[Anonymous]

Not 100% sure this topic is right for this forum – but let me lay it out.

As aspiring, or already CPAs, we are required to get an education. Many of us even have more than 4 years, whether due to career changes or state mandated minimum education requirements to become licensed. Based on this, as well as how expensive an education is nowadays, it is a good bet that most of you, like me, have a negative net worth due to a large amount of debt.

Although partly myth – but mostly true in my experience – accountants are conservative, goal-oriented and can be frugal when they set their minds to it.

So, how did, or do, you deal with your student loans?

I am around two years out of school with around student loan debt in the $30’s. I am on a long payment plan (I think it is 25 years – I should know this!) and have a minimum payment of around 240/month – although I pay closer to $400/month. I recently moved to a nicer area closer to where I work (much more expensive), and purchased a really nice La-Z-Boy couch and am thinking of getting a big screen TV. BUT, I’ve started to feel guilty. Am I being irresponsible? Should I be living more frugally and try to triple my payments?

If I was smart, I’d live in a less convenient area and with roommates (likely chopping my rent in half but also adding to my commute). I’d stop buying shit that I don’t need (my little tv that I bought when I was 14 still works great – only 1 trip a year out of town to see my family would suffice). If I were smart, I’d live super frugally for the next 10 years of my life and put any salary increases towards my loan balance. But then again, I want to live, am easily able to pay all of my bills and save a little each month, and tend to think of student loan debt as good debt (vs. credit card debt, which I pay off completely every month). So although I do feel a little guilty, I’m not convinced I’m doing things wrong. Am I?

I am also curious on how you managed your debt after college.

[Iron_Victory]

The point I attempted to make was that there was more you could have done to reduce or eliminate your student loan debt, you just chose not to do that. And it continues with repayment. There is more you can do, you just don't want to make yourself uncomfortable by giving up anything.

The majority belief that the ONLY way to get through school is loans is disturbing, at least to me. The lenders are great at marketing to you. The schools are good at getting you to take them so they get paid and the burden is off them and on you. Not to mention it increases the likelihood that you graduate giving them better numbers to hook some other poor chap. It is so normalized hardly anyone here thinks they are burdens. In fact they are praising them like the messiah come again.

I think it is good you are investing in your future and your earning power is going up. Though if you can't manage a little bit of money well, what makes you think you can manage more any better? If you raise your income up $30,000 you can bet your bottom dollar you found a way to increase those expenses as well. Effectively bringing yourself to the same position you were in, broke. At least you have nice(r) stuff right? Cause that is what really matters nice(r)Stuff.

It is also interesting to look at the rate of tuition increase. How long before the cost of tuition doesn't justify a degree any longer as it has outpaced the reasonable ROI? Are we that far off? With the general consensus as “take out more loans” the hikes to tuition go with little objection year after year.

AUD - (74),78
BEC - 85
FAR - 86
REG - 84

[Anonymous]

I didn't go to college when my father would've paid for it. Instead, I waited 18 years and then paid for my education at the same time I paid for my daughter's education. I worked two jobs and paid cash as best I could. She graduated debt free and I had a total of $20,000 for both of us. After graduation, I worked two jobs until it was paid on full. My suggestion is that if it is possible.. Work two jobs and knock out that debt while you are young and strong! I did the books for two small businesses at home and put every $ to student loans. Now I am paying for daughter 2 to go through nursing school. It's a little easier but it sure takes away from the cash flow.

[Anonymous]

Your income is actually not a consideration in the determination of a credit score. At least not directly. If you lose all of your income and stop paying your bills, then that is a different story. However getting a really high paying job will not make your credit score go up.

[Anonymous]

Wait, doesn't the payments on a 5 year loan @ $350/mo equal $21K (incl. int.)?

[Anonymous]

Good call Bill. From what I understand, income and debt/income ratio is not considered in the credit score.

[Anonymous]

Sorry ehrman9, I had to go back and pull the info but I misspoke. The proposed note was $450 for 5 years. That would have been around $32k.

[Anonymous]

Ah. For a second there I was more confused than I usually am 🙂

[lobnat]

My wife and I have been paying down our $136K of student loans since we got married in October of 2013. So far we've paid of over 25K to date. If anyone is interested in reading about it, we've started a blog which entails how we are doing it, what is working and not working for us, and other miscellaneous items. Personally debt has really limited taking the next steps in life. So this journey of paying off debt has become a personal goal of ours and has proved to strengthen out relationship, enhance communication, and has opened out eyes to how much money we were actually throwing away on items we didn't really need. It's a lifestyle change for sure. No one will change their ways, until the fear of not changing outweighs the fear of changing.

