Reader Case Study: Help Me Decide How To Pay Off $185K In Student Loans

Welcome to this month’s Reader Case Study in which we’ll help Bridget figure out how to tackle her student loan debt. Case studies are financial dilemmas that a reader of Frugalwoods sends to me requesting that Frugalwoods nation weigh in. Then, Frugalwoods nation (that’d be you), reads through their situation and provides advice, encouragement, insight, and feedback in the comments section (for an example, check out a previous Case Study).

P.S. Another way to support each other on our financial journeys is by participating in my Uber Frugal Month Challenge! You can sign-up at any time to join the over 10,000 fellow frugal sojourners who have taken the Challenge.

I probably don’t even need to say the following because you all are the kindest, most polite commenters on the internet, but, please note that Frugalwoods is a judgement-free zone where we all endeavor to help one another, not to condemn.

With that I’ll let Bridget, this month’s case study subject, take it from here!

Bridget’s Story

Hi, I’m Bridget!

Hi, I’m Bridget! I’ll be 28 in March and I live with my boyfriend Jack, also 28, in Portland, Oregon. We’ve been dating for five years and live a simple life with no pets or kids. We don’t have concrete plans to get married yet, but we hope to do so in the next few years.

We’ll likely march down to the court house and have a big reception afterwards in someone’s backyard with catered Chipotle. No big dress, no frills, just a lot of fun with people we love.

Bridget’s House

In May, I used every penny I had to buy a 750 square foot home in Portland for $280,000 with a 30 year mortgage and a 4.25% interest rate. I put 5% down, which was $14K. This was my dream, but I’ve been living on a shoestring ever since the purchase in order to fund aesthetic renovations to the house (the house doesn’t require any improvements from a safety perspective).

Bridget and Jack

Jack and I love cooking together and renovating our tiny home. I’m the frugal planner out of the two of us and I make a sport out of minimalism and thrifting. Spending time with family and friends is very important to both of us. We keep our entertainment costs low and don’t have cable or Netflix and we also don’t go out to concerts or the movies. About four times a year, we take a camping or ski trip, which usually totals $100 per trip.

Bridget’s kitchen renovation

I graduated with an M.S. in Public Relations from NYU in 2013 and a B.S. in Corporate Communications from Duquesne in 2011. Jack graduated with a B.S. in Economics in 2011 from Tampa.

I currently work as a Social Media Manager for a healthcare start-up in the urgent care and health insurance field. It’s an extremely fast-paced job and I’m on-call 24/7. I’d really like to move into a more conventional, steady 9-5 in communications strategy/planning over the next year. My current employer offers a 401K plan with a 6% match.

Jack has worked primarily in software sales since graduation. He recently landed a new job and expects to make around $50,000/year (pre-taxes) after commission. He’d ideally like to move into the fitness apparel industry, but is fine staying in tech sales at present.

I recently cut up my credit cards and would like to move towards living entirely debt-free. I watched my parents go through a bankruptcy, lose their home and get divorced and it has scarred me for life. Jack has two credit cards that he pays on time every month.

Bridget’s Long-term Goals:

In 10 years Jack and I would like to be married, living debt-free in our fully paid for house in Portland. Maybe with a kid or two. Possibly with Jack staying home to raise them. We’d also like to have the financial freedom to frequently travel for pleasure.

The Challenge

Bridget on the beach

I currently have $185K in federal student loan debt at a 7.25% interest rate. I had no idea what I was getting into at the time and took bad advice from broke people. The student loans and the house are my only debt. Jack is (mercifully) debt-free. I’ve researched working for non-profits where my federal student loans would be forgiven after 10 years (through the Public Service Loan Forgiveness program).

At this stage, I’m unsure if I should:

  1. Buckle down and start paying off my student loans more quickly while actively seeking out the highest paying job I can find.
  2. Pursue a career in the non-profit space (possibly making less money) and ride out the minimum student loan payments for 10 years, after which time the loans would be forgiven through the Public Service Loan Forgiveness program. If I did this, I think I could pay off my mortgage in 6 years (according to my estimates on how much extra I could throw at my mortgage payments each month).

