Student Loans

Sometimes I wonder if I have OCD when I look at my student loans.  There are days I can’t move on to my work until I figure out the best solution or come to terms with my pay back options.  And this can sometimes take 30-60 minutes until the calculations stop running over and over in my head trying to pinpoint when I’ll be free of them and how quickly that will happen.

The reason I am overly obsessed with calculating my pay off timeline, while it seems like all of my other friends are much more lax with the idea of just hanging onto the “good debt” since “everyone has it”, is because I made the promise to myself that I would pay off my student loans and treat myself with travel.  Now I don’t know if that was a good thing or a bad thing.  If you’re my father, it’s probably a good thing to save money on the interest.  If you’re my roommate and coworkers, it’s the lowest interest rate I will probably ever have and I’m only young once.  Both are valid arguments.  Save money in the long run or capitalize on my reserve of youth and freedom now?

For some this seems so black and white.  I have this problem of living my life in the grey.  

The faster I pay the loans off, the more money I’ll save to use for travel later.  I’ll also have one less expense to worry about as I travel.  However, that extra $1500 or so I’d be saving in the long run wouldn’t be immediately at my finger tips like magic when I finish paying off my loans.  In truth, I’ll probably have less savings right after I finish paying off my loans quickly than I would if I paid them slowly, saving as I went, but it’s the projection of what I’d save that I fixate on.  Plus the faster I pay them off, then the more I can save each month once they are gone, but it’s that much less I save while I’m still paying them.  You can see my conundrum.  See the money grow quickly later or watch it grow slowly right now.

It doesn’t help that I’m competitive and see the Sallie Mae website as a game I have to win.  I get irrationally excited when I see one of my loans drop drastically and even more giddy when one hits 0.  Interest is the enemy because it puts me back a few dollars each month.

I’ve worked the numbers at least a dozen different ways.  I’ll pay lump sums here and here while upping my monthly payments starting here.  I’ll plan to have the highest interest loans all paid off by the end of this year and then drop down to paying half as much each month and drag out the lower interest rate loans.  I’ll pay extra big amounts each month and don’t save any money but then they’ll be paid off really quick.  I’ll pay only the minimum and say “Eff it, I’m traveling!”  

All of these look good and bad at the same time.  

My current plan is to pay off the 6.8% loans by the end of this year.  Then drop down to paying half as much as I currently do each month and worry about saving up $15000 as quickly as I can for traveling and a cushion for coming home as well as paying my bills while I’m gone.  But the “graduated repayment plan where next year I pay off just a little bit more each month so that I’m done with loans by the end of next year” idea has been sticking around to possibly take over next year.  One allows me to travel sooner while the other allows me to travel debt free.

Then, just when I finally come to terms with one of the plans, a coworker likes to point out again that I’m young and should travel as much as I can.  It’s a never ending debate.

The only advice I think I can put forward through all of this is to budget.  Pick your reward (which for me is traveling) and then plan out what you can save each month.  Then rework that budget often to make sure you are maximizing everything.  

What works for me is that I figured out my monthly income after taxes and made sure to estimate it on the low end.  Then I wrote up all of my expenses (these estimated on the higher end): rent, electricity, internet, gas for my apartment, gas for my car, insurance, car payment, groceries, and student loans.  I figured out how much that would leave me at the end of each month.  (If I just look at my savings it gets a little messy because not every bill comes every month so I have to break it down and know that I’m prepared when the big insurance bill comes every six months).  Then I adjust certain expenses that I’m in control of, like my student loans payment and groceries, and either lower my allowance or maximize it’s potential.  From there I figure out what bills I will put on my credit card and what will be billed directly to my bank account.  It’s not super important to do that, but my strategy for keeping myself on budget is to say that each month I can only charge x amount to my credit card.  That includes the groceries, gas, and internet bills as well as anything fun I do.  When the end of the month comes I have to start turning people down for drinks or dinner because I am always conscious of how much is on my card.  Check your statement often!  Some months I go slightly over my limit, but I try really hard not to let that happen and some months as a sort of punishment I carry over the extra money so as to tell myself I now have less money to spend this month.  I only do this though because I am paying off my card in full most of the time and when not in full I’m paying a lot more than the minimum, which means I don’t incur interest.  This is how I force myself to keep a budget, and that way I don’t accumulate credit card debt which detracts from my future travel budget.  

However, don’t let this keep you from enjoying your life.  Since I’m holding off on travel for a little, I still want my life leading up to it to be an adventure in and of itself.  Sometimes I’ll allow myself to use my savings for an improv class or to buy the new curtains I really want.  It’s knowing what to allow yourself and not indulging every desire.  It can be like waiting for Christmas Day.  How sweet will it be when after the wait you finally get what you want?  And on top of that wait you also saved money for travel because you didn’t just charge everything as soon as you wanted it!  Double win!  At least that’s how I see it.

