Wow, I just noticed on the forums that my last blog post was 3 and a half years ago. A lot has changed in that time.
I was bragging about my first student loan payment in my last post, well in December 2012, as a 30th birthday present to myself, we paid off my student loans.
We moved from Pcola to Hawaii.
We sold our Pcola house and have continued to rent out our Jax house. We were able to (finally) refinance it, but they discovered we now need flood insurance so it didn't result in much of a monthly cost lowering so we still lose about $30 per month + any repairs.
We got and paid off a BMW. We sold my car and bought another one with cash after the move.
I changed jobs once, have been unemployed for about 8 months, and am about to start another job. DH changed his jobs once too (the reason for the move).
We continue to max out our Roth IRA and 401k.
We started contibuting to a taxable retirement account and are regularly contributing to it.
Wow, I just noticed on the forums that my last blog post was 3 and a half years ago. A lot has changed in that time.
My first student loan payment posted today!
I was able to get through my pharmacy program with primarily only getting subsidized loans, however, the first semester of my first year we elected to take the unsubsidized ones too. To cover the tuition bills DH and I had been setting aside $350 a month, well after my last tuition payment in January, I continued to do this. So today I took all of that and made a payment of $1400.
I start my residency today which is good in several respects. First, I'm really excited for it and it will be a great experience. Second, I'll get a paycheck! Finally, huh? I plan on putting nearly 2/3rds of my paycheck to student loans, and maybe more, but we've got some other saving we may do. Third, I can put my loans in deferment and extend the length of time my unsubsidized loans remain interest free. When I put my loans in deferment I'm going to ask if I get another grace period or if payment starts right after I finish my residency. Anyone know?
I plan on at least paying off the interest that has already accumulated and then the 8K in unsubsidized loans. Then I'll keep making the payment, but pay it to my savings account (earning 1%) until my subsidized loans start earning interest. Then, hopefully by then I can just pay it off in one fell swoop.
So I just found a new financial blog which talks about military retirement among other things. Today's post is probably the best article I have ever read about teaching children about finances. He basically tells the story of what he and his wife did in raising their daughter who is now a freshman in college. What I liked best was that it describes what they did at various ages and different books/resources he used as inspiration.
DH and I don't have kids, but we hope to someday, and I just hope I can find this again when we do.
Here's the link if you want to check it out:
In honor of graduation on Monday I thought I would start this new financial journey with my student loans.
Spring of 2007 I started applying to pharmacy schools. DH is in the Navy and we knew that it was possible for us to be stationed in one of the four corners of the US (Hawaii, Washington State, Maine and Florida). At the time I wasn’t aware of a pharmacy school in Hawaii, I missed the requirements for the school in Washington state by 1 biology credit (did I mention I was a biochem major in undergrad…how did this happen?!?!) and I was accepted to a pharmacy schools in New Hampshire (the closest to Maine) and University of Florida.
If we ended up selecting Washington or Hawaii, I’d put pharmacy school off for a while or go into something else. The base in Maine was closing so we knew eventually DH would come back to Jacksonville if he was stationed there, but we were holding out hope he would get Jacksonville and we could live together. Well the DAY of orientation, during my lunch break, we found out that DH had been selected to go to Maine and be the first squadron to come back to Jacksonville. I remember asking him “so that means I’m going to stay here [at UF], right?”
So needless to say things were a little up in the air there for a while. We had no idea how much life would cost supporting two households or how much school stuff would cost or anything. So we decided to take all of the loans offered that first semester, both subsidized and unsubsidized. I took all of the ‘profit’ in our savings account. I say ‘profit’ because they give you a bunch of money, take out tuition and give you the rest to live on. Second semester we took out the subsidized loans and my in-laws offered to pay for tuition. For my second year we continued to take out the subsidized loans and then used that ‘profit’ from before to cover gaps. Each semester we took out the subsidized loans, but it didn’t quite cover tuition so after the ‘profit’ was gone we started setting aside $350 a month to save up for those tuition payments.
