Income Based Repayment Plan

Aware that the bulk of my student loans are due in 2 months, I finally sat down yesterday and took a hard look at all of them. I made a chart listing each loan provider, loan number, with monthly payments, interest rates, due dates, repayment plans and current principal balances.

I then totaled all of my monthly payments. On the standard repayment plan, I would have owed, come December 1st, over $2000 per month (!!!). I knew it was going to be a lot, but not THAT much. So I looked into ways to reduce my monthly fee.

I found out that back in July '09, President Obama introduced something called the income based repayment plan. According to Federal Student Aid, "Income Based Repayment (IBR) is one of several repayment plan options for borrowers of student loans made under the William D. Ford Federal Direct Loan (Direct Loan) Program or the Federal Family Education Loan (FFELSM) Program. If you qualify for IBR, your required monthly payment will be capped at an amount that is intended to be affordable based on your income and family size, and will be less than what you would have to pay under a 10-year Standard Repayment Plan."

In order to sign up for IBR, you have to have a "partial financial hardship." You satisfy the requirement if the amount you would have to pay under a standard repayment plan is higher than the amount you would pay under IBR. They determine the monthly amount you pay under IBR by (1) subtracting 150 percent of the poverty guideline (view it here) from your adjusted gross income, (2) taking 15% of that difference, and (3) dividing the resulting number by 12.

Doing the math for myself, 150% of the poverty guideline for a family of 1 would be $16,245. If my AGI was $50,000, the difference would be $33,755. 15% of that would be $5063. Divided by 12, the monthly payment would be about $421. A long way off from $2000!

It doesn't apply to private loans, so I have 1 loan that's exempt. But I'm applying for an unemployment deferment (it's a loan from undergrad, and has already been in repayment for a couple months). Something else interesting is after 25 years of repayment under IBR your remaining loan balances are canceled (but unfortunately charged to you as taxable income).

I found all the necessary forms on Sallie Mae's website. It's recommended that you send in your paperwork at least 2 months before the end of your grace period (I sent it out just in time!). Here's some more info about how to sign up. And here's a detailed Q&A from the Department of Education.

Is anyone else considering (or signed up for) IBR?

Planning for the Future

M and I were talking about money the other day, and he told me that he's breaking even every month. Well, sort of. Four times a year he gets a bonus, and in total that increases his savings by $70k. His savings currently stands at 100k. But he has $5k in his checking account and that doesn't change. So that means he and I are spending approximately $5500 a month. I found that kind of alarming. He has no debt, so that's all outright spending. $1200 of that is all me. $1127 is our rent. So a little more than $3000 is spent on utilities, food and entertainment. He said he would check to see exactly how much we spend on food, but I'm hoping we can cut it down significantly.

I've been watching houses in our area on Redfin and the cheapest I've seen have been between $600-700k. A few miles east, and prices drop to $400-500k. I hope those prices will hold (or drop) in the next 2-3 years, because we talked about it, and we'd like to buy a house in 2012 or 2013. In 3 years, M will have 310k saved up. (How much I'll have is unknowable, except I know it won't be comparable!)

I think we'll definitely be moving in with his parents to their new house next June. They built an apartment-like second floor with a separate entrance, with either us or M's sisters in mind. The sisters will be away at college for another few years, so desire to have the place won't conflict. (His parents also specifically asked us a few months ago if we wanted to move in) And that'll be a savings of $1127/month for 1-2 years (for a total savings of $13k-$27k).

M wants to quit his job and start his own video game company in a few years. I'll need to be able to support us by then.

In the short-term, I need to find a job, ANY job, and start aggressively paying off my credit cards. I may have to accept something as low as $50k (or even lower, if worse comes to worst). I'd like to have the credit card bills paid off, and M paid back, before we buy a house. The student loans are another matter. I think I just need to accept that they're going to be hanging around for a long, long time.