I’ve gamed out these two scenarios a bit:

If I decided to pay off the loans myself and threw an extra $2,300 per month towards them, I estimate they’d be paid off in 6.7 years. This would be faster than the 10 year forgiveness program. On the other hand, if I used the income based repayment plan and utilized the 10 year Public Service Loan Forgiveness program, I believe I would save more money over time.

Bridget’s erstwhile credit cards

Option #1: Pay off the loans in a shorter timeframe on my own:

  • I’d pay $2,300/month for 6.7 years, which would be a total of $184,920 paid off and without the potential savings of option #2.

Option #2: Utilize the PSLF program:

  • I’d pay $151 to $300/month for 10 years, which would be a total of $18,120 to $36,000 (plus the tax I will have to pay on the forgiven portion, which I’ve unofficially heard is taxed at around 25%, so perhaps $30K in taxes?)
  • Total = $60K-ish of the loan paid off and the rest forgiven
  • I estimate I’d be able to save $276K while doing this ($2,300 saved/month for 10 years)

Bridget’s Questions For You:

  1. How should I pay off my student loans? (see options 1 and 2 above)
  2. Should Jack and I wait to get married until the student loans are paid off?
  3. Should we pay off the house first or the student loans first?

I think I make too much money to be this broke – help!

Bridget’s Finances

Yearly Take Home (Net) Income

Net Income Amount Notes
Bridget’s monthly take-home $3,554.00  This is after taxes and other deductions
Bridget’s annual take-home: $42,648.00 This is after taxes and other deductions

Monthly Expenses

A note on cars and cellphones: I don’t own a car and use the bus to get to work most days and sometimes Jack drives me. My office is 10 miles from my home. I’m currently on my Mom’s cell phone plan and she pays the bill (embarrassing), but I’d like to get on my own plan ASAP.

Item Amount Notes
Mortgage, taxes and insurance $769.00 $1,536.65 monthly payment (boyfriend pays half at $769.00/month); $263,378.08 remaining; $2,621.92 in equity; 4.25% interest rate.
Groceries, household supplies, eating out $300.00 This is just for me. We keep grocery budgets separate because I don’t eat meat.
Student loan payment $151.00 $186K remaining; 7.25% interest rate. On an IBR plan based on my 50k income from last year. This payment will go up in November 2017, likely to around $300.
Bus pass $100.00 I don’t have a car and ride the bus to work.
Home renovations $100.00 We’re slowly fixing up the home I bought including finishing up a kitchen remodel and painting.
Internet $41.00 $82 paid monthly, split 50/50 with boyfriend
Utilities: electric $35.00 Averaging around $70 a month, split 50/50 with boyfriend
Vacations $33.33 About 4 times a year we take a camping or ski trip totaling $100 per trip (or $400 per year)
Utilities: water and sewer $28.50 $57 monthly, split 50/50 with boyfriend
Healthcare $25.00 I work for a healthcare company so my payments are low and I have no known medical issues.
Clothing $20.00 I hardly ever buy clothes but I’ll buy one big ticket needed item about once a year for around $240
Garbage/recycling $16.00 $95 paid quarterly, split 50/50 with boyfriend
TOTAL each month: $1,618.83  
TOTAL annually: $19,425.96

Assets

$100,000 life insurance policy through employer

Asset Total Notes
IRA Traditional $14,784.00
Cash $3,390.17  In a Betterment account earning 0.2% with a time-weighted return at 0.7%
TOTAL: $18,284.00

Mrs. Frugalwoods’ Recommendations

Frugal Hound in the summertime

First of all, can I just say how THRILLED I am to hear from a young reader who is taking charge of her finances now! Hooray! While there are things you can do to improve your financial prospects at any age, time is certainly in Bridget’s favor here, which will be key to ironing our her debt situation–and to building her long-term wealth.

Bridget’s question #1: Student loan repayment

The elephant we want to address is her student loan debt and I commend Bridget greatly for tackling this debt head on. Plenty of folks would simply ignore debt like this, pay the minimum, and hope it’d disappear in a magic puff of unicorn dust (newsflash: it won’t). And so, before we get into the weeds, I want to encourage any other readers facing a debt load like Bridget’s to take heart that you CAN pay debt back and you CAN right your financial ship.

