Month 51- Navient $2,970, NMAC -$30,190, Retirement – $16,521

Month 51 Update:

Student loan is down to $2,970, as most of you viewers know…I have been extremely impatient to get rid of this one debt. Still made some great progress since last month… That’s $4,529 down. Still chipping away, chip chip chip….ūüėõ

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Making progress on the car loan at $30,190, another payment is coming out in a week, but as I mentioned before it’s 1.9% and I see little reason to pay it off early. Opportunity costs brah! Plus the emergency fund needs to be cranked up a few notches.

The stock market has been volatile with¬†Brexit, oil prices fluctuating, shaky consumer confidence and the fact it’s an election year… My 401k¬†is still at $16,521 though at +6.62% YtD RoR. So I’m still outpacing the market for now. The Roth is slowly going up at $125. Kind of a joke now, but it’s all about habits. The habit of continually investing extra money into retirement.

Going back to reading mode where I study people who are financially independent and pulling in large salaries. Not sure what my plan of action is right now, but it is inspiring me. I do wonder if I have it in me to work 60-80 hours a week. During the full time work and part time grad school days I easily put in 60 total¬†hours each week on my goals. Some things have changed but a lot has remained the same. No kids, single, also still driven for success. My day job takes more out of me and I’m packing a lot more weight these days¬†but at my core I’m still a driven personality. Just need to keep tapping into that hunger.

Went on a frugal trip with some friends for a day to ¬†Granbury,¬†TX. Drove the Maxima a little about 250¬†miles round trip. The car drove like a dream, soaking up the country roads at 80mph.¬†The hotel was $60, then paid for meals. On the first night there I had duck with roasted potatoes and carrots at this shack-like place called Let’s Eat. Food was amazing and almost worth the drive alone. Went to a winery and a brewhouse Between this trip and some shopping I did, spent around $200 in total.

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You don’t have a ton of money to have fun! I got invited to Napa in August with friends and the more I learn about the trip the more I’m glad I declined. It’ll be between $1500-$2000 and right now that is money they will get me one step closer to completing my 15 year goal… Next year though we’ve discussed going on a cruise. The verdict is still out on that one, but I think I’m going to go.

Boom

Take that Student loan! Getting closer to the finish line. No congratulations until It’s really gone. ¬†Paid more than I have in my entire life this month.

A bunch of coworkers or friends are doing vacations but I’m staying the course. They didn’t have this weight on them for 15 years.

$3,464 is a wonderful number though.

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Month 50 -Navient $7,499, NMAC – $30,691, Retirement – $16,149

Month 50 РThis is an interesting month. My Roth IRA transfer is still in progress. I have however made some really good progress getting the student loan down otherwise. Currently the balance is down 41% from the $12,845 balance in January.

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Navient: 7,499
NMAC – $30,691
Credit Card: $700
Total Debt: $38,890

401k: $16,149
Roth IRA: $25 (rebuilding this back up slowly for now)

As I mentioned in the Nuclear Option post, I’m shifting some gears to get this debt paid off faster. Don’t have too many other tricks up my sleeve near term other than to keep chipping away. It’s almost 1:30am so time to get some sleep.

The Nuclear Option

I mulled this over for a week and decided to pull the trigger. I pulled money from my retirement account for the student loan. Mathematically it may not make the most sense, but…

$3452.04 is in one Roth IRA act at Betterment. It has basically been flat for a year (down slightly under 1%).¬†$585 is in another Roth IRA acct. It was invested in a single company, that company’s stock is down slightly vs when I originally purchased. Trading fees and my strategy to purchasing were not very intelligent. I sold 6 shares and originally bought them in a series of 3 2 share purchases…

That leaves about $4k left to go toward the student loans once I process payments with no tax implications.

My current student loan balance as of 6/3/16 is $7,948. $4k of that is 50%. That lowers my balance to $3,948 and allows me to still get the loan paid off this year.

Why? I’ve had these loans since 2001. Almost 15 years ago. So much debt fatigue… 7 jobs, 2 states, a 10 year¬†high school reunionI didn’t go to and god knows how many dates…

But what about your retirement? I still plan to contribute 6% of my gross to my 401k at work, company matches 3% and I get 2% back annually. So that’s effectively 11%

Car Plans – 150k or bust

I’ve decided to keep my Maxima to 150k miles possibly more. How many do I have now? About 3k. I put on average 15k/year so that’s 10 years. The 2003 I had made it to 196k before the last owner killed the engine. There is a guy on one of the car forums with an 09 that has over 300k miles.

150k is the sweet spot for a couple reasons.

  1. It’s not high enough to the point that no one would consider buying it.
  2. It’s two cars. Basically on my normal historic schedule that’s two cars. That means less total cost than trading and getting another one.
  3. Still somewhat reliable with routine maintenance.
  4. I can’t picture driving the same car over 10 years.
  5. It makes dealing with depreciation mcouch more palatable.