The budget was a slight tangent, but it linked in with planning out your student loans.  I choose to pay about 4x as much as I’m required to pay back each month because I can.  This also doesn’t allow me to save as much money in the short term, but like the debate you read early said, right now I’m weighing the pros and cons of saving short term or long term and long term is currently in the lead.  The end of this year that might change.  That’s why I go over my budget/student loan plan about twice a month.  Just to make sure I’m happy with the direction I’m going.  I constantly question my money choices because I’m no expert, but this is what I can make work in my mind.  I’m still debating if my financial planning side is the better voice or if my wanderlust should be winning.  Where do I draw the line?

Heady Debates

I wanted to start this blog before any actual trip planning began.  I’ve been reading a blog called Legal Nomad and have gotten incredibly inspired by her path and her bravery throughout her 6 years of travel, but what I am missing from her work is the build up to her traveling.  What I wanted to hear about was what drove her to decide on a year of travel, how she planned for it, but most importantly how she faced any fears and doubts she had about her decision.

It’s exciting to read about the food, the sites, and the people, but I went searching for guidance, or at least validation that someone else who made it work felt the same way before they started as I do now.  It’s easy to to look at the joys someone else had, but a lot harder to convince yourself that you will have the same success.  I completely believe in myself and my abilities, what I don’t necessarily have blind faith in is my financial abilities.

Let’s be clear.  I have a job.  It pays me well enough for the life I live currently.  This means that I can afford my rent, eat decently, drive my car fully insured, go out with friends once or twice a week (but still be frugal with drinks and food I buy) and pay my dreaded student loans while still saving up a little money each month.  The problem with my job, though, is that it is freelance.  This means that I work on a show that is doing well and so far has gotten renewed for a new season, and barring any unforeseen problems, will probably continue to get picked up for new seasons in the near future.  All of THAT means that I have to plan for the worst (the show not picking up again and searching for another gig which can take a while) and hope for the best (it keeps getting picked up so I have relatively steady employment).  However, where my worries arise is that I always have to have an emergency fund that is more likely to be used than most people’s emergency funds since showbiz is a fickle beast.

I have enough money to live on for three months should I have problems finding a new show.  I’ve been fortunate so far and haven’t had problems, but I always make sure to remind myself how lucky I’ve been so as not to take that fact for granted.  The problem is I only have enough to live on for about three months if unemployed.  That means I don’t have the money to go traveling on top of having an emergency fund.  I could use my money to fulfill my dream of traveling and could travel a decent amount of time with my money, but what would I do when I came back?  What would I do if I went traveling and then lost my job unexpectedly shortly after?  There is always something looming on the horizon of possibilities.

Another aspect to my career is time off.  Depending on which mood I’m in while thinking about it, time away from my job can be both a blessing or a curse.  It’s great to know that I’ll probably have some time off when a show ends.  I have vacation breaks built in and can do things on those times off.  Where the negative side comes in is that I don’t get paid for this vacation time.  Also, if I don’t have a new job lined up, I spend the whole break worrying that I won’t find more employment before my savings run out, so I don’t go have the adventures the positive me saw happening while I was still employed.  That’s why a show that keeps getting renewed is a great thing to be on, but also definitely something lucky to happen into.  However, the worry wort in me always fears that no matter how likely we are to get renewed there is that possibility looming of cancellation.  

What I went searching for on the internet is how to deal with that paralyzing fear of money.  I would love to go away for six months or a year and not worry about the money I will come home to.  I’m great at managing a budget for my trip and can designate a certain amount of money for adventure, but I don’t have nearly enough savings to leave a decent amount untouched so I have a cushion to come home to if I leave for extended amounts of time.  If I leave, I may not have a job to come home to because the show must go on and if they find people they like they tend to stick with them.  What if they like my replacement better than me?  Or everyone disbands into other parts of the industry and can’t help me out for months until their next gig?  What if I can’t find someone to sublet my apartment and I have to continue to pay rent while I’m away as well as housing in a foreign country?  What if I do find someone to sublet?  Can I trust them with my stuff?  How dumb/heartbreaking would it be to sell all my stuff and not sign a new lease and then have to find a new apartment when I get back?  What if I can’t find a roommate when I get back?  Where will I stay until I get a new apartment when all I’ll want is to lie in my own bed?  How will I afford to buy all new stuff and still have money to live on until I find employment again?  Would all this be disastrous to my career?

This is the panic-ridden loop that plays in my head no matter which option I try to rationalize.

It’s a level of unknown that I’ve never been able to handle.  I’m a planner and a worrier, but I’m also an explorer and, despite my feedback loop of panic, an optimist.  I know that I’ll be able to have the time of my life, laugh, cry, eat a lot, learn to cook some of it, miss home, quench my thirst for something new, and on some level that everything will be alright, but all of that is made a lot easier if I can plan ahead.  I want to worry in the moment, not about the future, but that’s easier said than done.  I know that I could make it work, but how naive am I?

All of this is what I wanted to have someone tell me they went through and what I should do about it all.  I know that’s an unreasonable request, and I want to figure it out on my own, but at the same time it’s scary.  The first few steps to facing a fear are always the biggest and most difficult.  I need to find my momentum.  That’s the first part of my journey I hope to trudge through and be able to share so that future explorers may not feel quite so alone in the vast realm of getting up the courage to travel.  Everyone’s paths will be different, but maybe we can still walk them together.