Kudos to Bridget for researching the Public Service Loan Forgiveness (PSLF) program–it’s wonderful that she’s explored these two options for payback. Unfortunately, there’s no one right answer here. The right answer is to pay it back. The strategy, however, is really up to Bridget.

It’s true that she could likely save more money by going the PSLF route. However, it’s also impossible to know what earnings she’d be sacrificing by leaving the for-profit sector. If Bridget is a hustler (and I highly suspect she is), she could climb the ladder and catapult herself into a mid-six-figure salary in a few years in the for-profit sector, which would mean she could throw mega dough at her debt and then quickly get to the business of building her net worth.

Frugal Hound fording our stream

On the other hand, I hear from Bridget that she’s looking for a less fast-paced job with a better work/life balance. And so, aggressively climbing the ladder might not appeal to her. From that perspective, perhaps finding a slower-paced non-profit position would be a better fit. A word of caution here: don’t automatically assume that a non-profit position will be slower paced or will deliver that desired 9-5.

My entire career (prior to doing what I do now) was spent in non-profits and I’ve been at both 9-5 institutions and 8am-9pm institutions. From my experience, larger, more established non-profits are likely to: 1) offer higher salaries, and 2) provide better work/life balance. That being said, they’re also more competitive in their hiring.

I encourage Bridget to continue her research and start looking around at the non-profits that are hiring in her town and in her field. Try to suss out the salaries of these positions and also the general atmosphere of the non-profit. Is it well-established and well-funded (likely to be 9-5 with better salaries)? Or is it more of a bootstrapping start-up (likely to demand longer hours for lower pay)? And, more importantly, is it a cause you’re passionate about?

Frugal Hound scopes out our neighbor’s cows

Similarly, I suggest Bridget start looking around at other for-profit positions. Could she command both a higher salary and a better work/life balance at a company that’s not a start-up?

Another consideration with the PSLF program is that 10 years is a long time. It’s a long time to stay at the same organization (Bridget–research whether or not you can change organizations but still accrue years in the program). It’s also a long time for a federal program to go unchanged. In our current political climate, I’m a tad concerned for the longevity of this program.

I wish I could give you a final answer on this one, but I think there are too many factors that you’ll need to determine on your own. From a mathematical and financial perspective, the right answer is to pay it off. How you get there is largely up to you.

Bridget’s question #2: Should Jack and I wait to get married until the student loans are paid off?

Debt itself is not a reason to delay getting married. If Jack is ‘the one’ and you’re certain you want to spend the rest of your lives together, then there’s no financial reason not to get married tomorrow. I’m delighted to hear that you’re planning on a frugal wedding and it sounds like a marvelous plan!

Aside from marriage, since you’re already living together, I’d advise looking for greater efficiencies in your budget. I imagine there could be savings to reap by combining the grocery/household/eating out line item. You two are a household, so I’d start spending jointly in that arena as I bet you can save more by doing so.

Going to the chapel…

If you’d prefer to pay your loans off with your own money, that’s totally fine. If you’d prefer to pay them off as a couple, that’s also fine. Sit down and have a frank conversation with Jack (you probably already have, but just in case not… ) about the size of your debt and your plans for repayment.

Ask his opinion on how the debt should be paid off. Again, there’s not a right answer here, but there is a wrong answer: not discussing it. An absence of communication is the only danger I foresee. So, iron out how you want to handle the debt–singly or jointly–and then go get yourselves married.

As a sidenote, I think it’s wonderful you two have already discussed the possibility of Jack being a stay-at-home dad. That takes a lot of forethought and it demonstrates that you two have a good, open line of communication. Plus, you’ll save untold amounts of money on daycare!

Bridget’s question #3: Should we pay off the house first or the student loans first?

I have a definite answer for this one: THE STUDENT LOANS. The interest rate on the student loans is 7.25% whereas the mortgage is at a meagre 4.25%. This alone makes the student loans the priority. But there are several other reasons to pay the student loans off first: 1) unlike the house, the loans will not appreciate; 2) unlike the house, the payments on the loans aren’t stable–they fluctuate with your income.

