We lack self control. We can't tell ourselves no. Vacations? Sure. Dinner out? Why not! Buy the kids a toy? Absolutely!
The thing is, although we have a ton of debt and make massive payments every month, we don't struggle financially for the most part, so it doesn't seem like it's that big of an issue. Until now. Well, it's still not that big of an issue, but my husband has told me that we can not have another baby (which I want badly) until we move out of this house and pay off our credit card debt. He said if our credit cards were paid off by next year, we could try to get pregnant again next year.
Challenge accepted!
I previously wrote that we were working towards refinancing our mortgage. It will save us $225 a month, once all is said and done. Well, I also decided to consolidate my student loans, as interest rates on my variable loans will be increasing on July 1 and I wanted to lock in my lower interest rates.
I've noticed that MOST random readers come by my blog searching for information on grandfathered repayment plans on student loans, so I thought I'd take this opportunity to write a little more about it.
I'm not sure when the repayment plans updated, however when I attempted to change my repayment plan a few years ago, I received notice that my student loans were in the grandfathered graduated repayment plan and that changing my repayment plan meant I couldn't go back. I wasn't really sure what the difference was between the two repayment plans, so I didn't change anything. Even looking at the two repayment plans now, I do not see a significant difference, except that if I were to choose the new grandfathered repayment plans, my initial payments would be about $40 less a month than what I'm paying now and would eventually reach a dollar more than my highest payment at the end of the repayment period. The payments start at a lower amount and have a higher increase at each step. I've included an image below of what my payments look like under each scenario.
Points to Remember:
1) When I initially consolidated my loans, I was able to consolidate while still in school and maintain my grace period after graduation. I do not believe this is the case anymore.
2) Also, at the time that I took out my loans, all loans were variable rates. I believe they're now fixed rate only. Since I haven't taken out any student loans in the past seven years, I can't guarantee this is the case, but that is my understanding.
3) The only reason I am able to consolidate now is because my first consolidation loan was disbursed in June of 2005. My final quarter of college was summer 2005, and my loans for that quarter were not disbursed until July 2005, so they were not included in my original consolidation loan. If I were to take out more loans to go back to school in the future, I would be able to consolidate again, assuming they were federal loans.
Ultimately, I decided to go with the Standard repayment plan after this consolidation. The loan payment will be a whopping $15 dollars more a month and it will be a fixed payment for the duration of my loan. As you can see from my chart, payments are being stretched out to 20 years again, so my loans are currently scheduled to be paid off a year later than what is currently slated, but once I've paid off my credit cards, I will be able to pay off the student loans faster and hopefully not pay on these loans till 2032 (at which time my daughter will be 26 and my son will be 24).
On a side note, I was reading this article about Private Student Loans. I find it disturbing that so many people are struggling with student loans, and there really isn't anything that can be done about the private loans. But that is a story for another day.
