Posting schedule

As weekends are generally less in my control, I'm going to aim to post on weekdays only.

That said, since stuff came up yesterday and I'm at home now, I'll do a quick catchup.  

The loan payment went through yesterday, the 17th, and they listed it as having been posted on the 15th, so looks like the student loan payment issues have worked themselves out.

I am also currently leaning towards paying off everything but the large subsidized student loan before going back to school.  That's about 14500 in principal to pay off, clearly a not insubstantial amount, but less than the 38000 that will be remaining.  That will mean when I'm done there will (hopefully) just be one loan to pay off.  It also means with the payments I'm making now it will get rid of about 25% of the debt, but 30% of the monthly payments.  I'm still not sure paying any of it off makes the most sense economically, but emotionally it will be nice to start whittling it down.

Rethinking the asset allocation in my 529

I have a 529 plan for when I return to graduate school in a couple years.  It will be a one year program.  When I initially signed up for the plan I correlated myself with a teenager an equivalent number of years from college.  I now realize this was not entirely accurate.  Turns out 529 plans are frequently designed to theoretically increase the amount even while the child is in college (meaning they continue to hold some stock the first couple years), becoming fully conservative only when the child is in the last couple years of college.  That means they're investing about 3 years more aggressively than I would have liked.  I won't change it now because I don't want to lock in any losses (there have been some) but I will strongly consider putting future additions into the top age bracket rather than a 16 year old one.  I'm not putting the money away hoping it will grow, I'm putting it away so I don't need to pay taxes on any interest, and because I receive a bonus state tax deduction for doing so.  This will be particularly beneficial since I'm moving states this year and will move again next year, I can receive double the deductions (I am socking away as much money as I can in here right now)

Student loan issues

I mentioned yesterday that my student loans were all going into repayment.  Today things got more complex.  When I looked at the payments for the first loan I realized that the amount going to interest and principal varied each month, even though the amount I was paying was the same. And not in an ok I understand they've amortized this kind of way, in a

Date           Payment Amount   Principal amount   Interest amount

9/24/2008        $39.35                      $19.08                  $20.27

8/25/2008        $39.35                      $17.62                  $21.73

7/24/2008        $39.35                      $18.87                  $20.48

6/24/2008        $39.35                      $20.13                  $19.22

5/27/2008        $39.35                      $16.6                    $22.75

4/24/2008        $39.35                      $10.31                  $29.04

kind of way.  Crazy, huh.  So I'll need to talk to them in a couple days to find out what's going on with that.  It might impact my decision on what to pay off.  Also, I called today because the amount that was due today wasn't automatically missing from my bank account this morning and I just wanted to make sure they were going to take it out.  Interestingly, they apparently had no intention of doing so.  The form I signed asking them to automatically debit everything, to ENSURE that I would not miss a payment, they only treat as authorizing the payments due when the form is filled out.  Since the loans that I magically need to start paying now weren't due then, they wouldn't be automatically debited.  

This can be fixed with a verbal authorization (which my phone call counted as) but wouldn't be fixed in time for the payment that day, although they assured me it should go through within a couple days, and that they don't consider payments late until they are two weeks late, so there shouldn't be any associated fees.  I will be checking the next couple days to make sure it goes through, and probably calling again in two days when it hasn't.

This would have been much, much simpler if I had just called the day I realized they were going into repayment just to check that everything would be fine.  Hopefully there will be no lasting repercussions from this little episode.

My student loans

Things got a lot more interesting moneywise yesterday.

While I tend to think of the amount of student loans as an amorphous blob of approximately 53,000 (52255 as of today), but it's actually three loans.  One, a subsidized student loan at 6.5% interest for $3,578, one, an unsubsidized loan at 4.5% interest of 10,715, and the last one is a subsidized student loan, also at 4.5%, for 37,962.

While it bothered me that I wasn't paying them down, it was hard to argue when I knew I had other more immediate goals and the two big loans were in deferment.  However, I went online to check the balance yesterday and learned that both of the big ones are going into repayment, and the first payment is due tomorrow.

So, now that I'm officially paying them off (and probably half of what I'm paying is interest, judging by my payments on the first loan, I feel antsy and want to pay them early.  Even though I know I am doing what I should be doing with my money (saving up so when I go back to grad school I won't need to take out massive loans at 6.8% or higher).

Also, if I do pay extra I'll need to specify that it should go to the unsubsidized loan - I certainly would rather not have interest accruing on these when I do head back to school.