Paying Off The Mortgage?

Frugal Hound looking epic in the snow. Our friend took this photo at her house.

I hear from Bridget that she wants to pay off her mortgage; I actually advise against this. From a mathematical and financial perspective, the wisest course of action is to instead invest her extra money. Many people enjoy the psychological boost of paying off a mortgage, but it’s not a boost financially.

Bridget is suffering from what I call ‘mega debt aversion.’ I completely understand the desire to be debt-free, but the fact is that some debt can actually be a good thing. I also completely understand that she is scarred by the example of her parents and I commend her for wanting to chart a wiser financial path for herself. However, there’s a happy medium between having $185K in student loan debt and having absolutely no debt.

I discussed the folly of paying mortgages off early the other day and I’ve excerpted my notes below:

I view holding a mortgage–and having money properly invested in diversified assets (aka low-fee index funds)–to be a much less risky financial decision. Why? Say you funnel all of your extra money into paying off your mortgage early. Then, two months later, you lose your job and have a health crisis and your car breaks down and you need a new roof. And all of your money is now tied up in a potentially very illiquid asset–your home. While you might be able to get a HELOC (home equity line of credit), you also might not.

There are no words for this

Furthermore, a mortgage is an excellent hedge against inflation. Inflation is when money becomes less valuable and the neat thing about a mortgage is that it’s denominated in the dollars you originally paid for the house and so, over time, as inflation increases (which generally happens), the money you’re using to pay off your mortgage is “cheaper.”

Essentially, it’s not bad to hold a mortgage and it’s actually a fine component of a diversified portfolio of assets. In sum: paying off your mortgage is a lot like putting all of your eggs in one basket.

If Bridget were to pay off her student loans and pay off her mortgage, in ten years she’d have $0 in savings. Conversely, if Bridget were to pay off her student loans and invest the rest of her savings, in ten years she’ll have diversified and robust assets: real estate AND low-fee index funds. Additionally, if Bridget and Jack decide to have kids, as she mentioned they might, having $0 in the bank is a risky way to start a family.

401K

Bridget’s employer offers a matching 401K and I highly recommend she take advantage of it by contributing up to the max that her employer will match. By not doing so, she’s leaving free money on the table. Rather than put money into her IRA, she should be taking advantage of this matching 401K. For more on why you should almost ALWAYS utilize a matching 401K, check out this post.

Build An Emergency Fund

Frugal Hound’s emergency fund

Another reason to table the mortgage payoff idea is the fact that Bridget doesn’t have an emergency fund. I’m delighted she’s saving now that her credit cards are paid off, and that $3,390 is a fantastic start! In addition to paying off her student loans, her other financial priority right now needs to be building an emergency fund. If she were to lose her job, or have a health crisis, or a major repair was needed on her home–she’d tunnel back into credit card debt in a hurry.

Before throwing her extra savings toward her student loans, Bridget should pay the minimum on the loans while building a robust emergency fund.

A good rule of thumb is to have six months’ worth of living expenses in an emergency fund, which would be $9.712.98 for Bridget. Save up this amount and THEN (and only then) start putting extra towards the student loans.

Expenses

Why is there an apple on me?

Bridget and Jack are some frugal folks! Their expenses are quite reasonable and they’ve clearly embraced the frugal ethos quite well. And if we weren’t dealing with the debt situation and the lack of emergency fund? I wouldn’t advise any tweaks to their spending. However, since we are, there are a few things Bridget could do in order to save more every month:

  • Groceries, household supplies, and eating out: $300 isn’t terribly high, but if Jack is also spending $300? That’s a whopping $600 for just two people. I’d suggest eliminating eating out and carefully combing through the grocery and household lists to identify possible savings. As previously mentioned, since you and Jack are a household, I’d advise the approach of combine-and-save.
  • Bus pass: HUGE kudos to Bridget for not taking on a car loan! Gold star here! However, $1,200/year on a bus pass is kind of a lot of money. I wonder if there’s any way that Bridget could bike to work? Or carpool with Jack every day?
  • Home renovations: these need to stop. I completely understand the desire to fix up one’s home–especially one you’ve just moved into. But given her debt load and lack of emergency fund, these need to be put on hold for the moment. Since these renovations aren’t necessary for the safety of the home and are purely aesthetic, Bridget should instead be saving this money. There’ll be plenty of time in the future to spruce up the ol’ abode.