It’s¬†interesting to see YouTube celebrities talk about their (used) Lamborghini Gallardo or Dodge Charger Hellcat, err I mean Corvette z06. Those cars are 2.5-3x more expensive than mine. Not a hater but it’s a big mindset shift. For some the views they get cover the car note each month. Really makes me want to grab a GoPro or other camera secondhan, learn the ropes and start recording. The ideas are a brewing.

Credit and Automobiles

Several of my friends have made automobile purchases over the past two years. The names have changed to protect their identities.

Take Jordan. Jordan is in his late 20s, lives with his boyfriend. Has a Nissan vehicle that he bought used and is making payments. His payments are around 375/mo and his interest rate is about 15%. Some elements of Jordan’s life have changed and now he has a need to move out of this sedan and into an SUV. Jordan has poor credit due to mistakes made several years ago. Things have improved, but they are still far from ideal. If he buys another used vehicle he will get screwed over again with the financing because of a low FICO and high associated risk. The dealership he approached to buy another used model gave him horrible advice. The suggestion was he get out of his current car through a repo and just buy the one he wants beforehand.That way he doesn’t have to worry about making payments on two vehicles since no one wants to really buy a 5 year old car with 90k miles for what he owes.

My advice? See if a local credit union will allow him to refinance at a lower interest rate once his credit has improved. Or sell the car even though he is upside down, take a loan off to pay the difference and save enough cash to buy the SUV he really wants. In his situation, having another car loan and worrying about student loans and renting a house later this year is spreading him to soon. He will have to either get something really old like a ’99 Pathfinder or just make do with his sedan. I cannot in good faith encourage him to buy another car, the math just doesn’t work.

The next friend, we will call Adam. Adam’s situation is a little different. As a teenager his mother took out credit cards in his name, maxed them out and didn’t pay the bill. He also had one of his cars repoed several years ago when tough financial times hit. Adam is in his late 20s and recently bought a car just hours before we discussed his financial situation. Adam’s payments are ~$480/mo for 72 months on a used Kia that has a purchase price of $18k. The real kicker -his interest rate is 18%. Not 1.8%, not 6%, not 10%… 18%!!! I did some quick calculation. Over the course of his loan assuming he doesn’t refinance. His total payments will be over $34k. He said some people suggested he file for bankruptcy but that would be like a time bomb going off in his personal finances. I also believe Adam is making student loan payments, but not 100% sure.

I care about my friends, but don’t repeat their mistakes.

  1. Cars should be something you get to enjoy, not a financial noose that makes it impossible to do anything else fun in life.
  2. Anything over 6% interest rate on a car is insane.
  3. Car loans over 60 months are also insane. If it takes you that long to pay it off you really can’t afford it.
  4. Pay attention to your credit. It’s like an STD, bad past decisions can and *will* haunt you in the future.
  5. Nothing with a motor should be more than half your gross income. I got that one from Dave Ramsey and pretty much agree. Cars will depreciate and going much above that will leave you car poor. Expenses such as maintenance / repairs, fuel costs, and insurance will eat up more cash than people who just focus on the payment will realize.
  6. If you buy a new car and are younger, you may need to cut lifestyle elsewhere. In the case of both friends and myself, we eat out infrequently. Many millenials though are totally rejecting the idea of purchasing a car and getting into auto debt.
  7. Credit. Protect it at all costs, ignoring it makes you much more of a slave to money due to all the interest.
  8. Opportunity costs. Retirement planning, other activities to boost net worth. Jordan is going to college now and has a FT job. I doubt he has enough extra money to contribute into a retirement account. I have doubts about Adam contributing to his 401k because of his gripes about not having enough money to do certain things.

I’m lucky that my credit never got screwed up over the years, through my various trials and tribulations. My student loan is 4.25% and car is 1.9%. No credit card debt that carries from one month to the next. Not everyone is as fortunate. I hate paying more than I need to on anything. I used a 25% off first order coupon for Taco Cabana online. I buy items on Amazon if they’re cheaper than my local store.

It’s hard to watch people deal with financial pain, but at the end of the each day…we all make our own decisions.

Death of a Friend

No I’m not talking about Prince. Though his death was definitely a shock to me. I have listened to his music since the 1980s. Took me about a week to deal with it. Nor am I talking about my father who passed away at almost 11 years ago after 19 years of health problems related to kidney failure.

I’m talking about the death of someone else I knew. Someone I was really interested in dating. His name was Chris. He was only 29 years old. His birthday is two days before mine.¬†Chris had his fair of struggles in life. He confided in me with a few of them. I really wished I was able to do more. We unfortunately lost touch with each other last June.

Yesterday I went to look him up on Facebook¬†and found that he passed away just over a month ago. **One Month**¬†¬†I don’t know from what. I feel a sense of loss. I never met any of his family members. He wouldn’t let me get close enough to be a regular figure in his life. I tried a few¬†different occasions. Work or other things going on his life got in the way. Wish I could hold him again and tell him to stay strong and that everything would be alright. He was a beautiful person inside and out, just wanted to see him at his true potential. Not working crazy hours at a hotel just to make ends meet. His family setup¬†a gofundme page to help with burial expenses.

I’m just speechless. RIP Chris. You will be missed. Not just by me but by all the people you’ve touched.‚̧

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