Sunday, May 22, 2011

Decisions, Decisions

I postulated a while ago that, sometimes, it seems easier to be broke than to have money coming in on a regular basis.  When you don't have money, you know you can't spend; when you do have money, you have to decide the right way to spend/save.  If you're a committed frugalista with student loan debt, you also know that you should have emergency savings in case anything goes wrong.  But it feels weird to be slotting away money in a savings account when there's that big scary number out there that you OWE.

In my mind, my student loan number is like a flashing neon sign circa 1985.  It makes that buzzing sound, and sometimes a few of the numbers go dark, but I know they're going to flash back on the second I let my guard down.  Problem is, I will most likely never be able to pay all that money back--it's just too much money.  I've done the math, and even if I paid twice what I'm sending in now, it would take about fifteen years to pay off.  If I sent in twice what I'm sending now (this is all theoretical cause I don't actually have the extra money), I wouldn't be able to save anything for retirement, emergencies, or buy a house.  That doesn't seem like a very smart trade-off.

Now I'm re-training myself to realize two things:

  1. If I get a full-time position, it will be at a qualified non-profit that would allow me to have my loans forgiven after 120 payments.  It makes no sense to send in all my money if the bulk of the loans are going to be forgiven.  Yes, that feels like reneging on paying back money I borrowed in good faith, but it's a program designed to help people like me.  I help the economy more overall by having some disposable income, and by potentially buying property someday.
  2. It makes more sense to take care of myself in the long term.  If I'm making the minimum payments required by my lender, my credit score is still good, which should help me out if I ever want to buy property, and this way I have a retirement nest egg and won't have to spend my twilight years living in a cardboard box.
It's really, really hard to retrain myself to look at that number as something that will just always be with me.  It's a situation I've never been in before.  Even when I had a significant amount of credit card debt, I paid it all off.  It seemed insurmountable, but I did it. Now having this other massive amount of debt that I won't pay off feels a bit like failure, but I would be in a much worse situation if I didn't plan for the future in other ways.

I need to keep remembering that.

1 comment:

  1. Again, thank you for this! I feel like I'm always putting my loan on the back burner and feel guilty stashing a small amount into my savings account, which I know is ridiculous because I will likely need it in the future.