I’m pretty sure my girl Bridget took the Uber Frugal Month Challenge, but if not, take a moment to read through Uber Frugal Month: The Ultimate Guide To Saving More Money Than You Ever Thought Possible for tips on how to save even more.

Conclusion

Bridget is super smart to proactively tackle her finances now rather than waiting until she’s older. To summarize my advice, I think Bridget should:

  • Build an emergency fund while continuing the minimum payments on her student loans
  • Research employment options for: 1) a higher-paying for-profit position; 2) non-profit positions that qualify for the PSLF program. Decide which route she prefers and go for it sooner rather than later.
  • Start contributing to her employer’s matching 401K program.
  • Reduce monthly expenses.
  • Get married :).
  • Pay off her student loans.
  • Invest any extra savings in low-fee index funds.
  • Remember that eliminating debt is only one aspect of a healthy financial portfolio.
  • Enjoy an awesome life that’s financially secure.

Ok Frugalwoods nation, what advice would you give to Bridget? She and I will both reply to comments, so please feel free to ask any clarifying questions!

Would you like your own case study to appear here on Frugalwoods? Email me (mrs@frugalwoods.com) and we’ll talk.

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199 Responses

  1. As someone who helped his spouse pay off $107k in student loans, I wish you luck. Yes, you can continue to accrue public service credit at multiple institutions, but be sure to file the employment forms quarterly to keep a paper trail and be sure to not consolidate after you start the forgiveness program or you risk resetting the clock. We cut out eating out and gave up a lot of.little things to crush our debt. While there is a small risk the PSLF may not exist in 10 years, I think the bigger risk is having children and wanting to not work. Staying home won’t be an option for mom. It’s a tough call. Another benefit to getting married is the tax savings, you might find a few thousand extra in your refund check. Good Luck!

    • Bridget says:

      Thanks, John! I was terrified to air my laundry out in such a public way but everyone is being so kind and supportive. The first step to getting out of debt is to talk about getting out of debt! 🙂

    • S.G. says:

      She also might not. Getting married isn’t always a tax savings. Two professionals working can mean a BIGGER tax bill. If this is a consideration I’d suggest running the taxes both ways before getting blind sided.

  2. Two pieces of advice from my side.
    1) continue to contribute to the 401k as stated. One of my biggest regrets from earl adulthood was ignoring my match to pay off my loans as quickly as possible. After the match and emergency fund needs I’d focus only on the debt. 2) have you looked into consolidated or refinancing that debt. I would think in today’s environment there is a way to make at least some of that 7 percent become 5, even if it’s using a home equity line of credit. The risk is of course monthly payments would no longer tie to income per government plan but if you don’t go the PLSF route this might be very helpful.

  3. Firstmute says:

    One very important note: you do NOT have to pay taxes on debt forgiven under PSLF! Under the standard 25 year forgiveness, yes, but not PSLF. Also, you can switch jobs.

    We are currently working on paying back a large law school debt in this way, but like you the current political climate had me worried.

    • splendidcakes says:

      Me too! Will debt forgiveness be around long?

    • Winifred says:

      Nonprofits also go through downsizing, reorganization, funding cuts, and staff layoffs. I worked at nonprofits both large and small for 20 years and found this to be the case. I’d be wary of putting my eggs in this basket for that reason.

      • @TashaCochran says:

        @Winifred, yes, I’d be a bit cautious about non-profits too, particularly smaller/newer ones for the exact reasons that you mention. But PSLF also covers federal, state, & higher education jobs too which tend to be a lot more stable.

    • Bridget says:

      Thanks so the info! I definitely need to look into it a bit more but am excited to hear this!

    • Melissa says:

      I agree. I took the leap of faith to go from practicing a law as a solo practitioner to becoming a social worker and working at non-profits because of PSLF. I racked up two years in higher ed, so I only need eight years after this (I work for a non-profit now but you need to be paying on the loans to qualify.) I’m very frightened that it may go away. But I had no idea two years ago when I applied for my MSW that things would turn out this way. I chose a state school, only borrowed federal money, and work to make up the difference.

