mizzoumoney
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Location: Columbia, MO
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| How am I sitting? |
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I have at present as of this months balances, $44,900 in student loan debt.
I am just about 2 years removed from college after having finished my Masters degree. I have since been working full time for a just short of 1 year now.
I make 36k a a year. I pay $360 a month for my loans under the IBR plan for each loan. All but one of my loan lenders is federal. My interest rates are between 2.2% and 6.5% with most around 5% or higher.
I did the math and without counting interest Its going to be 10 years and 4 months before I pay off all my loan debt at this salary.
How can someone with a MS degree and multiple, well recognized certifications in their field be in such unbalance with their income vs debt so early on in their career? I did grad school just to avoid this very issue amongst other things.
Suggestions?
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Thu Apr 07, 2011 1:26 pm |
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GotCommonCents
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You've taken the first step already, realizing that it needs to be addressed. My advice from here would be to attack it with focused intensity. Do not grow comfortable carrying this debt but instead focus on paying it off as fast as possible. This focus will mean avoiding the trap of overspending. You can do this by creating and keeping a household budget that will allow you to control your finances as opposed to it controlling you. With this mentality, it will be much less than 10 years before you have this paid off and are sitting pretty.
For more advice about how to handle your personal finances and manage your life in a way that will be prosperous, check out my blog:
www.GotCommonCents.com
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Thu Apr 07, 2011 1:44 pm |
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littleroc02us
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Are you asking "Why does someone who has a Masters only make 36k and have 40k in school loans?"
Romans 13:8 “Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.”
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Thu Apr 07, 2011 1:56 pm |
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mizzoumoney
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Not so much why but how? It seems strange that many of my peers with BS degrees in related fields and in other fields make 45k + in their 1st year or 2 without the degree of loan debt I have and trust me..... I worked part time jobs all through college to offset expenses as much as possible. Yet I am the one with the smaller income and larger loan debt?
Where did I go into the red zone and what did they do different?
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Thu Apr 07, 2011 2:05 pm |
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littleroc02us
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I would say quit worrying about that now, work your butt off and continue to improve in your field and one day you'll find a better job that will pay more. Focus on the positives and in the meantime, work on paying off those loans.
Romans 13:8 “Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.”
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Thu Apr 07, 2011 2:12 pm |
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oldguy
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quote:
BS degrees in related fields and in other fields make 45k + in their 1st year or 2 without the degree of loan debt I have and trust me..... I worked part time jobs all through college to offset expenses as much as possible. Yet I am the one with the smaller income and larger loan debt?
Where did I go into the red zone and what did they do different?
A big factor today is the proliferation of 'majors'. You can get a degree in women's studies, appreciation of russia lit, yada. The grads with the applied skills degrees - engineering, accounting, nursing, teaching - get jobs quickly and start at high salaries. But when someone with a less marketable degree, say a BA in Psyc, shows up in our HR Dept, we can't offer much hope (or money) to them.
So, if you have one of the soft degrees, it takes time to find and progress into the niche that you are good at before your skills become marketable, ie, in demand. There may be a time in your future where your acquired skills outweigh those of a room full of generic BS Engineers and you will be well paid for your patience.
quote:
I did the math and without counting interest Its going to be 10 years and 4 months before I pay off all my loan debt at this salary.
Well, not counting interest gives you a distorted outcome - when you add in the $25,000 of interest the schedule goes out a few more yrs. Is $360/m the minimum payment or are you paying extra? Can you consolidate the loans and stretch out the time - any money that you can invest now at a young age drastically changes your net worth a couple decades from now. So don't prepay inexpensive loans at the expense of your future wealth.
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Fri Apr 08, 2011 4:52 pm |
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kate032
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A master's degree (partially depending in which field it's in) isn't a great deal different from a bachelor's.
Are you making substantially less than your peers in the same field with the same education?
Something isn't adding up here. Before you graduated, you should have known what the debt would be and should have done research into what your particular field pays.
It sounds like you didn't realistically look at the situation before you took on the debt, or for some reason, you aren't being paid what your peers are.
Of course, in this economy, just having a job is a bonus.
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Sun Apr 10, 2011 12:08 am |
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mizzoumoney
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| What I found was... |
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My footing out of undergrad was 17k in loan debts. Nothing terrible there at all since I work all 4 years to offset costs.. I had every intention of getting a GA spot in graduate school to offset the tuition costs and then also make a nice stipend at the same time to offset living expenses for the 2 years of schooling my program had.
Sadly despite my acceptance to the program of my choosing I did not land a GA spot and thus had to pay the full 2 years of grad school from loans. This was step 1 in incurring more loan debt then planned. My field (exercise science applied to sport performance) requires an advanced degree and additional certification to practice in public and professional sectors so graduate school had to happen.
Salary's in my intended field (collegiate level sports performance training) vary widely depending on a myriad of factors. A recent study just released by the College and University Professional Association for Human Resources (CUPA-HR) has shown that those with Masters degrees holding "assistant coaching jobs-other" in athletics departments make an average of 42k a year.
Those in my current position (campus recreation and intramural sports) with a Masters degree average 38k a year. I make 35k. So this becomes step 2 in the debt equation.....not making what my peers do let alone what those in my intended field of education/training are making with equivalent degrees and experience.
This taken together shows that my working in a field at 35k a year vs my planned 42k a year in addition to the extra debt during graduate school:
8k per year tuition x 2 years = 16,000 + (475/month rent+utility) x 24 months = 11,400 = grand total for basic graduate degree education.....
$27,400. Add that to the 17k I had already is what got me to the 45k I now sit with.
