Broke-Ass Student

Taking Inventory of My Finances

This week I’ve decided to set aside a bit of contemplative time and quietly review my financial situation.  Every few months I sporadically enjoy kicking my feet up at a coffee house, with my trusty notepad in tow, to scribble an overview of whether or not my financial priorities are being established and my goals are being driven forward.

That time has rolled around, and it’s once again time to review The Good, The Bad and The Ugly. *thoughtfully nibbles on pencil tip* Hmm, so let’s see where these past four months have taken me.

The Ugly – My debt

My debt currently consists of car payments and student loans. I still owe $10,000 on my car loan (fixed at 9%), while two student loans, equaling $5,000 combined, are teetering between 7.9% and 8.1%. These interest rates are ouchie, and one of my top priorities has been to consistently chip away at all this debt.

Yep, I’m one of those fanatics who despises debt, even in the seemingly friendlier form of student loans. 

I’ve been making payments on my car for over a year now and barely dented the balance due to the high interest rate. The plan I initially concocted four months ago was to; 

• Faithfully stash between 10%-25% of each paycheck into a savings account to establish a safety cushion of at least $1,000. This was primarily to break the habit of ’living paycheck to paycheck’. A few unexpected expenses and stumbling blocks cropped up along the way (a tuition payment of $540, being one), but I was gracefully able to take care of these situations and knock my savings back up immediately after. 

• Aggressively focus on tackling the car loan while paying the minimum balances on my two student loans.

And then suddenly, pleasant relief arrived. 

The Good!

I’m elated that a family member has kindly offered to help consolidate all my loans and refinance my payments into a tidy manageable payment every month, at a nifty 3.9% interest rate.  

My financial priorities are now beginning to shift a bit, as this unexpected gift has thrust me more ahead than I had anticipated at this point.

Here’s my current status after four months of starting with nothing (at $0):

¤ Debt – approximately $15,000, soon to be refinanced at a much yummier 3.9% interest rate after this week (The Ugly morphs into The Bad – not too shabby!)

¤ Savings – approximately $2,000 stashed away in an iGObanking Online Savings Account at 5.30% (The Good)

And finally, The Better. I now have a fighting chance of not only opening a Roth IRA this year, but also an opportunity to focus on aggressively funneling the maximum contribution of $4,000 for 2007.

As I delicately sip my vanilla chai, I am finally beginning to glimpse a delicious taste of what LAD (Life After Debt) just might feel like.

=^..^=

Suggested Reading: Why You Need A Roth IRA – Now!