive for them to come here. Warsaw was really bombed during the WW wars so lost their historical buildings and were replaced with communist style cement block buildings. WE have also visited some of the smaller towns too. We have been there twice. It is so green it is glowing.