Monday, August 30, 2010

30 something and in Default

I rode the emotional roller coaster with all of my student loan lenders today. Since I started taking stock of all my loans including their balances and monthly payment amounts, I said to myself “why stop there?” So I called Sallie Mae and found out what type of loans I had – private or federal.  I had a slight glimmer of hope in my tone as I had read about extended repayment terms being able to lower payments.  So I asked the rep if any of the loans qualified for extended repayment terms. The rotten fruits of my labor are in the chart below.

Ugh. Now, I’m even more depressed. Two of the loans don’t have a cosigner and are already at the max repayment term so I have no choice but to default on those loans. Not because I don’t want to pay, but because I can’t afford to pay. Unfortunately, those 2 loans are also federal loans so they’ll probably end up garnishing my wages and my professional license could be in jeopardy (seems ridiculous b/c I need my license to make money and if I don't have it I can't pay you anyway). But right now, my focus has to turn to the loans that my parents are cosigners on. I absolutely can’t default on those and those are the loans with the highest payment amounts. The only loan I’m not worried about is Access Group as that balance is reasonable and I can afford the $60 a month payment even if I end up working at Target. I'll see what I can do about paying that balance off in the next 9 months (270 days) – which coincidentally is how long it will take for the two federal loans to be considered “in default.”

I stumbled upon some decent resources so I could know what to expect during the default process: The US Department of Education Debt Collection Service publishes a guide called Guide to Defaulted Student Loans and Defaulting on Student Loans on also has information on Student Loan Debt Settlements. I was quite surprised to find Student Loan Borrower Assistance as it provided the most useful information. Definitely bookmarked that site. I also have to say I was super excited when I stumbled upon was created by the nonprofit, nonpartisan Project on Student Debt to help student loan borrowers learn about two new federal loan programs: Income-Based Repayment (IBR) and Public Service Loan Forgiveness (PSLF). Like the tension build up before the slaughter in a horror-film, I ecstatically filled out IBRinfo's web-based calculator. I put in all the information, which I conveniently had at my finger-tips thanks to my nifty spreadsheet (softly play music from Jaws). I eagerly pressed calculate and awaited my fate (volume of Jaws music increases). Then suddenly, the fatal bite from the unyielding student loan beast – “Based on the information you have provided, you would probably not qualify for IBR.” Damn! Damn! Damn James! On a whim, I kept increasing the number of dependents to see how many kids I would have to have in order to qualify. 3? No. 4? No. 5? No. 6 – Ding! Ding! Ding! Correct!! I would have to have 6 kids in order to qualify for a payment of $640!!! Does this reinforce a welfare mentality or what? Because if I had 6 kids I certainly would not be able to have a job other than my own reality show about having 6 kids and not being able to afford anything (I must note that reality shows pay WAAAAAYYYY more than any career in the legal profession so this is now a viable option for me; I wonder if I can get my husband drunk enough).

I would almost be better off with 6 kids and taking a lesser paying job (but seriously, is $86K a lot these days? That’s before taxes and deductions – after all that is taken out I’m bringing home about $57K THEN all the bills start). Just another reason why I can’t afford to be middle class.  I am living the statement that Today's generation will most likely NOT be  better off than their parents.  Forget the 20 somethings - what about the 30 somethings!!

Thursday, August 26, 2010

Cosigner Nightmare and Plan C

Many parents dread having "the talk" you know, about S-E-X, with their kids.  But trust me, nothing is more dreaded by the kid than having "the talk" with their parents about you know, the student loan debt that they can no longer afford to pay that their parents cosigned.  Well, I just had "the talk" with my parents last night followed by a 6:30 am continuation phone call by my father which ended in me crying, talking about suicide, and dropping F-Bombs (soooo out of my character, well at least in front of my parents).

I thought I was being smart by calling my Mom on Tuesday and letting her know that I would call her later (meaning 2-3 days) to discuss a strategy for paying the student loans since the payments increased so drastically.  I completely had my business professional hat on and was focused on laying out the issues and developing a plan of attack.  I was being proactive for a change by attempting to get out in front of the problem before the next bill was due instead of hiding the unopened bills in a shoe box like I usually do.  Well my mom, being the awesome parent she is was one step in front of me.  She called me last night while I was playing with my son on the porch and said, "Is now a good time?"  I really didn't have a good reason to delay any longer so I promptly emailed her the spreadsheet I created. 

