Graduating from the USC Rossier School of Education last spring

Well, that doctoral program has come and gone and I absolutely loved it. Soon, I intend to post an entry talking about the tremendous experience that I had as part of the University of Southern California’s online doctoral program. It was amazing and really rewrote the entire online learning experience for me. Again, though, that story is for another time. This update is about student loans.

To start, I do not intend to write a series of updates about my student loan repayment experience like I did after I graduated from Monmouth University and Rutgers University some 10+ years ago. Writing about my on-going repayment of the $120,603.31 in student loans that I incurred getting a bachelor’s degree and master’s degree was fun, but I have already provided that type of content to this blog and I do not want to write about the same issue in the same manner again. Also, my personal circumstances during this repayment are much different than they were back in 2006 when I started that repayment program. When I started repaying my first set of loans back in July 2006, I did not even have a full-time job yet. Now, I have two full-time jobs and two thriving small businesses… so yeah, my situation is a little bit different.

What is also different is the amount of student loan debt that I needed to incur to complete the doctoral program. All in, I took on $89,286.86 in new student loans. This number is comprised of $87,360.16 in loan principal, $1,878.84 in capitalized interest, and $47.86 in closing and refinancing fees. For those of you keeping count, when you combine all of the student loan principal, capitalized interest, and closing and refinancing fees that I have had to pay off in my lifetime, that number is $209,890.17.

Pretty amazing, right?

Just for fun, if you want to add in the $28,851.81 that I have already paid in interest during the first set of student loans, then the total amount that I have repaid and am still tasked with repaying is $238,741.98.

In terms of repayment, the first set of student loans took me seven years and one month to repay in full. Those seven years did not necessarily go by quickly in terms of financial time. In other words, repaying those loans was brutal to a young professional just getting his career started – in the nonprofit sector no less. Today, my repayment plan is a little bit different as my first payments began in December 2018 and I expect to have these loans paid in full sometime around the end of 2020 or the beginning of 2021. My estimates are still somewhat off because I am unsure if I want to repay the loans earlier and, to be honest, I am contemplating a few different repayment structures that make more financial sense. Unfortunately, my income is at a point where I can no longer write off my student loan interest as a deduction on my taxes, so paying interest on the student loans really has no financial benefit at all.

But there are other ways to make student loan interest work for you. For example, I own a home now and I have a good deal of equity in the home. If I refinance my student loans into my mortgage, then the interest incurred on the increased amount of the mortgage loan would be tax deductible (up to a point, given the recent state and local Tax limits). Also, I could take out a loan from my 401k and repay my loans that way, too. By doing that, 100% of the interest paid on the 401k loan would go back into my 401k and I would earn all of the interest paid. Either one of these options seems like a better choice than just making payments on the student loans.

That is about it for this student loan update. Again, no regular updates on my repayment this time around, but I might post a random update here and there, so be on the lookout!

This isn’t the actual “sold” sign from my new townhouse, but you get the point

The common theme, though, was the unstable relationship between my finances and my housing situation. What I mean by this is that by not owning the different locations where I’ve lived over the years I was at the mercy of externalities that could (and did) have a direct impact on both my housing stability and my personal finances. For example, if one of my roommates decided to (or had to) leave in the middle of a lease, then their leaving would increase my monthly expenses by a factor based on how many other roommates I had at the time. In other words, an expense that should have been “fixed” in my personal budget was always at risk of increasing based on externalities that were outside of my control.

As a guy who works in finance and who is a maniacal manager of my personal finances, I don’t like it when I’m not in control of my long-term fixed costs and, by consequence, other financial stability-related issues.

At the end of February 2014, my now-former roommate told me that he was finally hired by a group that he had been hoping to get a job with for the past few years. This was a tremendous success for him and a really good, positive moment. This was also a good moment for me because I had been searching the “for sale” listings for a few months at the time that this news came around. In a different scenario, I would have been at my wits’ end trying to find a way to piece together a new living situation. However, after paying off my student loans and feeling financially free since August 2013, I was ready to purchase a home.

