Can I Get It OFF Credit?

I paid off my student loans in January, but it seems I replaced one type of debt with another.

I attended PAX East in Boston in April. The hotel room for 5 nights ran me about $1,500, which I then matched for spending money to use on convention goodies, a trip to the casino, and food.

In May, my car's alternator failed. It ran me roughly another $1,000. Now as I'm approaching inspection time, I also had to put new tires on it ($600). These items, along with some recreational spending, has me in the neighborhood of $6,000 in credit card debt.

I have to make compromises in order to work on this debt. My emergency fund contributions are now 1% of income (which covers my Keep The Change feature at my bank). I've also put a freeze on new cryptocurrency buys, at least until I cut this debt in half. The market is chaotic at the moment, so it's probably a good idea to back off anyways.

But there is good news on the moving fund... IT'S OVER $9,000!

P.S.: I have full confidence with debt will be paid by my birthday (March). I am expecting a refund on my student loan payments and my annual bonus. I even started a new savings challenge to round things out.

What If Biden Cancels Student Loans?

Before I begin, I want to say that I understand it was my responsibility to pay off my student loans. Did I miss exit signs during my early college years? Yes. Could I have taken my priorities more seriously? Yes. Could I or should I have switched majors? Yes. But now that’s over a decade ago and my student loans are paid off. But with how recently I paid them off and recent news of loan cancellation, it would be nice for some of that money to come back.

In short, the President can forgive up to $50,000 per borrower, but Biden is leaning toward a modest $10,000.

Worst case scenario: no balance means no forgiveness. I'm no longer burdened by my loans, but with forbearance still in place, I could have continued small payments in hopes that some broad cancellation happens. This would have extended my loan by another 2-3 years.

For the middle of the road, we have to consider what amount is being forgiven. It could be based on the number of payments I made. Following the post-graduation grace period, I would have made 13 payments. Since consolidation, I made 97 payments on my student loans, for a total of 110 payments. The Public Service Loan Forgiveness program requires you make 120 payments and that you’ve worked in a qualifying field. Given that, this scenario might not get me a refund.

But what if it’s based on a set date, like the balance as of December 31, 2021? In that case, I could stand to get back $4,906, the amount of my final payment from January.

Best case scenario: I get the full $10,000.00. But again, does it go back to a certain date, or would I see something for ever having the loans?

In these last two scenarios, any money returned to me goes through my windfall strategy. I keep a fifth for myself then apply the remainder to my financial goals, first paying down my credit card, then increasing my emergency fund.

Open House Open Walls

The search for a house of my own continues!

Last Saturday, I went to an open house. This is the third house at which I looked, but the first one where there were other buyers on site. The house was listed for about $80,000.00 and described as a Handyman's Special. I don't mind putting some handy work into a house if it means getting it for cheap. However I quickly realized how special this house is.

It looked decent on the outside. Immediately upon entering, I noticed the crumbling ceiling and dangling light fixture above my head. The living room appeared to be in decent shape, but the kitchen floor definitely needed to be torn up. There was a breezeway to the garage, but the door was boarded. The garage had to be accessed through the back yard. The garage door itself was not present, but instead was a giant sheet of plywood.

The basement was a cramped space with no windows. The foundation was cinder block painted in a checkered pattern, on which someone (rightfully so) wrote THIS IS UGLY! My head brushed a pipe as my feet found the floor. The realtor pointed up to the pipes and noted the asbestos wrapping. The bulkhead to the outside was boarded off in the same way the garage was. The appliances were down here, but had I moved in, they wouldn't have stayed there.

In brief, the whole house was a patchwork of floors, walls, ceilings, and windows that needed to be replaced. I had to guess if they were asking for $80,000, it would probably take my whole $120,000 pre-approval to compete with the other buyers and maybe another $40,000 to bring the house up-to-date. This means I wouldn't be able to get this one. If there was one upside, it at least had a spacious bathroom. The realtor appreciated my search for the silver lining.

TL;DR: Went to an open house, realized the repairs made it too expensive.

My Home Down Payment Progress

For a couple years now, I've been using a bullet journal to keep track of important things happening in my life. One page of my current journal has a progress chart for my home down payment. Today I'm giving an update on that progress and how I track it on the sheet.

First off, notice the outer most rectangle. It measures 25 squares by 20 squares. Since the outer rectangle represents my ideal payment of $25,000.00, each square accounts for $50.

Each time I make a deposit to my high-yield savings account, I mark off a region and label it with a reason for that deposit. I started off on "9/20" with a $100 deposit. Some squares say CASH or $$$, which is money set aside from lottery winnings or odd jobs and usually held until I make my regular monthly deposit. The regions snake across the page, which leads to the bends in some of the shapes, like "BONUS" for example.

There are also two dashed lines. The bottom line represents $6,250, or 5% of $125,000. This is the minimum I need for just the down payment. The second line is another 5% to cover closing costs on top of the down payment.

So right now I have $3,400.00 saved towards a house. I can definitely see hitting my $5,000.00 goal for this year, but crossing the first line will depend on how fast I pay off my student loans.

Spending My 2020 Tax Refund

 My tax return was filed last week, and I am happy to report I'm receiving a federal refund of $857! What am I going to do with the money?

First, I'm going to cover the $160 I spent to pay the accountant.

Next, I'm going to take $140 for fun money. A proper office/gaming chair sounds good right now!

After that, I'm boosting my home down payment by $300. Note: this isn't an even split with my student loans, since my progress chart goes by $50 squares.

Finally, I will make an additional $257 payment on my student loans.

But what about my state refund of $9? I already spent that on a large soda and lottery tickets.

Tax Year 2020 Complications

I thought tax year 2020 would be the most complicated year to date for me.

I had a software snafu in tax year 2019. The software I used (which I won't name here) buried forms regarding marketplace health insurance coverage. Their logic was this: the penalty for not having coverage was removed, so they hid the form as a whole. Since I wasn't asked about my coverage, I never entered the information. So I ended up paying back the marketplace coverage I had and it delayed my remaining refund by six months (peak pandemic time and all).

Thanks to economic relief efforts, I've enjoyed 0% interest on my student loans for most of 2020. The interest I paid during the first few months of the year was not enough to warrant an official tax form, so I had to submit a letter instead. When I file my taxes next year, I assume this will be the same case.

This is also my first year with cryptocurrency. I started off with about $40 in Bitcoin in January of 2020 and by the end of the year my portfolio grew to about $200. When I made my account on Coinbase, I went through the lessons to earn other cryptocurrencies and made some exchanges to get the other coins for which Coinbase offered rewards. Two surprises came from this: Bitcoin is not my largest asset (the honor goes to Maker at roughly 20%) and I actually lost $59 on conversions.

Finally, I received stimulus checks in the last year. I did have to report the amounts of the checks to my tax professional, but I was well within the income limits to receive them.

I am receiving a refund this year, but I will write about how I plan on using it once the money materializes.

Doubling Down Financially

Welcome to my first post of 2021!

This year, I've taken on the theme of doubling down. This theme applies to many aspects of my life (weight loss, reading, etc.), but what does this mean for me financially?

First: Student loans. Once I get my three-month emergency fund locked, my loan payments will be 29% of my income.

Second: Home Down Payment. I saved about $2,500 in 2020, so I'm looking to match that in 2021.

Third: Filling My Big Pig. It's about half-way full already, so I can see completing it this year. That pig is going to be split four ways: food, exercise, dating, and most importantly the student loan.

Of course, it's early in the year, so any of these numbers is subject to change.