Total Money Makeover by Dave Ramsey

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Originally Posted by Ultralight

This is my favorite topic to debate! My student loans!

Let us do some math here, amigos.

I owe $165,000. If I wanted to pay that off in ten years, starting from today I would need to pay $16,500 a year. That would mean $1,375 a month. I bring home about $2,400 a month. That would mean I would need to live on $1,025. This is simply not possible.

Or I can pay for 7 years (actually 6.5 but lets keep it simple), starting from today a monthly payment of $298 and have the rest forgiven, so long as I work for the government. That would be $25,032. I have already got three years (3.5 actually, but lets keep it simple) in to the ten year forgiveness program so I have already paid $10,728. Lets add $25,032 and $10,728. The sum is $35,760.

So what do you think I should do, pay $165,000 or $35,760?

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If you owe $165K, you'd be paying more than $1,375 per month due to interest in the first alternative (less the tax impact, if any). You would probably also need to make reasonable assumptions about the incremental salary difference if you were to take a (presumably) higher-paying non-PSLF job. I would guess that increment would need to be fairly substantial to break even over the remaining life of the loan.

Another alternative would be for President Sanders and a Democratic Improvidentialist Congress to proclaim the Jubilee and shift your obligation to the National Debt.

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Originally Posted by Ultralight

Uh... what?

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Quote:

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Originally Posted by Ultralight

This is my favorite topic to debate! My student loans!

Let us do some math here, amigos.

I owe $165,000. If I wanted to pay that off in ten years, starting from today I would need to pay $16,500 a year. That would mean $1,375 a month. I bring home about $2,400 a month. That would mean I would need to live on $1,025. This is simply not possible.

Or I can pay for 7 years (actually 6.5 but lets keep it simple), starting from today a monthly payment of $298 and have the rest forgiven, so long as I work for the government. That would be $25,032. I have already got three years (3.5 actually, but lets keep it simple) in to the ten year forgiveness program so I have already paid $10,728. Lets add $25,032 and $10,728. The sum is $35,760.

So what do you think I should do, pay $165,000 or $35,760?

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List all your debts smallest to largest, this includes your student loans.
In your case, I am pretty sure (as you are not changing jobs), he would say option 3 which you haven't considered. Work your tail off, getting extra money and putting it aside. Since your intent on doing the forgiveness program, when/if your debt would be forgiven, you would have a nice chunk of change.
If you were terminated from your job, then immediately use that on the debt.

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If you were terminated from your job, then immediately use that on the debt.

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no you can postpone student debt if you are unemployed, so not immediately (perhaps eventually)

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Originally Posted by LDAHL

Another alternative would be for President Sanders and a Democratic Improvidentialist Congress to proclaim the Jubilee and shift your obligation to the National Debt.

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I would feel kind of slimy about this, but I would still do it if they allowed it.

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Originally Posted by ToomuchStuff

List all your debts smallest to largest, this includes your student loans.
In your case, I am pretty sure (as you are not changing jobs), he would say option 3 which you haven't considered. Work your tail off, getting extra money and putting it aside. Since your intent on doing the forgiveness program, when/if your debt would be forgiven, you would have a nice chunk of change.
If you were terminated from your job, then immediately use that on the debt.

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Debts:
$645 medica bill
$165,000 student loan

Can you explain more? I don't get what you are saying.

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Originally Posted by ApatheticNoMore

no you can postpone student debt if you are unemployed, so not immediately (perhaps eventually)

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I have 12 months of any-reason forbearance still. So I could use that if I get unemployed. But if you get unemployed, yes, you can use a hardship forbearance too. During forbearance you don't make payments.

So I did the math. If I poured every red cent of my take home pay into my loans it would still take me 6 years to pay off the $165,000.

Anyone still think I should abandon the PSLF plan? haha

I am reading that you are comfortable with the 'noose of debt' around your neck, limiting your employment opportunities, your freedom to move and live an alternative life. I couldn't do that so can understand others who are puzzled by your choice. It is your life and you live with the consequences of your choices as we all do. Stop trying to rationalize it to others.

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Originally Posted by razz

I am reading that you are comfortable with the 'noose of debt' around your neck, limiting your employment opportunities, your freedom to move and live an alternative life.

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You read correctly!

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Originally Posted by razz

I couldn't do that so can understand others who are puzzled by your choice.

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You couldn't? What would you do?

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Originally Posted by razz

It is your life and you live with the consequences of your choices as we all do.

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I am living with the consequences. Though I am trying to mitigate them in the best possible way for myself. Is that a bad idea?

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Originally Posted by razz

Stop trying to rationalize it to others.

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Are you implying that my plan is irrational? Please tell me the more rational method of dealing with this. I'd love to see the math. I am definitely open to quicker methods of paying this loan off or getting it forgiven faster.

I think UL is wishing he hadn't taken on $165k of student loan debt, but he can't rewind the past. He is trying to manage it as best he can by doing the Total Money Makeover and accepting the fact that the loan forbearance by the government is going to be the most expedient way to relieve the noose of debt, as razz called it. His only alternative would be to find a job that pays twice as much as he's making now, at the very least and then pay off the whole thing.

Since the government has a legal program that will in effect "pay" him over 10k a year extra for 10 years to relieve himself of the debt, that's the choice he's making and it's not a dumb choice. He's already made his dumb choice years ago when taking out the debt to begin with. But again, he's fired up to get rid of his paltry $645 medical debt and he's trying to improve his finances.

I don't know why people are giving him such a hard time.