The stability that I received in my personal finances from paying off those student loans was great. Yet, it also made it abundantly apparent that I needed to stop renting and buy a home sooner rather than later. Given the high cost of owning a home in New Jersey (if you’re reading this from a state other than New Jersey, you don’t want me to start going into our property taxes), it was always a smarter move for me to live with at least one roommate instead of buying a home of my own. Over the years, though, certain things change. One example of the things that changed is that I’ve gotten older over the years and with that age has come a certain rigidness in what I want in my home. I like what I like and don’t want to be bothered with whatever annoys me! When you live with a roommate, you have to share space and sometimes you can get annoyed by what your roommate does without even thinking about it. Maybe you don’t want to watch the same show on the television or maybe you don’t want to wait for your roommate to finish making breakfast/lunch/dinner so you can get into the kitchen to fix yourself some food. Perhaps you’re not a fan of the state that your roommate leaves the kitchen in when they’re done making their food. The list can go on and on.

This isn’t to say that I haven’t had a wonderful group of roommates over the years. Rather, this is all to reiterate the point that as you get older you change. And as I got older I slowly segregated myself from the entire townhouse that I lived in to just living out of my bedroom. Imagine a very dorm-like situation – I would wake up, shower, and prepare for work all in the same room. When I got home from work, I grabbed a bottle of water from the refrigerator and then headed to my room to catch up on the day’s news, do some work for my small businesses, and then eventually go to bed… just to perform a very similar routine the next day.

I won’t get too deep into the process of buying a house here, but suffice to say that I found a place nearby where I live now that I felt was priced right. I struck a deal with the owner for a few thousand less than the townhouse was on the market for and we’ve were out of attorney review quickly. The home inspection was done and came back stellar, the appraisal was completed and the value is right where I thought it would be and my mortgage company was lined up and ready to fund me. In the space of about a month, I was able to go through the entire searching and closing process. Not too bad.

For the few weeks that I worked through this process, I had a chance to consider how I want to arrange the 3 bedroom, 2.5 bath townhouse that I bought. I had a chance to consider what I want to do with the garage that is attached to it, what I want to do with the living room, dining room, and eat-in kitchen. I also had a chance to think about which family events I want to host on an annual basis and which events I want to host for my friends in the area. Another aspect that I considered is how I wanted to furnish the place and that’s another aspect of the townhouse that I thought about during the closing process. Luckily, my sister-in-law’s twin sister is an interior designer and she came in to help me choose colors, textures, furniture, and more!

Buying a house was a fun time and not such a bad idea. Plus, I now get to write these blog entries from the comfort of my personal home office – which is fully separate and apart from my bedroom and living space!

1. The Overall Setting. More than anything else, I like the setting of my new home and the layout of the structure. In truth, the “setting” of the new house isn’t that much different than the old house. It’s still a townhouse and it’s still in the same development. However, where my old rental used to be an end unit right on the major road going through this development, my new home is the second to last unit in the building and I like that better. In addition, the new place is situated far off of the main road and at the end of a cul-de-sac. It’s much quieter than my previous place, which brings me to my next point.

 

2. Kids… Kids All Over! Look, I’m a fan of kids getting up off their butts, getting out of the house, and running around outside playing. How many more studies do we have to read talking about childhood obesity dooming future generations? When it comes to kids and their health, I think that video games have generally done us wrong as a society. And you might be reading these comments thinking, “What’s the point here, Joe?” Well, the point is that the kids who used to live on my old block were not obese because they were constantly outside playing! And it was annoying!
    
   Let me be clear, though – I’m not contradicting myself with this statement. Yes, the kids who lived on my old block were outside playing and getting their energy out in a healthy and productive way. The issue was that they were always outside and they had that weird thing that kids have in their heads that tells them it’s okay to scream at the top of their lungs any time they’re outside of their houses. That includes the minute that the step off of the bus in the afternoon and, more importantly, the few minutes that they spend waiting for the bus every morning. I don’t have any kids, but I can tell you that the school bus stops on my old street (directly in front of my old end unit, by the way) at 7:57am every morning. I know that time because that’s when the morning screaming would end (and, presumably, start up again on the school bus, but who knows). Suffice to say that one of the best parts of the new house is that there aren’t that many screeching kids running around on my end of the block. It’s… peaceful.