I diligently explained my personal budget and how the increased student loan payments weren't going to work (I had been paying them regularly until the increase occurred).  I empathized with them and expressed that I understood that their credit was important and that I could care less about mine at this juncture.  I was purposely being stoic so as not to bust out crying as the whole situation frustrates me when it comes to my parents involvement in this hellish matter.  Then she drops it on me...she tells me that the reason why their credit is so important is because the loan on their home is reviewed periodically and if their credit is bad, their rate increases.  Now couple a new higher mortgage payment along with these high ass Sallie Mae payments and not only is my life ruined, but so are the lives of my retired 60 year old parents.  Shit, I was counting on moving in with them after Sallie Mae takes my house and now they may not have a roof over their own heads! Damn you Massa Sallie Mae - Damn you!!!! How do you fuck up my Plan A life and my Plan B life in one fell swoop! Not to mention my parents' lives as well!  This company is definitely the Devil's Spawn!! Dave Ramsey's voice and the scripture "Borrower is Slave to the Lender" keep replaying in my head.  There is no way the birds and bees talk is more difficult than this discussion because at least you don't have to explain taking it up the butt!

The conversation concludes when I restate the obvious, "So where are we if we can't default and we can't afford to pay the bill?"  An unsettling silence follows and my mother states, "Well, that's the end of that conversation."  We both hang up.  Three minutes pass.  Then a flash of brilliance.  My mother calls back and says, "How many loans are we the cosignors on?"  I tell her I think all of them, but that I would call in the morning to confirm.

The next morning arrives with a phone call from my father at 6:24 am first my cell phone, then my house phone where he leaves a message to call him back as soon as I get the message.  Clearly, I ignore it and go back to sleep.  He calls me again at 7:09, same scenario - cell phone followed by house phone.  I ignore it again.  I finally get up and get dressed and call him back.  He tells me that he didn't sleep at all and that he and my mother walked through the house after the conversation last night trying to figure out what they could sell.  My heart drops.  Then he says that he was even thinking about finding a job and coming out of retirement.  My heart stops.  NOW MY WHOLE FAMILY IS SALLIE MAE'S BITCH!!!  He then chastises me for not apologizing for this situation and not sounding remorseful.  I understood his point, but I'm $190K past remorse.  Plus, remember I had my business professional hat on so I could focus on a solution so all my emotions were checked at the door.  Anyway, I told him I did say I was sorry, but honestly, I can't remember if I said it or not.  He backhandedly berates me by saying I'm a smart girl and I should have kept better tabs on this loan situation.  I try to be my stoic self and appease him by cheerfully saying, "Yes, you're right." (Um, not sure if I should feel bad about not being smart enough when there is a whole movement and thousands of articles and web comments about predatory lending practices of Sallie Mae and other lenders.)  Then it happens.  I lose it.  I go off talking about I have no F-ing life whether I'm dead or alive b/c of this shit and that no one signed up for this and F-this and F-that.  Damn, the one thing I didn't want to happen - I didn't want to lose my cool.  I feel like Sallie Mae takes even more from me when I do that.  My father is clearly not moved by any movement or other people's situations no matter how similar to ours because none of that is going to help him keep his house.  I quickly gather myself and say, "yes, you're right" to his remaining statements.  I end by telling him I'm glad he was able to get it off his chest (it being "shit" which is now all over my face, but hey, at least one of us feels better).

Today I received the best news I've ever heard from my lenders - matter of fact, its the only good news I've ever gotten from them.  It almost tops when the doctor told me I was pregnant!  My parents are cosigners on only two of my loans!!!!!  Default city here I come!!!  I am smiling ear to ear!  Go Mommy for making me check!!!  My parents are cosigners on the smallest loan which is $6,889 and has a reasonable payment of $60 a month.  They are also cosigners on the 2nd largest loan of $63,760 which payment increased to $506.65 from $282.40.  (I want to reiterate that Sallie Mae added $17,596.00 worth of capitalized interest to this loan that's 36% of the original loan amount - THE DEFINITION OF PREDATORY LENDING.)  Now I have a new outlook, a second wind and fresh perspective!!  I will reprioritize my payments to make these 2 loans the most important and default on everything else. Now, that's a strategy!!  My parents get to keep their home and I'll have a place to live when they come for my house!!  If I can execute this strategy for the next 14 years which is how long it will take to pay this Sallie Mae loan off then I will be able to pick up a payment on another loan.  Oh, by the way, in 14 years I'll be 48 years old.  Thank ya Massa Sallie Mae for my freedom! Boy, am I feeling good and riding high!  Now, I just need to figure out how much money I can scrounge up to help make this payment for the next 14 years.

Wednesday, August 25, 2010

Dead or Alive

I finally counted up the cost.  The complete and total cost for my education to date.  And neither my education nor I am worth $190,461.02!! 

Now, I am grateful for my education but as the cliche goes...had I known then what I know now about finances, payments, interest, capitalized interest and life in general there is NO WAY IN HELL I would have made the same decisions.  And this gets to one of the points of my blog - taking advantage of 21-22 year olds who only want to go to school and have no concept or any real life experience with anything other than school and saddling them with hundreds of thousands of dollars worth of debt.  I can't even afford the payments every month of $2,340.12 ($28,081.44so I know I WILL NEVER BE ABLE TO PAY THESE STUDENT LOANS OFF.

