Sunday, February 24, 2019

March Spending Freeze and Freezer Challenge

February was a stupidly expensive month:
  1. Our car insurance for two vehicles was due-- $983
  2. I had a stack of medical bills to pay-- $570
  3. I had some car maintenance that needed doing-- $349
  4. I owe the state of Massachusetts $817 in taxes
All totaled, this month gave me a $2719 kick in the face, which is actually more than my monthly take-home pay!

Also the weather has been alternating between being arctic and springlike in a way that's just unsettling. And since it's dark all the time, we are now a three humidifier household, and I've been trapped on the treadmill every morning, the electric bill has been higher than usual.  All this has come together to make me a super cranky individual, but instead of wallowing, I'm making a plan.

For the month of March I will engage in no unnecessary spending, and I will also endeavor to grocery shop as little as possible and instead eat from my pantry and freezer as much as I can.  My husband is going to be working in the UK office starting mid-March, and I'll join him at the beginning of April, so this is a perfect time to clear out the cupboards and make some space for our cat sitter.  I expect I'll be eating some pretty strange meals by the end of the month, but I'm sure it'll be fine and I probably won't get scurvy.

Cutting back on food-buying and unnecessary spending won't make too, too much of a difference, but it will help somewhat, and will hopefully make me feel like I have some modicum of control.  Thankfully, all of those expenses went onto our Capital One Venture card, so that earned us a fat stack of miles we can redeem when we're on vacation.  That card also has a 0% interest rate right now, so at least the money I charged won't cost us anything extra.

I also plan to list a few items on ebay/ facebook marketplace, to see if I can earn a little bit of extra money while decluttering.  I recently re-inherited my hockey card collection circa 1992-1994.  I sincerely doubt they are worth anything, but I have a few collectible items that I can potentially sell.  I also have a $60 LL Bean gift card that I'm never going to use, so I've got problem selling that at a discount.  So, dear reader, if you yearn for hockey cards from the early 90's or shop at LL Bean, hit me up!

Friday, February 15, 2019

Checking in With My Student Loans

Wee Watson, my trusty sidekick
My student loans and I have been together longer even than me and my precious cat!  And yet, despite being on the Public Service Loan Forgiveness plan, they show no signs of actually going away after I make 120 on-time payments, despite me doing everything I'm supposed to do!

I've been much more aggressive about taking screenshots of my loans, because my loan servicer (Fedloan Servicing) repeatedly makes mistakes, doesn't do what I ask them to, and also generally doesn't seem like they know what they're doing.

Case in point, I was making extra payments to one of my high interest loans, but every time I made an extra payment, my regular payment would then not deduct from my auto pay.  I called them up and said "what the hell?" and they said "Oh, that loan is in paid-ahead status, therefore, since you've already paid more than your monthly payment, we won't deduct the normal amount from your bank, even though you're on the auto-pay plan."  This was in 2015, so I told the person I was speaking to to remove paid-ahead status from my account so that any extra payments I made would not interfere with my regular payments.  She said she would remove paid-ahead status from all my loans right away.

About four months later, it happened again, and I called, again, to ask why paid-ahead status had not been removed as I requested.  They said "So sorry, we'll do that right away."

In 2016, I put it in writing, and got this back:
Click to embiggen

When I look at my loans individually, it shows me how many qualifying forgiveness payments I've made, and the anticipated date of forgiveness.
Click to embiggen
That screenshot is from Loan #6, taken 02/15/2019.  This screenshot is also from Loan #6 taken 11/06/2016.

Notice how despite me making 100% of my payments on time (I'm on auto-pay, so they just take the money out of my account on the due date), my date of forgiveness has slipped by about six months?  Isn't that interesting.  This is the case on all of my loans (I have eight of them) EXCEPT the one loan I made some extra payments on.  Extra payments aren't supposed to advance your forgiveness date (though in this case they've more kept the date consistent), and you're really not supposed to be making them at all, but I'm losing my mind watching so much interest accrue on a daily basis, that I made the somewhat stupid decision to throw some extra bits of cash at that one loan.  Except maybe it wasn't a stupid decision because this is what that loan is currently showing:
Click to embiggen


So I emailed them in December asking why this is happening, and I received this response:
Click to embiggen

After not hearing anything after that email, I followed up again February 1 to ask if they've got any answers for me, and I haven't heard a peep.

So, this saga is taking up a tremendous amount of my time and energy, but I am determined to be their worst nightmare until they actually do what they've said they'll do.  I have to keep up my end of this devil's bargain, why don't they?

Thankfully (maybe?) I'm not the only one having these kinds of issues.  According to NPR: "While all nine loan servicing companies occasionally failed to follow the rules, some did so more frequently than others. According to one review of borrower phone calls from April 2017, servicers failed to comply with federal requirements in 4 percent of calls, on average. But PHEAA failed to give adequate or accurate information in 10.6 percent of its calls with borrowers. A review of more than 850 calls the following month found that PHEAA representatives failed to follow the rules in nearly 9 percent of those interactions — more than five times the average failure rate of the other servicers that month."

PHEAA is my servicer, and I can 100% agree that depending on who you talk to when you call, you can get completely different answers.  And they are incredibly eager to put your loans into forebearance for almost no reason at all.