 

3. Arrogant, Entitled People. Everyone has a version of this story. You know how the story goes: you live in a small neighborhood or on a block where the neighbors all know each other and there’s always that one neighbor. The one who thinks that they are entitled to something a little bit more than the rest. On the block where my old rental unit is located that person lived on the other end of the street. How did her entitlement manifest itself? In general, she believed that she was more important than anyone else. The best example I can give was during one of the major snowstorms that we had a few years ago. Everyone who lived on our side of the block moved their cars to visitor parking so that the snow plows could come through and clear out our spots. That process worked well until Madam Entitlement moved her car into our spots (I write “our” spots because at the time I had roommates)! We left a note on her car asking her not to do that because we needed our spots cleared out as much as she needed hers cleared out. Of course, like the Empress of the Street that she believed herself to be, she left a note back to us explaining that we don’t own those spots and that she has important work to do and needs access to the main road.
    
   I was waiting to read the line in her note saying, “And in case you were wondering, the answer is yes – my feces do smell like the Queen’s roses.” That’s how full of it that woman was – and still is, I’m sure. Getting away from a self-absorbed, self-obsessed fool like that was an added bonus for my move.

 

4. People With Too Much Free Time.

A closely related type of neighbor to the entitled kind is the neighbor who just has a little bit too much free time on their hands. Granted, I didn’t have many of these folks living on the old block. There was one person, though, who seemed to fit this bill. Whenever there was a bad snowstorm or whenever we had the parking area repaved and had to park on the main road for a few days, she would stand outside of her house and encourage people to call the homeowners’ association to complain. I don’t have a great deal of angst or anger towards someone like that, but I do think that they need to understand reality a little bit better. What constitutes a major crisis in their eyes may just be a minor inconvenience in my eyes. In fact, it may not be a problem at all in the eyes of someone else. It’s all a matter of perspective and people with too much time on their hands have a very bizarre perspective sometimes.
 

5. The New Place Is Newer! This may seem a little obvious, but the new place is newer than my old rental. It was built almost 20 years after the townhouse that I was renting was built. That means that I have different, better perks over here than I had in the old place. For example, while the old place had one assigned parking spot, my new house has a garage with a driveway that I park in. Another example – the old place had a standard, wood burning fireplace that worked relatively well, but was a filthy mess to clean up. The new place has a gas fireplace. It’s incredible.

 

6. It’s Mine! It’s pretty cool that I own this place. And yes, I understand that I own everything on the inside of the townhouse and my homeowners’ association owns everything outside of the walls. I’m cool with that arrangement because I get to customize the inside of this place and make it my own. And that’s just what I’ve been doing since I moved in. For example, I’m writing this blog entry from my new home office and I’m putting this office together the way that I want. Before I came upstairs to write in this office, I was downstairs in my living room that is furnished with brand new furniture that I bought and sits in a room with walls that I painted with colors that I chose (okay, my designer chose the colors – I just approved them). When you’ve rented for the better part of the last 15 years, having the freedom and mobility to do whatever you want inside of your own home is pretty great.

There you have it – 6 reasons why I’m glad to live in a house I call my own. In the future I’ll write about the financial impact of the purchase and why last spring was the right time to buy for me. Stay tuned!

Robert Shireman, a senior adviser to Secretary of Education Arne Duncan, says he expects the default rate, which reflects the early part of the recession, to continue to rise. “When people are facing a job loss, figuring out how to pay their student loan is not No. 1 on their list,” he said.

That’s right. For better or for worse, the last thing on many people’s minds at this time is their student loans. Like Mr. Shireman reports, if you’re losing your job and you’re at risk of going into default on your mortgage, then the last thing that you care about is paying back a student loan that is ten, fifteen, or twenty years old!

But you’ve got to make those payments, folks. Student loans are among the few pieces of debt that cannot be discharged in a bankruptcy filing. Further, the government can (and will) garnish your wages if you default on your student loans.