So now 4 years later I’ve got just over $44,000 in student loans which will continue to be on deferment until November (colleagues who took everything have 100K or more). Since I will be starting a residency, they can be put back on deferment. I’m not exactly sure for how long. My program lasts until June, so at least until then, but I’m not sure if I get another 6 month grace period or not. The unsubsidized loans are currently at 6.8%, and they all with be at that rate when the deferment ends.
Our goal is to pay it off in 5 years. However, I plan to put $1000 a month toward them, which, especially with deferment, should pay them off in about 4 years or so. The nice thing is that with our slush fund whenever we get sick of them we can just cut a check and be done with it. Probably not the best thing financially (paying higher interest than we are earning in our checking account), but liquidity and flexibility is key in the Navy.
So it's been a while since I've updated or written on this blog. Almost a year, I guess. DH and I are right on the cusp of a lot of big changes so I think now is a good time to jump back in.
First, I will be graduating from pharmacy school on Monday. It was a long, hard, fantastic 4 years and I wouldn't trade a second of it! Financially, I'll be leaving with student loans amounting to just over $44,000.
Second, DH and I both will be starting new jobs. DH is going back to be a flight school instructor and I was selected for a 1 year pharmacy residency position. DH will still be making 85-90K and my stipend for the year is 41K.
Next, these new jobs are no longer in Jax, but across the state. We will be there for about 3 years...and are buying an amazing house. We were supposed to close on Monday, but it was pushed back to Friday. (This time through the home buying process has been AWFUL, I'm sure I'll comment on it later). So we will be adding another $125K to our debt.
We are still keeping our current house and are renting it out to a girl I went to school with. She's signing a 1 year lease, but I hope she stays a little longer than that. If not, we have access to a decent sized pool of renters. Her rent covers all of our costs plus about $15 or $20 to save up for repairs.
This summer before my residency starts my goal is to re-evaluate our financial plan to make sure we are using our money to best meet our goals. I intend to post updates and possibilities and would love to get your input on it!
I was doing our typical end of the month calculation to pay off our credit card and transfer any extra money from our checking account to our savings account. Well it was low, really low. Usually I can add in our end of the month payment, take away our CC bill and rent and be close to maintaining a $2500 buffer. (I know, 2K is probably ridiculously high for you, but it works for us.) However, this month it would only leave $800. So where did that nearly $1700 discrepancy go?
Mortgage increase due to taxes: $200
DH car repairs: $400
New door handles: $200
Conference for work: $100
Lunch at work: $100
Repair for bed: $100
Walmart (can't remember what we bought): $100
Whole Foods (week's worth of meat and cider): $100
And the rest was just spent at various times.
We've got money set aside for the car repairs, actually I have a "car fund" for repairs, maintenance, and saving for a new car. I don't like borrowing from it though, usually if something comes up I just don't add more money to it.
I really need to be better about taking my lunch to work. It something I haven't done and that extra $100 a month could probably be put to better use.
The new door handles was probably the biggest non-essential purchase. I wanted to replace them, but didn't need to do it right then. Usually little things like that don't hurt anything, but when combined with a bunch of others, it means I have to transfer money from savings.
I'm in pharmacy school and just started rotations. I always have known it is a challenge for many patients to afford their medications. However the current location of my rotation serves a set of patients who have little-to-no income. Many of the pharmacists where I work spend a great deal of time helping patients get their medications. Here are a couple tricks of the trade:
Free medications. Publix, a local grocery store, has offered select antibiotics for free. All you need is a prescription and you can get the medications for free. However they just started a new pharmacy program for diabetes where they are also giving immediate release metformin away for free.
$4 lists. Retail pharmacy chains like Walmart and Kmart offer many common prescription medications for $4 a month or $10 for three months. This can be a huge cost savings for everyone, not just those with low incomes. If you have insurance and your co-pay is more than $4, you will still only have to pay the $4. One down side is how busy these places can be, however.
Patient assistance programs. Patient assistance programs help low income patients receive brand name medications from the manufacturer. Often there is paperwork associated with this, either documentation of previous medications tried, or income statements. The work can be cumbersome, but results in receiving the medication at no cost.