So yes, I was happy to take loans because I was happy to go to school.  But my issue is that I feel I was taken advantage of.  I wasn't informed about  capitalized interest and how it could equal the amount of the loan (who the hell would think that was even possible!!!).  Additionally, when you are unemployed and you need to defer or forbear the loan, that's when lenders capitalize the interest.  Talk about beating me with a nail studded baseball bat while I'm down.  The only other option you have is to default.  I was speaking to a rep at Sallie Mae and I told her I couldn't make the payments.  She told me that I could forbear the loan.  I said, "why would I do that, if I can't afford the payments now, I won't be able to afford them in six months." Sallie Mae however, would make more money off of me because they would capitalize the interest on my loan while it is in forbearance - so its not surprising that the representative offered me this option. She then suggested I get a part-time job.  I told her I already had 2.

Where do I go from here?  Look at that amount owed one more time.  No part-time job (let alone more than one) is going to put a dent in those numbers.  Do you actually think Sallie Mae is going to see any significant amount of the loan repaid? (Well, I actually know that they won't)I see why people commit suicide over debt because they really have no hope for a life when they are already behind 150K+ when they are just starting out!

For me, suicide is not and will never be the answer.  It won't change anything with Sallie Mae as I am just another delinquent account number to them.  And if I'm going to kill myself to get out of paying them, I might as well stay alive and just not pay them - the end result is still the same:

Sallie Mae}  $0    |    SM's Bitch}  No Life

So is the cost of my education really $190,461.02 or is it my life - whether dead or alive?    

Tuesday, August 24, 2010

Sallie Mae's Bitch

I finally added up my new Sallie Mae student loan payments since I was on the graduated plan and they just adjusted after 2 years.  Note: this is just my Sallie Mae payments, I have other student loans not subject to the Sallie Mae's Devil's capitalized interest antics.  Below are my before and after payments.

My total payments increased by 152%!!  From $778.00 to $1,967.91.  That is another mortgage and since I already have one mortgage (and daycare which is like a mortgage) it is clear to me that I will be in default very soon (or putting my child on the black market). 

What's sad is that I actually have to call my parents to discuss a plan of attack because they were helping me pay Sallie Mae 2 and they can no longer afford to help with the increased payment.  And if I default on the loan then their credit will be adversely affected.  Now, I could care less about my credit being screwed up because thanks to the teachings of Dave Ramsey, Christian Finacial Counselor, I have freed myself from the mentality that I am my credit score and pay for everything in cash now anyway.  My parents however, live and die by their credit score since they are on a fixed income (which I don't understand because if you are on a fixed income then you don't have any new income coming in therefore you shouldn't be incurring any additional debt since you have no new income to pay for it; hence why does your credit score matter?). 

Seriously, do you think millionaires worry about their credit score?  Nope, they have something called a Positive Net Worth.  The rest of us underlings, I mean everyday people, scurry back and forth frantic over our credit score instead of worrying about our net worth.  As the Bible says, the borrower is slave to the lender and as you can see I'm clearly Sallie Mae's Bitch.      

What's pathetic is that after speaking to Sallie Mae I may have more options if I actually go into default!  Hello!!! Does anyone see the issue with that besides me??  I mean isn't that EXACTLY what the issue is in the mortgage lending industry????  Help me out BEFORE I go into default!! Hell, I'm trying to pay you, I may even want to pay you (well, that's just a blantant lie, but you get my point) so why won't you help me out before I stop paying you??  Forget logic, Sallie Mae just doesn't have common sense.

Sunday, August 22, 2010

Maintenance Woman

As a self-labeled anonymous blogger (to protect the innocent - like my spouse and the fact that I would like to procure a job that pays waaaaaay more than I'm making now so that I can actually get out of debt and with companies googling candidates now I doubt they would take to kindly to blog about a $190K+ student loan debt load as apparently it would be perceived as a major character flaw and could be an indicator that I'm more likely to embezzle - at least that's always what is insinuated on Law & Order) I still want to develop a personal connection with my readers, so here's some background about me.

I am in my mid-30's, married with a son who is almost 2.  I have a B.S. degree in Business and a J.D.   My husband has been working for the same company for 13 years (which is unheard of from our generation) and has a B.A. degree.  We've been married for 5 wonderful years.  My parents are still married and are retired. My husband's parents are still married and his mother is retired and his father was laid off this year.  My husband and I both have 2 siblings a piece.  I had a pretty normal upbringing as far as I can tell, which is pretty much not the norm these days. 