How I used credit cards

Having never been one of those people who were unable to contain their spending when using a credit card, I instead do what I consider most convenient.

For me that means putting every purchase possible on my cards.  I like having a complete list at the end of the month of everything I spent money on and I like being able to pay all of that off at a single time, and knowing exactly what that will do to my bank balance.  In the ten years I have been doing this (I got my first credit card right before starting college) I have never not been able to pay off the entire amount at the end of the month and I have never been late.  By this point I know when the month ends on the two cards I use (I set them to end at the same time) so I go online as soon as possible once the total is finalized and pay it.

Now, I know that studies show people spend more with a credit card, and I think I probably do fall into that category, but here are the reasons I still do it.

First, I only think I pay more with a credit card than I would if I forced myself to use cash for everything.  I think I spend exactly as I would with a debit card.  However, while using only cash might keep me from purchasing something extra at the grocery store, it would also keep me from purchasing something I needed at the grocery store if I had simply forgotten to bring along that much cash.  It would also force me to keep a running total of everything in my cart, including weighing all the fresh produce I buy (and which probably accounts for 60% of my food expenditures).  I would also constantly be concerned about not having enough cash, and would be really stressed during every grocery shopping trip.  Only bringing along enough cash for what I knew I needed to buy would also prevent me from taking advantage of specials to buy in bulk.

Or I could bring huge amounts of cash, enough to cover anything I could possibly want to buy, in which case there would be nothing preventing me from buying those same questionable purchases I make with the credit card, only with the added fear of losing large amounts of cash.

So, the options really come down to credit card or debit card.  I realize there is a difference for some people, but not for me.  I would spend the same, only without the added security features of credit cards, and without the rewards.  I currently use two chase cards.  Using the first I get 5% back on drug stores, grocery stores, and gas stations with the first (so I use it at those stores exclusively).  The second is a chase freedom card, but most of what I buy using that card doesn't fall into one of their categories, so it's closer to 1.25% back.

For those who are interested, this is exactly how my mom uses credit cards.  I think she started doing it when I was a teenager, since that's when I remember talking to her about it (and I'm guessing I asked because she wasn't writing a check).  So, proof that talking to your kids about your financial decisions does pay off.

My first money memory

A while ago I stumbled on this blog entry, and realized that my moment pretty much defined who I was financially for years.

I started getting an allowance when I was young.  I don't know what age, but I certainly had it by elementary school.  So did my next door neighbor, who was the same age.  I don't know what I was spending my money on at the time, but I do know I was must have been spending it, because sometime before elementary school started we were in her room, and she showed me her piggy bank, which had a lot of money in it.  At least, a lot for someone who was probably getting about a quarter a week. 

That's when it hit me.  By not spending my money every week it would accumulate like hers had done, and that was it.  I stopped spending money.  Not completely, but almost.  This pattern continued my whole life.  It's very difficult for me to part with money.  I have never had severe problems with consumer debt because for me the act of paying money for something is physically painful.

On the contrary, I also tend to shy away from doing activities with other people that cost money.  I think this frequently means I don't have as much fun in life as I could, I miss out on experiences that would probably be worth the money, but I'm just not willing to take that chance.  One of the nice things with my boyfriend is I've learned that, practically for the first time in my life, I'm willing to pay something for new shared experiences.

The point, however, is that I seem to come at personal finance from a different perspective.  I didn't wake up one morning and realize I had more debt than I had any hope of paying off, but I've also had to learn how to rethink my relationship with money.

Who I am

Here's what I've decided to share for now.

I am a twentysomething professional.  I could not have gotten the job I have now without having attended graduate school.  My job also requires a lot of writing (hence my reason for starting this blog.  It has absolutely nothing to do with personal finance.  While this technically makes me a trained professional, it does not make me a trained finance professional.  Any advice contained herein is all amateur advice.

I am currently living in an East Coast City and I work for the government.  For this year anyway.  I'm going to start looking for a new job for next year in January.  I am concerned this will be made more difficult because of the current state of the economy, but hopefully my time in the government will have made me valuable enough to hire.

I currently make 70k a year.

My boyfriend lives in a different city on the East Coast, within a tolerable driving distance.

I have about 50k in student loans.  I currently pay only the barest minimum on these.

I plan to return to school at a later point, and pay cash.  I'm guessing I will need between 60 and 65k for this, and saving for it is where the majority of my money is going now.

I think that's enough for now.