Note to readers: The following is a long question–although really, it’s someone venting. I’m posting all of it (except for some minor edits) with the thought that many of you may see yourself in this woman’s shoes.
Q: I lost my job last May. Since January, I’ve been in grad school full-time, working on my Ph.D. I’m trying to save for a nice church wedding when I finish the program, in fall 2013. I only make $1,650 per month (gross)/$1616.76 after taxes. My car note is $515.74, rent is $615; then I have utilities, grocery, books, gas, etc. Mind you, I’ve maxed out all my credit cards (and they are months behind), and I seem not to be able to get on track.
I recently moved from a two-bedroom to a one-bedroom, which reduced my rent from $800 per month to $615 per month. I got my hair braided to cut down on going to the beauty shop every week. I cut down going to the nail shop from twice a month to once a month. I don’t have a TV, so I don’t have a cable bill. I have a mobile phone and wireless Internet bundle that is $252 per month. I’ve slacked up on eating out. I do cut coupons. I have eaten spaghetti for the past eight days because that’s all I had. I really can’t get a part-time job because I have to be in the research lab. I have a lot of student loan debt that has been deferred. I’ll probably be paying Sallie Mae for the rest of my days. I faithfully pray that I will embark on a career that will help me afford it.
Oh yes, I do pay my tithes.
Please give me some suggestions for student assistance.
A visitor, Baton Rouge, LA
A: You are doing great by cutting your expenses, but that’s after you’ve lived a life you couldn’t afford. And you still need to cut more. Here’s where:
- You said: “I’m trying to save for a nice church wedding.” Girlfriend, you need to go to the courthouse and have the wedding reception at your mama’s house or a relative’s house, with some cheese and crackers, a nice cake and Kool-Aid. I’m serious. You can’t afford a “nice church wedding.” You have too much debt. (“I’ve maxed out all my credit cards and they are months behind.)
You should be paying your creditors back, and on time, rather than worrying about saving for a party, because that’s what you are saving for when you say you are trying to save for a wedding.
Depending on how much you’ve saved so far, designate some of the money for an emergency fund (at least one month of living expenses), and take the rest and begin to pay down your credit card debt. I recommend starting with the card with the lowest balance. Take whatever extra money you have and pay on that, making the minimum payment on the other cards. When you have paid off the card with the lowest balance, take the money you were using for that bill and apply it to the next debt on the list.
- You said: “I cut down going to the nail shop from twice a month to once a month.” Lee Nails is all I’ve got to say. You can’t afford to get any nails done. And by the way, I have like 10 JOBS, and I don’t get my hair done every week.
- You said: “I have a mobile phone and wireless Internet bundle that is $252 per month.” Please call your provider and get that bill cut in half. That may mean going down to the lowest telephone plan possible. It may mean cutting out text messaging. But that’s a hefty communication bill for a single person.
As I said, I think you are making some good headway in curtailing your spending. And I love it that you have remained faithful to tithing. I tithe.
Now you need to get control over your debts.
If you are having trouble with that, visit the “Debt Advice” page of the Web site of the National Foundation for Credit Counseling.
As for your student loans, there are a number of options to help you with paying them off. Although you have a few more years left in your graduate program, I want you to begin gathering information on who you owe and how much you owe. I can’t tell you how many borrowers I talk to who don’t know the specifics of their student loans.
So, I want you to go to the “Repayment Information” page of the Federal Student Aid Web site. Spend some time going through the information, particularly the repayment plan options. For example, starting July 1, there’s the new “Income Based Repayment” (IBR), which is a plan for the major types of federal loans made to students. Under IBR, the required monthly payment is capped at an amount that is intended to be affordable, based on your income and family size.
You are doing some of the right things. Just stay on this path.
(Photo by kate e. did)