Of course if anyone is having a hard time affording their medications they need to inform their doctor. Doctors may be able to prescribe a lower cost alternative. I see many people chose not to fill certain prescriptions due to cost. Also, abruptly stopping some medications can be dangerous. Do not stop taking medications without first talking to a doctor or pharmacist.
I got a phone call from DH yesterday saying that his laptop had officially died. We weren't really expecting it, but I did know it was falling apart and in much worse condition physically than my computer. I don't know what he'll get to replace it, but I'm sure it will cost $500-1000. A funny side note is he bought it while in Italy 2 years ago on a detachment and he's now in Italy on the exact same detachment.
He's not the only one spending money though. I bought LexiComp for my phone. It normally retails at close to $300, but with my student discount I got it for nearly half price. It was something I was planning to get here soon, so when it was on sale I jumped on it.
I also joined a gym. I decided to go with the month-to-month rather than the year long contract. It works out to be $8 a month more, but if I decide in 2 months I hate it, it would be much cheaper to cancel. I also figured that I needed to do this for me. I've been starting to run and am pseudo-training for a 15K. I've been running off and on for 2 months now, but the weather has been a big hurdle. So with the gym that excuse is off the table.
So we have spent a lot this week, but thankfully we have the money to be able to handle it.
DH and I got our tax refund earlier this week. I can't believe how fast it came! As soon as I noticed it hit our checking account I quickly transferred it to our ING savings account. Don't want to waste a second of higher interest.
We get a huge refund, over $2500. I know that we shouldn't be letting the government have it interest free, but we don't have a strong need for it and apparently the government does. Also I'd much rather be receiving money than having to pay.
This is the second year in a row we've had large refunds. I'm sure it's because I barely contribute to our income and we have to pay tuition. This next year, 2010, we may also be able to itemize our deductions and save any more. Although I haven't crunched the numbers yet to see if the interest on the house and possible interest from the student loans would make it worth it to itemize.
In anticipation of this I've increased the number of exemptions claimed on DH. Hopefully this will give us some more cash throughout the year but not make it so we have to pay come tax time.
As far as the refund goes I don't think we had a set plan for it. I did put some of it into our vacation fund in anticipation for our two week trip to Costa Rica. The rest of it has gone to our "housing/downpayment fund." That's sort of our catch-all for any extra money. When DH gets home the end of the month we may discuss if that's what we want to do or to put the money into other places.
Wow I just found an old post that I was going to put on my blog but must have forgotten to do. It's my review of sorts of the Millionaire Next Door.
I just finished reading the Millionaire Next Door written by Thomas Stanley and William Danko. I have heard a lot about this book so I was curious about reading it. However, I was a little disappointed with it. First of all, it is not really written for 25 year olds. I do not really know who would benefit the best from this novel, but I am not its primary demographic. This is also not a normal personal finance book that makes suggestions on how you should change your life to increase wealth. Rather, it is merely a collection of statistics about the average millionaire in America. (The fact that the â€śaverageâ€ť millionaire is a 57 year old self-employed male may explain my difficulty in relating to some of the things in the book.)
Things that bode well for us:
There are several common themes that run through the book. The first is that despite our exposure to celebrity millionaires who have all the latest toys and blow money left and right, most of the millionaires are quite frugal. Purchasing items on sale or using coupons is common.
They spend more time tracking where their money is spent and planning for future financial endeavors.
I like that they have a formula to determine how much money a person should have saved: 10% of your age multiplied by your income. At age 25 and an income of roughly 50,000, DH and I should have saved roughly $125,000. Not going to happen. My initial thought was that it is skewed for older workers. I mean, I havenâ€™t really had my first job yet and DH has only been working for 2 years. There is no way that in 2 years we could have saved $125,000. It does make me think that we could be doing better though.