Even if you're lucky enough to not have any student loan debt, there is still going to be a reckoning coming that affects everyone.  The fact that these government loans are being serviced by non-government agencies that charge insane interest rates is alarming and should bother everyone. I have over $40,000 in loans at an interest rate of 6.55%, and the monthly payment that I have to make in order to qualify for Public Service Loan Forgiveness doesn't even cover the interest each month, so the amount owed keeps climbing higher and higher despite me following the rules that they set.
I don't think they're actually read the banner on their own website.

Sunday, February 10, 2019

2019 Savings Goals

Since 2018 was the year of decimating my car loan, I've fallen a bit behind on putting money into my Roth IRA.  According to my account, I am nearly on track to retire at the age of 70.  Sure, that's great, but also, I'm pretty sure I can do better than that.  I do love my job, and thankfully it's not physically demanding in a way where I won't be able to do it at age 70, but I also would like to have options.  Having money means having options.

Despite the fact that I didn't put any money into my Roth IRA in 2018, I was still saving for retirement.  I have a TIAA Cref plan through my work, and my monthly contribution is pretty aggressive, since until literally this month, I've been behind on saving for retirement.  My employer also has a very, very good match (10%), so that helps significantly.

So, the plan for 2019 is as  follows:

  1. Contribute as much as I comfortably can to my Roth IRA for tax year 2018, which I can do until April 15.  I'm not getting much of a tax refund, but what I do get will go into my Roth for 2018.
  2. Contribute as much as I comfortably can to my Roth for tax year 2019. I don't think I'll be able to max it out, but I'll certainly do my best. It helps that I can contribute for tax year 2019 until April 2020.
  3. I will pay off the credit card that has the balance of my car loan on it in July, but I should still have $10,000 in my emergency fund at that time.  $10,000 is my low threshold for my emergency fund, since I need to have at least that much to get the interest rate of 2%.  I'd like to have at least $12,000 in my emergency fund, so I will still be putting some money in there each month, but the Roth is the priority.
  4. Look into micro-finance loans.  This is something I'll write an entire post about, but in a nutshell, micro-finance loans are loans that you give to people in developing countries to help them grow their small businesses.  It's not something that will make me money, but it's a very low cost way to give people a hand up.  I'm still investigating this, so I will report back in the future!
  5. Get our household emergency fund over the $10,000 threshold.  My husband and I have a shared emergency fund, and I really want to get that over the $10k mark so we can move it to a Money Market and double our interest rate.  We're close, but that goal is a few months away.

That's it for now!  I have a couple other things percolating in my mind, but I think five goals is a very reasonable batch to write down.  

What are your annual financial goals?

Sunday, February 3, 2019

2018 Savings Goals

Every year I set a new savings/ financial goal, but since I wasn't blogging in 2018, I didn't write that one down even though I'm particularly proud of it.  So, better late than never.

2018, I bought a new-to-me car for the first time in years.  I started commuting about 90 miles a day to work, and after buying gas for my 2005 Malibu three times in one week, I snapped and went to get a more fuel efficient car.  Because this decision was somewhat impulsive, I did not do my homework beforehand and ended up financing through the dealership.  Despite my exemplary credit rating, they got me a loan at 5% interest, which seriously filled me with rage.  I tapped into savings and threw a few thousand dollars at it, but interest was accruing on my eight thousand dollar balance much faster than I liked, so I came up with a different plan.

This was around November, which is apparently when credit card companies start aggressively sending out 0% balance transfer letters.  I got one from my Capital One card that offered me 0% interest for 18 months, with a one-time 2% fee.  I decided to take an $8500 cash advance ($190 fee)  and pay off that stupid loan right away.  Then, since the interest rate on that card was 0%, I made the minimum payment on the card, and redirected the rest of my payment into a Money Market savings account that earned me 2% interest.  I'll pay off the card in full in July, before the 18 month period runs out, and for the year 2018, I made $150 in interest.

A few things I had to consider before doing this:

  1. I had to do a bit of math to determine if I would have the money to pay that card off in full before the 18 month period runs out.  If I don't pay it off, anything on that card will be assessed something like 25% interest, which I do not want to pay.
  2. I had to take that card out of my payment rotation completely.  I disconnected it from any automatic payments, and physically took the card out of my wallet and stashed it in my office at home.
  3. My credit score took a bit of a pummelling.  My credit limit on that card is $10,000, and I put $8500 on it and paid it down by only about $100 per month.  That looks really bad on a credit report, but since my score was already excellent, it didn't matter too much.  I got a bit of a bump when I paid off the car loan, but not enough to compensate for carrying such a high balance for so long.
Despite those few drawbacks and minor inconveniences, I am 100% glad I did this.  I saved myself hundreds of dollars in interest on that stupid bank loan, and the balance transfer fee is a non-issue since I'll more than make that back in accrued interest on my Money Market savings account.  I had almost enough money in my emergency fund to pay the bank loan in full without involving my credit card, but that would have obliterated my savings, which makes me deeply uncomfortable.  This way, I was able to keep some liquid cash on hand for emergencies (which I did end up needing).