April was horrible. I can’t believe the last time I made a student loan payment was in February which is not good at all.

I am so glad I started this blog to hold myself accountable because I am feeling pretty damn embarrassed right now for not making progress so there will be drastic changes coming.

The upside is while I didn’t make any payments in March or April, I didn’t default on them at all. This is because I am currently on REPAYE which is the federal loan repayment program that allowed me to make $0 minimum payment/month while cutting my interest rate in half which I talked about here.

*FYI: I rearranged the order I listed my loans based on the order I want to repay them. So it may look a little different compared to my previous debt statements.

I previously had it arranged based on how Nelnet, my loan servicer had it but visually I think ordering it this way makes more sense.

Debt progress: +$250.84 since last month.

No surprise there. My loan has increased since last month because I made no payments at all in April.

What surprised me was that it only increased by $250.84 which basically means I was only charged a 2% interest rate this month! Which is awesome (or at least as awesome as a $250.84 increase in debt can be) considering my actual interest rates are up to 6.21%.

Looking back at my March 2018 debt statement, I can clearly see that the balance on all my subsidized loan has not changed at all. This is because REPAYE subsidized 100% of my subsidized loan interest this whole year. So I have about $18,233 of interest-free loan!

 

What Happened?

Okay, so I need to stop putting a positive spin to this. Because at the end of the day, my end goal is to pay off my loans ASAP and I am currently making negative progress.

So what happened? Why did I stop making payments? Well, I was going through some career changes.

That may be an understatement. In the course of two months, I was laid off from my full-time job, I chose to resign from my part-time job, and I started a new job. So it was a period of instability, to say the least.

While I was giving myself slack the last two months, doing this monthly statement made me realize that I really could have put in at least $2000 this month which I deliberately chose not to do.

Truth be told, I was just hoarding money into my checking account… about $10,000 if we’re counting, instead of putting it into my loans. I guess being laid off just traumatized me.

I was glad at the time that I had money saved up and it gave me a peace of mind but I just wanted to feel extra secure so I kept saving up my money into my checking account instead of actually paying off my debt.




Dave Ramsey, who is the go-to person on debt repayment, recommends only having $1000 in an emergency fund while in debt. I don’t think I can do that. I would not be able to sleep at night.

Especially with the amount of debt I have and my plan to repay in 3 years, only having $1000 in an emergency fund for 3 years just doesn’t make sense to me. The stress alone would probably jeopardize my health and $1000 is definitely not enough to cover the healthcare cost!

Extra note: I’m feeling so bad right now for hoarding money into my checking account instead of putting it into my loans that I just made a payment of $4,000 to my student loan in the middle of writing this which will be reflected on my May statement.

 

Reconsidering My Debt Strategy

This whole month I had been reconsidering whether I should aggressively tackle my debt or invest.

I finally decided to start contributing to my company’s 401k. I think in the back of my mind I always knew I wasn’t planning on staying with my previous two companies, so I had chosen not to put money in 401k. Instead, I focused all extra payments on my loans.

This did not hurt too much as I was not offered matching contribution from my contract full-time job or my part-time job.

However, I am optimistic that I will want to stay with the company I just joined so I am putting in 5% into my 401k although I won’t start getting matched until next year. The stock market has been doing so well this year and I think it would be a big mistake to wait to invest.




I’ve actually been playing around with the stock market through the app Robinhood (sign up through my link to get a free stock) which allows customers to buy and sell stocks at $0 commision. I absolutely love it.

As a stock newbie, it was a great way to dip my feet into the stock market world where there’s no minimum deposit and I can buy and sell one stock at a time.

I’ve actually made a 30% gain since I started in August 2017 so that may just be the reason why I love the app.

The math makes sense too. I made $450 this month from stocks I purchased with Robinhood, which more than covers the interest I’ve accrued this month. And this is just from stocks I had purchased months ago (as I did nothing with my money the past 2 months except hoard it into my checking account).

Of course, my low-interest rate and $0 payment is only valid for this year and the stock market has been doing exceptionally well but there’s no guarantee it’ll continue to do well. So I am not going to put all my eggs into the stock market basket and forgo my loan payments.

I mentioned before in my goals that I’d like to buy a condo in the very near future. I don’t want to wait until my debt is completely gone to do that. So I’d like to start saving for a down payment as soon as I get my student loans down to $100,000.

New Goals

As I am a huge believer in having a good balance in life, I have decided that I don’t have to go all out with paying off my debt, but I’m also not going to completely stop.

Although paying off the debt will be my main focus, I do want to allocate some of my paychecks to building my 401k and also saving for a down-payment on a home.

I realize that having 6-figure student loan debt will probably cause some problems with getting a mortgage when I do want to buy a house so my priorities and new goals are:

1. Contribute 5% to 401k each month
2. Pay off my highest priority debt which currently has a balance of $7,681 by July.
3. Keep only $5000 in an emergency fund.
4. Pay off $25,000 and get to a loan balance of $100,000 by December of this year.