Acting Parent

Yeah, I'm the acting parent right now. Why? Because my mom has turned into an irrational, unreasonable human being.

Tell me if I'm wrong here. She doesn't carry health insurance for herself or my little sister. She previously didn't carry car insurance (that changed, because I set it up and am paying for it). She felt neither were necessary. Does anyone else believe that health insurance (not to mention car insurance) absolutely, definitely is necessary?!

She is over 50. She argues that she hasn't needed a doctor in the past 10 years. But as she gets older, the risk increases. She has knee problems. She's had problems with her weight. My grandmother and I both have hypothyroidism. There's a likelihood she has it too. She claims she's "very healthy." But how would she know that, not having been to the doctor in 10 years? She also claims that there's a "homeopathic remedy for everything." I asked her, what's the homeopathic remedy if you break your leg?

Her only income is my dad's spousal support because she hasn't been able to find a job. So she's low-income. I looked into insurance plans and found that she could apply for low-cost Medi-Cal for my sister. She doesn't even want to consider it. She doesn't like the idea of "going into the system."

This is driving me crazy because I know that if anything happens to her or my sister, M and I will be responsible financially. She has always come to us. She doesn't have anyone else. Yet she insists that that won't happen. As if all the other times never happened?!

M thinks we should get insurance for them. But as I'm unemployed, it would be him paying $300 per month insurance for my mother and sister. The thought of that makes me so angry that I want to shake her. Especially since that number could be reduced by $60 if my mom signed my sister up for Medi-Cal.

She won't listen to reason. I'm baffled. Her stubbornness and irrationality have gotten much worse from when I was younger. Maybe that's just her reaction to my pushing her. She and I have not gotten along for many years now. Well, I have not gotten along with her. She tries to be the nicest person alive, but I have so much resentment built up, I get angry just hearing her voice, seeing her face. For years, I've been supporting her in one way or another. And since I quit working full-time, that responsibility has passed to my boyfriend. That makes me wonder why he even stays with me. Not only am I debt-laden, I have her as baggage too?!

How do you make someone go to the doctor? How do you make someone do what's best for them? Are there others out there who agree with her, that health insurance is not necessary?

What should I do here?

Month 2 of the Job Hunt

It's actually been a month and a half since the bar, since I've been actively looking for a law clerk or attorney job. But only 2 weeks until we move into month 2 of my search.

There have only been 2 jobs I've been excited about, and neither of them called me back. I still have only had 2 interviews.

(I feel like I'm on Sesame Street and 2 is the number of the day :P)

My friend approached me about the possibility of starting up a law firm together. But it's not a right away thing; we find out if we pass the bar at the end of November, and if we don't, it'll be a re-try in February and another long wait until mid 2011. I don't know how much money that would require up front. It would require a lot more research on both our parts. I imagine we wouldn't really be making any money for a few years. And both of us have hefty loans.

I've been trying not to feel depressed, but it's getting more difficult to stave it off. I feel no desire to leave the apartment during the week. Or clean the apartment. Or do anything productive (other than look for jobs). I haven't been to the gym since before I had food poisoning.

Probably some human contact would cheer me up, but everyone I know is working during the week. My law school friends all fell back on the jobs they kept throughout school or had before school started - mostly jobs that have nothing to do with law.

I need someone to give me a swift kick in the pants. I need to use the time I have wisely, instead of feeling sorry for myself. I need to go to yoga more, so I can administer that kick in the pants to myself! ;)

Sense of Scale iPhone App Giveaway!

I've been raving about this app on twitter today. It was made by someone I know, but it's also really fun! :) It's a game that tests whether you can correctly scale objects given surrounding clues. It's for the iPhone, the iPad, or the iPod Touch!

(Am I the only one loving that fat dog pic in the middle? It makes me 'LOL' everytime I see it!)

And now I have two codes to give away! The first two people to comment get a code. My only requirement is that after you play the game, you leave an honest review.

Hope you like it! :)