All of this gets back to a point that I’ve made a few times in the last few weeks on this blog – that one of the best ways to stimulate the economy would be to cancel some, if not all, student loan debt for existing borrowers. And this point is related to something else that I think many of us stunted by student loan debt understand that the rest of the people out there don’t get yet – namely that even with all of the stimulus plans and other money being pumped into the economy, those who have a great deal of student loan debt are not going to be able to contribute to the economic recovery.

Now, if there were only a few of us, then the effect wouldn’t be so bad. But the number of people with out of control student loans is growing and that is not a good thing for the economic recovery…

Credit cards are great tools to help build a credit history, but they have to be used properly or they can demolish a person’s financial status. Anyone who knows how to use money to their advantage can tell you that not all debt is bad debt. Sometimes a person can use debt to their advantage (for example, the right types of student loans and home mortgages). Consumer debt, though, is a different story.

The right types of student loans and home mortgages are investments in the long-term future of you and/or your family. Consumer debt, though, is more of an investment in the here and now – this is why it should be used sparingly. Sure, everyone falls victim to the use of consumer debt to meet their immediate wants. Hey, I spent a great deal of money buying a television last month just because I wanted it! Well, the old television was broken, too, but that’s a different story. That said, though, I do not believe that people should avoid credit cards. I think each person should have one or possibly two credit cards, but no more. I keep one to both maintain a good credit history and just in case I need access to a large dollar amount quickly (since I don’t keep much cash in my checking accounts – the money stays socked away in the savings and investment accounts).

In any event, I thought the USA Today article was pretty good and wanted to share. Enjoy!

Example #1: Spent time reviewing applicants and deciding whether or not they would fit in with the company’s mission statement

In this example, someone is seeking a job in human resources and is describing one of her regular tasks at her previous company. However, remember that your potential employer does not read your resume to read a description of your previous job. Instead, they want to know about how effective you were at your previous job.

Resolution #1: Hired 14 staff members over a 5 year period including 3 executive level positions; managed an average of 4 employee complaints per month; designed and successfully implemented an annual department review program

The resolution tells a little bit more about what you actually did while in that position.

Example #2: Managed a loan portfolio and analyzed potential new borrowers for the company’s various loan products

Blech! All this tells the reviewer is that you went to work each day and did your job. How exciting?! Talk about what you managed at work and describe your analyzing.

Resolution #2: Manage a $60 million loan portfolio including $30 million in residential mortgages, $20 million in federal grants, and $10 million in commercial real estate; analyzed new business opportunities through cash flow statement and audited financial reviews and background credit checks on applicants

This resolution gives specifics and tells the reviewer much more about your daily work load.

Quick, pertinent details are what you’re looking for in your resume. Keep it simple, but make it count!

This post is also scheduled to appear on GradSpot.com – Your destination for life after college with all the content, tools, and services you need to ease your transition from college to the real world.

New Jersey seems to be ready to confront that problem head on. Last week, the New Jersey State Senate passed a bill that would require the equivalent of Finance 101 for New Jersey’s students. As reported on the Asbury Park Press website:

High school seniors would be taught how to write a check, manage credit card debt and obtain a mortgage under a bill advanced in the New Jersey Senate.

The Senate Education Committee approved a pilot program in personal financial education despite concerns about overloading the high school curriculum.

I often draw on my experience in advising college students, but one of my previous jobs was working for a real estate management company. One of our core businesses was renting houses to college students. We used to have college kids (majoring in business and finance, no less) walk into our offices to pay rent and hand us blank checks because they didn’t know how to fill them out. Really!

The mortgage portion of the new Finance 101 course will be interesting to watch unfold. I can almost hear the banks salivating at the idea of young, unworldly individuals becoming “pre-certified” in their first-time home buyer’s program – before even stepping foot into college. I’m a major proponent of First-Time Home Buyer’s workshops because they are effective in weeding out problem borrowers. In fact, I was at an event last week where the attendees were talking about how the studies are all showing that the mortgage meltdown mess is not hitting the first-time home buyers and those who have graduated from first-time home buyer programs. Talk about a good investment in the future, huh?

The Finance 101 course could be great. I hope that it succeeds as a pilot program and quickly spreads around the rest of the state and the nation. The more people know about money, the better off they’ll be in this world.