Studying for the CPA exam and having no life has provided a great way to get out of debt seeing that I don't go out and do anything fun anyway 🙂

Good luck to everyone waiting on scores tomorrow!

http://www.blissfulandbroke.blogspot.com

B - 80
A - 82
R - 79
F - 77

Boom

"No shortcuts, work for it."

[fuzyfro89]

I've thoroughly confused everyone regarding my comment about credit scores and income. Please disregard.

[KBinMN]

It's great that many people want to pay off all their debt or student loans as soon as possible. It's all personal preference though. Can you live with a bunch of debt or does it keep you up at night? I lived just fine with it for a while and then after I saved up a good chunk of money I decided it was time to pay it off.

That being said I'm a proponent of enjoying your life while you can. I wouldn't feel guilty about putting money towards my hobbies. My thoughts are it is easier to enjoy my money now than it will be when I'm 60.

[Anonymous]

KB, nailed it. I think the key is to be more mindful of your spending. I shell out a good chunk of my income on things that contribute to my happiness and do not spend money on others (rarely buy new clothes, rarely eat out other than Jason's Deli salad bar, have roommates at 29, plan on driving my compact car until it dies and will never buy another “new” car.)

Dave Ramsey's black-and-white philosophy works for a lot of people. Frankly, some people REQUIRE the direct “Come to Jesus moment” approach. But it's a little rigid for me.

I mean, AA is a godsend for those that really need it, but a lot of people are able to drink responsibly without it. And liquor is not inherently evil.

[Anonymous]

@Aina – Check out the CapitalOne secured card. I started with 0 credit history and a $75 deposit, which gave me a $150 credit line. I've had it about a year and a half and they've increased my limit a couple times, now up to $700 credit line. The only drawback is a $39/yr annual fee, but I did a lot of research and this one was the only one that everything said reported as a regular (non-secured) card; others, like the card from the bank I worked at, had varying reviews (some said they reported secured; some said they reported regular). However, after a year and a half with this card, and just a couple months with a car loans, my score is a little over 700, so it's worked! I'm considering how applying for a rewards card of some sort without an annual fee (Chase and PNC have good cash back ones) – I use my card exclusively for gas and pay it off every month (at least – sometimes twice a month haha), so a cash back rewards would be a good option.

[Study Monk]

@Kricket

What was your husbands interest rate? Did you cosign?

In most cases car dealers and their related banks are not that picky who they lend to(its a desperate industry). If a payment is missed then they can usually impound your vehicle within 24 hours and the bank still keeps the down payment and the vehicle as collateral. Your husband might even be able to get a mortgage. I severely doubt that he would get a great interest rate on that mortgage. If he ends up paying 1% more because of his credit on a house that costs $500,000 then he will pay more than $100,000 extra in interest on a 30 year mortgage.

It very important that young people realize the importance of building credit not so that they can buy expensive cars, but so they can start a business or buy a home where they can raise their family while being in a position to pay the loan off. The lower the interest the easier to pay off the loan. The better the credit the lower the interest. A small student loan and a credit card where the balance is paid off monthly is a great start…..

I spoke to an ancient wise man who sent me on a mushroom induced journey through an ancient forest to find the key to passing the CPA exam. A talking spider monkey told me to throw the last of my drinking water in the dirt to find what I was looking for. So I followed his instructions and the following message appeared in the soil:

"Do 5000 multiple choice questions for each section"

[univegabw]

I don't have to deal with student loan debt. I paid my entire way on my own while working a full time job. I just slowed down the process to make it affordable. I went the community college route to start then transferred to a 4 year college and in total took 7 years to get my 4 year degree, but I have $0 in debt 3 paid off cars, and a house (with mortgage debt) that I purchased after the market crash of 2008. Also found a way to start up a Roth IRA and 401K all at the age of 29.

The only downside. I'm trying to beat Colorado's 2015 deadline or else I'm going back for more. But luckily I have 130 credits and would only need 30 more 2 of which need to be accounting.

It's possible. My suggestion to pay it off is just throw all lumps of money that come your way at it, tax returns. I even cashed in an employee retirement fund that I contributed no money to and paid the taxes to do so, but it got me past my last semester in the clear.