*Update: DH is now further into his career and his income has leaped up. I, however, am still in school. Our new goal is about $220,000. However we are MUCH closer to reaching that than we were 2 years ago. We've started and fully funded our Roths, we started contributing to TSP, and our savings account has nearly doubled. At least I see that saving that much could be possible*
There was a large portion of the book that related to educating children about money and enabling them with gifts. Not having kids, I havenâ€™t had a chance to mess that up yet. It made me reflective of my own childhood though. My parents lived fairly frugally, I donâ€™t know how much money we had, but we didnâ€™t live extravagantly, but there was always enough money for me to do what I wanted. I have always been interested in money and lived pretty frugally. I think that it was more of an internal thing, but maybe some of it was shaped by how my parents were. If you needed something you bought it, if you didnâ€™t need it, you didnâ€™t buy it. And we didnâ€™t need a lot of thingsâ€¦.we didnâ€™t try to keep up with the Jones. Actually my parents bought our first DVD player after I was out of high school, probably in 2002 or so. My step-dad still has dial up internet.
But it did make me realize how important it is to teach children to be financially aware and financially responsible. Iâ€™m sure DH and I will help our children out financially at least for school, both of our parents helped us. But I think weâ€™ll also take more of a hands-off approach and make them do it on their own too.
Another thing the book seemed to emphasize was that most of the first generation millionaires are all self-employed. This was a little disheartening to hear as that isnâ€™t really a plan for me. They say that many of them are tax advantaged and that the income they earn is only a small percentage of what they make. I wonder if it is possible to have a similar tax shelter without having a business for write-offs. I mean, does increasing the amount I have in my Roth, increase my net worth without increasing my taxable income? Would a traditional IRA/401(k) have a similar effect? Are there non-retirement accounts that would do this?
Is it bad that I consider us to be debt free?
In reality we have a mortgage ($149K) and my school loans ($30K), but I don't really think about them. DH and I closed on our house in August, so we have a mortgage, but the only real change is that rather than paying rent to a landlord, we pay it to the mortgage company. So mentally there hasn't been a big change there.
Also the school loans will still be deferred until I finish in about 2 years. So since we aren't paying for them, I don't think to include them. Additionally with the exception of the first semester DH and I have only been taking out the subsidized loans. So while fellow classmates who need those loans to live off of, have about 100K in debt, I'll only have about $40. Another reason why I don't include it is that if push came to shove, we have the money to pay it off, we'd drain our savings, but technically that could be gone tomorrow. So maybe once the school loans come out of deferment I'll start feeling differently, but I doubt it.
So no, I still have debt, but we've got it under control, so I may slip and say we're debt free.
So DH and I closed on our house a week and a half ago. Since that day we have gone to Lowe's nearly everyday...I think I've only missed 2 of the last 12 days.
Thankfully most have just been little trips for paint and brushes. However one of those trips was a big weekend where we purchased all new appliances for the house. The house was 20 years old, and had mostly original appliances with no washer/dryer. We shopped well: went during the weekend where they had 10% off energy star appliances, a rebate on Samsung kitchen appliances, and used our 10% military discount. All in all, much worse than it could have been, besides we can take the washer, dryer and fridge with us when we go if we want!
DH made a little fuss about buying washer dryer pedestals. I think I'd like the extra height so I don't have to bend down so low to get to the front loaders. (Yes, I know you have to bend down for top loaders, but hey, it was my one sticking point. I offered that DH could do all the laundry if he didn't want to spend the money, but if I was doing laundry, I'd like the pedestals.)
Then the next day I just happened to wander back by the appliance section mentally I'd just checked off the appliance section, so wasn't even planning on going to that part of the store. I notice a sign that said if you buy any Samsung washer/dryer you get the pedestals for free, starting on Thursday...and we had purchased our appliances on Saturday. I was pretty sure that we were charged $200 a pedestal, so I talked to the appliance guy and he verified that the washer/dryer we bought would qualify. He said to check the receipt to see if we were charged, and if we were to bring it back.
Lo and behold, we were charged, so on my next daily trip to Lowe's I brought my receipt and was refunded the nearly $400. In addition to the money DH now can't complain about purchasing the pedestals...they were free!