      It may help the writer to note that there are state based repayment programs as well she may be able to tap into if she is going to go into non-profit work. I’d do some Googling and see what other information she can come up with. Finally, working at a college can have benefits beyond that of salary and work-life balance. I worked in higher education for two years and I qualified for tuition remission from one of the two institutions at day one. The other I needed to put in a set number of years. Either way this is excellent information to file away for if or when you have kids.

      Best of luck. I feel your pain.

  4. Ross says:

    I have researched PSLF extensively (because my wife is on this plan) and there are a few important points that I think Bridget should factor in. The PSLF benefit is NOT taxable, so that $30k tax expense should not be there. Also, if you go the PSLF route, you really should think about delaying marriage. PSLF will increase your payments if you file as married. It has really dramatic tax implications. You can always file “married filing separately” (like us) but that comes with a whole host of complications. As for the longevity of the program, that’s anybody’s guess, but my assumption is that once you’re in, any change that they make will grandfather you in (but my assumptions have been wrong before 😉). Let me know if you’d like to discuss further. I’d be happy to share what I’ve learned about PSLF.

    • Sophie says:

      As someone else who has extensively researched the PSLF, my understanding is that the danger re: counting on this is that you are only eligible to apply AFTER you have made your 10 years/120 on-time payments while working for a non-profit, which means that someone who’s currently doing it is SOL if the program gets cut tomorrow, even if they’re on payment 119. I would think that once you apply you’d be grandfathered in (though again, maybe not!), but it’s more that you have to wait the 10 years to even apply that worries me.

      • Kelton says:

        I agree with Sophie. I am currently about halfway through the payments for PSLF, and my husband and I have been discussing the same concerns. Our understanding is that you are not grandfathered in to the program even if you have been making qualifying payments for several years. The paperwork that we have about PSLF states “Se cannot make any guarantees about the future availability of PSLF. The PSLF Program was created by Congress, and Congress could change or end the PSLF Program.”, and you cannot apply until you have 120 qualifying payments. So if the program were to get cut, we are worried that we would be SOL at this point. Se have been married and filing our taxes separately for the last several years, and paying smaller income based repayments that aren’t actually dropping the debt amount. We are currently trying to decide if we want to stick with the PSLF plan given the concerns we have about it, or take my loans on head on and demolish them asap… This article is very relevant timing for us! 🙂

      • @TashaCochran says:

        Hi Sophie, so that’s not quite true. You can certify as you go along. The program website actually recommends certifying regularly–generally yearly–so you have an accurate record of your service.

        • Sophie Foss says:

          You can definitely certify as you go to minimize paperwork on the back end, but all that is doing is demonstrating your eligibility as you go – you’re not actually applying for the program yet. According to the PSLF website, you can’t actually apply until you’ve made your 120th payment (there is no existing application, even, since it was only started in Oct 2007) so no one is yet technically eligible.

          “Will I automatically receive PSLF after I’ve made 120 qualifying monthly payments?

          No. After you make your 120th qualifying monthly payment, you will need to submit the PSLF application to receive loan forgiveness. The application is under development and will be available prior to October 2017, the date when the first borrowers will become eligible for PSLF. “

          • @TashaCochran says:

            Hi Sophie, while yes, you cannot technically apply until you have all 120 payments, the PSLF program is not as iffy as many people make it seem. First off, yes, Congress could in theory eliminate the program and make the elimination retroactive but (1) that would require an act of Congress (which is not a low hurdle) and one that is deliberately retroactive (which is virtually unheard of) and (2) Congress’s actions would have to survive legal challenges in court. Those are both HUGE ifs.

            Let me discuss the second one in particular. When you took out your loans you signed a Master Promissory Note (MPN) for each loan. The MPNs actually contain PSLF as a provision. That means the program is part of a binding contract between you and your creditor (the U.S.). Thus you now have a contractual right to PLSF. That’s not the end of it of course because it’s not a huge deal of Congress breaks a contract if there is no actual harm. But many of us can show harm by saying that we spent X number of years working in public interest (the proof is in the yearly certifications) making less money because we were pursuing a contractual right granted to us in the MPN (a legal concept known as detrimental reliance).