A- 53, 55
B- Passed!
F- Not Yet Taken
R- 1/17/2015

[Vlakmir]

Iron, you must have been pretty silver spoon fed/young to call people's student loans “a bit of money” and act like the accounting behind your idea even makes sense. I don't mean to come off so terribly harsh, it's just that making the suggestion of going debt free at the cheapest institutions you can find doesn't make sense or account for a ton of different benefits of finishing on time and where you want to be.

That being said, I went to the -cheapest- university available to me, and was happy with it, it was my first choice.

I worked at least 2 jobs and did my own thing on the side, and I still have student loans.

I don't get how you can take $8.00 X 30 hours a week and get more than 10-11k a year, working 45 weeks out of the year.

Now subtract taxes

Now subtract rent and food (at least $500, even living poor)

car expenses

books per semester

The list goes on…..

Tell me how you can break $10,000-$11,000 Gross income into An average cost of $9,000 for in-state, $22,000 for out of state. Hell, after taxes (Social sec, so not even counting income tax because thats refunded at this level of agi) you're down to about 10k flat.

And that's working 30 hours a week. When you're supposed to study 3 hours per credit that's a 75 hour week 45 weeks a year….is that really sustainable….? No. It sucks. I've done it for years now.

I did my undergraduate in a language and a Masters of accounting. a 4 year degree + a 5 year degree in 7 years. I'm 48k in debt. That's under 7k a year.

My school costs were 9k+cost of living+Books.

I made anywhere from 12k-16k a year working and going to school.

So really, I've “paid” about 28k+ in debt for school alone (9kx7 years), + I paid my own living (10k/year-ish), traveling, fun, etc…

If I would've gone Straight debt with no work, I'd be upwards of 1

But the fact of the matter is, I could never make more than 12-16k/year while going to school…that's -alot- for a student…

I got a big 4 offer with a 3.1. Likely because I have tons and tons of work on my resumes, my state is known for pumping out people that are working/going to school because I live in a rural area and that's how it is – noone has money here – so they find good work ethic here. It's quite frustrating to see your assumptions about people making bad decisions or living overly luxuriously. I've lived in a 1 bed room with 3 people at one point in my life for god's sake! Get outta here.

fixed cost $8,800 (cheapest average cost, in-state public university)

+$800 for books

+$400-800 x12 months Rent depending where you live =$6600-$11400

+$150/mo for food? living cheaply…$5/day…..

+Numerous other expenses (car? Insurance? Emergency funds? Do you have any fun ever ever?)

I mean, this is pathetically simple and not considering numerous costs….and we are already what, 8,000 over our -gross- income here?

I didn't even bother doing the math. It's clear you have never had to think about the costs of taking care of yourself

Could you get $10 / hour? Maybe. That would help. Many college towns have at least 10,000 students all looking for work to pay for their living expenses. They are in high supply….with thousands each year graduating with better credentials coming out into the same town you're trying to live in and get a decent job…? Please show me a craiglist posting for a job that will work around your class schedule, still pay you 30%+ over minimum wage, and is only part time that requires a only a high school degree in a college town.

How does an accountant fail to account for so much…..

The only way possible is described above, take it over 7 years for 4 year degree.

At that point you're 0k in debt

But the guy 30k in debt is making 50k+/year for 3 years while you stay at net 0….

So…. 150k+3 years of experience for 30k debt, or debt free….

It's clearly ridiculous to not spend as little time in school, leverage debt, and increasing your earnings potential as fast as possible, start getting experience and promoted and time value money bla bla.

That's why people do it. The only ones complaining about student debt are the marketing majors, AMIRITE?

Could you avoid debt?

A very skeptical maybe.

Does it make any sense to focus your schooling around avoiding debt and taking years of experience and salary away from yourself?

Not at all.

edit; wow sorry long post. It's irritating to see such ridiculousness. Reminds me of my roommates when interning for the big 4

“I was going to pay rent early, can you give me a check?”

“yeah after we get paid”

“Oh, why”

“…..because I pay rent with my paychecks……?”

“Oh, I'm just having them sent to my apartment in my college town while I'm hear. My parents got me a pretty nice 2 bedroom so I just wanted to keep it over the summer”

Roommate then proceeds to complain about being tired from having to work like, oh em gee, for 8 whole hours.

REG - 92
AUD - 90
BEC - 82
FAR - 82
BISK Review Materials
DONE! /Happydance

[Author]

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