I worked full-time and paid for college so thankfully, I don't have any undergrad student loan debt.  I also worked a part-time internship during law school, but $10 and hour usually only covers your transportation and a meal or two.  I am no stranger to hard work as I started working at age 15 at the McDonald's by my house.  Since then I've always had a job, sometimes 2-3 and even as many as 4 (like when I was pregnant).  Since having my child though, mommyhood is first on my priority list so I'm purposely limiting my jobs to 2 (I need to be around so I can drill into him that student loans are from the devil).

I enjoy my current job where I run a very profitable department at a non-profit.  And thankfully, I've survived about 4 rounds of layoffs there.  I have great friends, many of whom I'm discovering are in the same situation as me but no one wants to talk about just how much student loan debt they have and degree of frustration or depression its causing them.  My answer to the "describe yourself in one word" question is Maintaining.  Not progressing; not going backwards; just maintaining.

Saturday, August 21, 2010

Ridiculousness @ $202,453.48

Damn!! Did you see that number!! $202,453.48 - ARE YOU SERIOUS???  94% of that is student loans!!!  And the worst part is, is that that is just today's number.  With "capitalized interest" tomorrow it will be a new higher number.  Too bad interest on my bank account doesn't work that way. 

So essentially my law school education was worth $190,306.27.  That's a far cry from the $86,000 salary that my non-profit job pays me.  Perhaps, I should ask for a raise.  Let's see, the company hasn't given raises for the past 2 years, we just had our 4th or 5th layoff in as much time and that includes flying through 2 CFO's and our 401K is currently on the chopping block.  I'm surprised I'm still getting paid at all, so asking for a raise is not even a consideration.  My student loan payments keep adjusting upward (hubby's went from $276 to $933.04) but my salary isn't.  

When I told my hubby about the increase in his student loan payment he just laughed and said, "whatever, we'll just keep paying what we've been paying".  I'm glad he could see the humor behind such a ridiculous payment amount.  I laughed because Sallie Mae is ridiculous for thinking it would actually get paid that amount.  I'm not trying to run from the debt, but clearly, that's waaaaay out of our reach.  And the drones that work for Sallie Mae always say there is nothing they can do since the loan is a private loan and the investors only allow certain things.  This is the exact same set-up that was in place in the mortgage lending industry and look what happened to them (e.g., loan modifications).  With all the attorneys out of work (and even those who are still in work like myself, but who still can't afford to pay) I wonder if Sallie Mae investors will offer some modifications.

What sucks out of all of this is that my parents are co-signers on several of the Sallie Mae loans.  They are retired and are on a fixed income and are from the generation who bow to the almighty credit report.  So they freak out when a blemish to their credit report is even threatened.  Now, I am not trying to stick my parents with the loan payments nor can they afford to pay them, so what exactly are the options that I have left? (Note to self google "fake own death" later)

Dah well, I'm looking forward to Sallie Mae's collections phone calls - all 933 of them.

Thursday, August 19, 2010

At Rock Bottom & Fed Up

Wow! Never thought I'd be in such a mental space that I would take the most exasperating phase of my life and post it on the web for all to see.  But here I am - at rock bottom and completely fed up.  I'm fed up at the fact that I financed my American Dream (through student loans) which is now My American Nightmare.  I'm angry at the fact my retired fixed-income parents are caught up in my debt storm because they co-signed my student loans with nothing but the purest intentions of trying to help me become the first attorney in our family. 


and weary that so many of my friends are in the exact same situation.  I've been hoodwinked, bamboozled, led astray and sadly, I have no one but myself to blame (although its so much easier to point the finger at years of mass over spending and instant gratification by the American population in general even if its not any less comforting).  I was an uneducated consumer when all I wanted was to consume my education.  And now, the cost of my education is consuming me - literally.

My blog will chronicle my seriously unrealistic attempt to get out of debt (unrealistic because I'm in sooooo much debt due to law school loans).  The emotional turmoil, the extra and odd jobs, the practical tips for frugal living and my heart breaking realization that I truly cannot "afford" to have another child.  I will also do the unthinkable...I will post all my real-time finances in my blog (as soon as I figure out how to do a spreadsheet in this thing).  No one wants to say how much they make and how much they spend and what they spend it on - discussing your own money issues with other people is taboo.  But since I'm fed up, I will do so - openly and honestly.  I'll post my paystubs, bills and receipts and my bi-weekly budget (in all its negative glory); you'll see my household income and all our expenses.  Open for you to comment, critique, and make suggestions (and maybe even job offers???) hopefully with the intention of helping me get out of debt faster.

As I said, I'm at rock bottom and if I keep doing what I've always done, I'll always get what I've always gotten.  So now, I'm trying something different for myself, my sanity and for those out there who are just average Americans like myself who have been treading water for so long now we have no idea what being on top feels like and the laws make it impossible for you to drown yourself (student loans aren't bankrupt-able).

I will post my income and expenses in the My Debt tab and will keep a running calculation of the debt payments made and the current total.  This is definitely a sobering and humbling experience.