            So my point is that it will be very very very hard if not impossible for PSLF to be retroactively eliminated. It’s just not accurate the way it is currently described as something that can just disappear without warning, because it’s highly unlikely.

    • Casey Doten says:

      The PSLF is what caught my attention most while reading through. I don’t think anyone knows for certain if it’ll be there in the future and if it’s not if they’ll allow those currently repaying to be grandfathered in if it’s done away with.
      I can tell you there hasn’t been any specific mentioning of doing away with PSLF but the anticipated threat to it isn’t without merit. With the report coming last month that it cost the government much more than anticipated I could see it becoming a political issue as the new administration looks to form it’s own education policy along while creating budgets.
      Plus, as mentioned, getting married and filing jointly will count both incomes in the calculation where filing separately will not.

    • John says:

      If you file married filing separately you can’t claim the Student Loan Interest deduction either.

    • Nur says:

      Hey Ross,

      It depends on the type of eligible payment plan you are in. For instance if you are in Income Based Repayment only your income counts if you are married and file separately. If you end up in the Pay As You Earn program your spouse’s income will be included in the income calculation no matter how you file. One resource to check out is the Repayment Estimator (https://studentloans.gov/myDirectLoan/mobile/repayment/repaymentEstimator.action) which allows you to plug in your loan information directly to see what you qualify for payment plan wise and you can see how a spouse’s income could potentially impact your plans.

  5. solteronita says:

    As for your monthly bus pass, I wonder if you could talk your employer into paying for that. It’s worth a try! I think employers may be able to get them at a discount.

    • Florence says:

      I second this! My employer pays for any employee’s public transit, up to $100/month. It’s definitely worth asking about getting them to pay it, or at least get a discount.

    • Amy K says:

      Or get a 1 year pass. https://trimet.org/fares/1yearpass.htm
      It only saves $100/year, but that’s a whole $100!

      • Kate says:

        I buy monthly TriMet passes off Craigslist for $70/month. A lot of people get them free from their employers and sell them. It sounds annoying but I only had to find someone to sell them once off Craigslist and they now sell me theirs each month. I’ve seen them posted for $60.

    • Lisa says:

      It might also be worth it to look and see whether she’s saving much or even anything by buying a monthly pass instead of pay-as-you-go. When I lived in Chicago, my employer allowed us to deduct monthly transit passes pre-tax, but when I added up the number of times I took the train per week (instead of riding my bike, using a free shuttle, walking, or driving with my now-husband), I would have only saved a few dollars. There were other months when I would have paid more just for the monthly pass! It’s possible Bridget has already looked into this, but if she hasn’t, it’s definitely something to consider.

  6. Kyle says:

    Unfortunately this math doesn’t add up: “I’d pay $2,300/month for 6.7 years, which would be a total of $184,920 paid off and without the potential savings of option #2.”

    That assumes no interest accrues that whole time. By plugging the numbers into Unbury.us, the loan would be paid off in April 2026 by paying $2300 per month. So 9 years and 2 months.

    • Bridget says:

      Thanks for the feedback, Kyle! I’ll definitely check out that site. I was just doing quick estimates and didn’t account for interest so I definitely need to keep digging!

  7. Egad! I read about debt like this often ($180k is average for graduating medical students), but usually paired with the potential for an eventual high paying career. The same concepts apply, though. Either work for a non-profit and enroll in PSLF — and do it fast before the program is altered — or find a job that pays enough to make up for the loss of potential loan forgiveness.

    It’s also important to share these stories for others to learn. An ounce of prevention is worth a pound of cure. That quip won’t help Bridget much, but that’s a huge loan burden that could stay with her for decades if she doesn’t make addressing it a priority.

    Cheers!
    -PoF

    • Bridget says:

      I tell every high school kid I come across as a cautionary tale. I took advice from people who meant well and didn’t know any better. If other’s can learn from my mistakes I’m happy to help!