I should note that opportunities in my field are always there. The turn over is huge but getting a job is very hard unless you know the right people to get you in the door period. Its the way the field has been for years. After almost 8 months of looking for "my in" I had to bite the bullet and look for anything in college settings closely related to athletics. My current job is what I found and what I got, so yes its much better then nothing at all.
Safe to say IMO I did my homework and then extra credit as well!
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Tue Apr 19, 2011 5:14 pm |
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oldguy
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quote:
Safe to say IMO I did my homework and then extra credit as well!
Well, not so safe to say - your homework showed that chosen career had low pay. You ask ""How can someone with a MS degree and multiple, well recognized certifications in their field be in such unbalance with their income vs debt so early on in their career? ""
And then point out that your 'goal' salaries are $38k to $42k and you make $36,000 - ie, you didn't miss your goal by very much at all. Small variations due to location could easily account for 10%.
Can you do additional tasks, such as teach a course? That might add $15k or $20k to your income.
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Tue Apr 19, 2011 6:38 pm |
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KatherineLee88
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I am unsure of what expenses you have right now, but I suggest you take a look at the budget again and see if you can squeeze out another $100-200/mo towards the loans.
I am currently in graduate school and I am employed as a Graduate Research Assistant. I make $24,500/year and I have my school paid for (incurring no new debts). I graduated with $37k in loans from undergraduate. With my take home every month of about $1,750 after taxes and health insurance I find the money to still make a $500/mo payment to my student loans, $250/mo car payment, and $100/mo towards a Roth IRA.
If the loan thing is really bothering you, you need to readjust your spending to emphasis paying off the loans.
I feel rich making $24,500 a year! That's like $23,500 more a year than I was making throughout my undergraduate years! Focus on the positive - you have a job, and it's paying enough for you to pay off your debts. With experience and time your salary should increase. Focus on what you can do now to make the most of it in the meantime.
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Wed Apr 20, 2011 2:34 am |
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mizzoumoney
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quote:
Originally posted by oldguy
quote:
Safe to say IMO I did my homework and then extra credit as well!
And then point out that your 'goal' salaries are $38k to $42k and you make $36,000 - ie, you didn't miss your goal by very much at all. Small variations due to location could easily account for 10%.
Can you do additional tasks, such as teach a course? That might add $15k or $20k to your income.
My goal salary starting out was and is the mid 40's as I never planned to work in student rec but rather college athletics. The job I have now is the closest thing I could find to that which generally has a lower salary yes. 42-45k would be better then 35k I am at now of course. Not to mention its what I love to do.
I have looked for some other jobs I could do on the side but my non traditional work week has me working some nights, some mornings, some afternoons and most weekends with middle weekdays off. Its hard to comply with another more consistent work schedule with the one I have now. Good tip though!
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Thu Apr 21, 2011 1:15 pm |
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mizzoumoney
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I ran the numbers again (20th time I think...?) and I will have about $377 left after payday on the 1st of next month (adjusted for all expenditures that month). If I do not go out to eat or see movies, rent movies, buy drinks etc....I will have that $377 extra to throw at my student loans. June and July and August will leave me with $417 to throw at loans under the same circumstances.
Not a bad chunk as this would really get a snowball effect going on my loan debt reduction plan. However. Going 3-4 months with zippo social activities would likely start to alienate my co-workers and friends pretty quickly as well. I already tend to pass up anything going on the last 10-14 days of every month as I get too tight to budget anything else at that point.
Sacrifice is a must but becoming a hermit is not.
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Thu Apr 21, 2011 1:24 pm |
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coaster
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quote:
Originally posted by mizzoumoney
Sacrifice is a must but becoming a hermit is not.
Now take 10% of the money you freed up, and get/do something nice for yourself as a little reward for your success. 
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Thu Apr 21, 2011 3:53 pm |
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mizzoumoney
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Location: Columbia, MO
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| Hows this look folks? |
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Expense Cost
RENT 635
LOANS 310
CAR LOAN 185
CAR INSURANCE 97
GAS MONEY 95
UTILITY 100
INTERNET 35
CABLE 78
FOOD 250
GYM 30
MEDS 37
CELL 75
Total Expenses 1927
Net Income 2128
Remaining 201
This is my monthly budget right now. I am looking to try and take 75-100 of whats left and apply it to my smaller student loan or my car loan to pay that off. Then snowball what is left from that money left over after its paid off to my next smaller loan, etc etc. Within 2 years I can have my car and 1 of my 5 student loans gone for good with this tactic. However this means I have 100 bucks a month to spend freely tops. Sound feasible?
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Sat Apr 23, 2011 2:35 pm |
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oldguy
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quote:
Within 2 years I can have my car and 1 of my 5 student loans gone for good with this tactic.
What is your top-down goal? Why do you want to prepay these loans - ie, why not keep them for the full amortized schedule?
Often it is a mistake to prepay long term, low interest loans. Eg, I get 30 yr lwo interest loans as a way to raise low cost capital for investing. My caution is this - no prepay loans simply "becasue they are there", make certain that it is the right thing to do.
Let my make up some numbers to demonstrate. Say that I borrow $45,000 in cash for 30 years at 5%, that costs me $242/m, ie, a total of $87,000. I put my borrowed $45,000 into an Index Fund that averages 11%/yr, the $45,000 grows to $1,030,000 in 30 yrs.
In your case it might be far better for your distant future to keep your low cost loans and direct your extra income stream to your 401k/403b where you can grow it to $1,000,000. Do not under-estimate the power of compound interet, use it to your advantage.
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Sat Apr 23, 2011 6:36 pm |
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