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I decided to change my 401k contribution rate from 5% to 10%. This will amount to approximately $675 contributed each month. Although my employer only matches 5%, I know it is a good move in the right direction towards establishing a continuous pattern of saving. I was going to wait until next year but I can’t come up with a good answer for why I should put it off when I am blowing through cash and don’t have sufficient income at the moment for debt repayment.
Why change to 10% when I have so much debt?
It’s easy. I am simply out of control and living way beyond my means. I know that I won’t touch my retirement account so it is safe and out of harms (MY) way. Right now, it is the only method of savings that I have. I am going through the savings in my checking account left and right now with irregular and unexpected expenses popping up everywhere.
- Car Insurance Deductible = $250
- Passport = $100
- Sister's Destination Wedding = $1,600
- License Plate Renewal = $100
- Christmas = $1,000 Budget (just being realistic about this one – saved in ING account for Christmas)
It just makes sense to me to make sure I am doing something right. In my bleak state, here are some good things.
- Everything is paid on time.
- $50k in equity in my condo.
- I have been a homeowner since age 25.
- Graduate from law school in May 2007 – just 6 more months.
- Flexible repayment for student loans.
- Private loans don’t go into repayment until February 2008.
- Car is paid off and I am content with driving it for many more years.
- I am able-bodied to get a second job if necessary once law school is over.
- I have great employment credentials.
- I have the love and support of my family.
In the grand scheme of things, I am doing all right. Things will get better. I just need to stay focused on the big picture.
10 comments:
Sounds like you have everything under control. That is a great place to be. Congratulations!
The jump from 5% to 10% was definitely a good move. Kudos.
Increasing your 401K contributions is definitely a good move. You will be better off longterm for it.
You are doing quite good. Like you said you have the support of your family. It can only get better from here.
Hey, I'm a new reader to your blog. I'm also in school - my second year of business school. Did you consolidate your student loans? If so, who did you consolidate with?
Thanks for the info!
Trixie
Hey, I'm a new reader to your blog. I'm also in school - my second year of business school. Did you consolidate your student loans? If so, who did you consolidate with?
Thanks for the info!
Trixie
Hi Trixie!
Thanks for reading!!!
I consolidated my federal loans last year before the rates went up. I will probably complete a final consolidation once the school year is complete and consolidate my Federal Grad Plus Loan as well.
I used one of the calculators and the weighted average of the federal loans will be 5.4% because my loans from my last year are higher at 6.8% for Stafford and 8.5% for the Grad Plus loan. The other option is to leave those unconsolidated and then I will have approximately $57,000 at 3.5% already consolidated.
All of my student loans are through Access Group. I really like them a lot!
Good luck with Business School!!!
You're doing the right thing. The less money you have available, the less you'll spend or be tempted to spend. I want to up my savings now, but it seems like every penny is budgeted for and I keep overspending...
I kinda disagree. You should be paying off that credit card. Take the card and put it in a safety deposit box so it harder to use. Only use in emergencies. Pay for everything in cash...and do without that Starbucks or whatever else you're buying. Most of getting out of debt is mential willpower...kinda like losing weight. Put that extra 5% from your 401k towards the Credit Card debt. Sorry to be such a killjoy. Good luck.
Thanks for reading. Not a killjoy at all. I appreciate your advice and opinion. It all helps me when I make the final decision.
For an update, I agreed with you and I actually held off on increasing my 401k contribution for the time being. I will post a follow up with my monthly recap.
Happy Holidays!!!
yay, i'm glad you did. it seemed a bit silly to up your contribution past the match solely so you wouldn't touch it. you could have done an automatic payment to ur CC and then you would not have seen the money either..... yay for smart thinking
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