      • Brenna says:

        I definitely don’t remember anyone talking to me about the effects that student debt can have on your future life. I’m counting myself lucky, getting out with only $40,000 owed but I’ve also pigeon-holed myself into a non-profit line of work that is not very lucrative. There’s no market for private work either where I live. I do enjoy my work, which was the only advice I received on selecting a path of study, but It will still take me years to dig myself out and in the mean time my dreams of home ownership are on hold. I’m 28 as well and it feels like I’ll be lucky to be able to move on from renting by the time I’m 40… I’m hoping to do better than that though.

      • Good for you, Bridget! I wish you the best in tackling that massive debt.

    • Julia says:

      I totally agree with the need to warn people about student loan debt! It’s easy to be flattered by impressive-sounding scholarships, and I think a lot of tuition prices are so high they don’t feel real to people. It’s important to remember that there are VERY few careers out there that genuinely require an ultra-pricey college degree. State schools are good enough for the vast majority of us.

      And this is minor, but it might be helpful to parents of high school students (I do a lot of editing and tutoring work with college-bound kids). There are loads of scholarship opportunities out there that ask kids the same question: “When have you shown leadership in your community, *independent* of your school or church?” Trust me, this question comes up ALL THE TIME, and I strongly encourage the parents of middle school/early high school students to talk about it with their kids as soon as possible. These volunteer opportunities can be surprisingly tough to find, so you might need to get creative. (For example, my kid organizes a monthly cookie drive that provides the desserts for our local no-barrier shelter, and that combination of outreach + leadership has proven to be worth scholarship gold.)

  8. @TashaCochran says:

    #1, like others said, Bridget should start contributing to her 401k at least enough to get the employer match. It doesn’t seem like she is doing that now, which means that her monthly available income is actually $250 less than what is listed above. #2, at her current income level, she does not have enough surplus cash to pay her student loans off on the aggressive plan described above. She is at least $500 short. Where is the extra money coming from?

    I recomment the PSLF option. My SO and I 180k in student loans each and are going the PSLF route so I’m probably a little biased but I’m going to add my two cents anyway.

    Based on my calculations, even if Bridget increases her income 20% a year for the next 5 years–taking her income from 50k to 124k–and even if she puts every single drop of that extra money into paying off her student loans, it would still take her 5-6 years to pay off her student loans. And it will take even longer if she has kids, has house repairs, etc. Meanwhile, she would have been putting only the bare minimum in her retirement account and so at 33 years old will have very little saved for retirement. Yes, she would be debt free but at what cost?

    The great thing about PSLF is that it allows you to leverage your money to achieve multiple financial goals at once. Because we use PSLF, we have been able to buy a house, save $175,000 towards retirement, and are halfway to our student loans being “paid off.” There is no way we could have done all three–or even two out of three–if we weren’t using PSLF.

    BUT, to maximize PSLF we decided not to get married. We both make over six figures (which is totally doable in public service jobs) and have found that we pay less taxes (and have lower student loan payments) filing single instead of married. So that’s what we are doing.

  9. Katie says:

    Well done on not recommending PSLF. It’s an incredible program that is likely going be dismantled under the current administration. So many people are shaping their entire future lives based around its existence, and are going to be destroyed when congress yanks it away. It would be a phenomenal deal for my husband (massive medical school debt), but we just can’t trust its longevity.

    • Anon says:

      Is your husband currently in residency? My understanding is that as long as the residency is in an “under-served” area, those years still count toward the service requirement. And residency is at least 3 years anyway (more if he’s not doing FM).

  10. Kim P says:

    If you do decide to pay your student loans, is it possible to lower the interest rate? The current rate seems a little high. Paying it off early might negate that somewhat but locking in a better rate seems prudent.

  11. Christine says:

    Reading this made me feel like I was reading my own story – thank you!! I have approximately $170k in student loan debt and have been working at a non-profit for almost 3 years, planning on taking advantage of PSLF. I am always fearful that it won’t exist or will change when my ten years are up and am so interested to see what happens come this October, when the first people who are eligible for it will reach their 10 years (I believe the program was started in October 2007). My husband and I do have to file our taxes as married but separate so that his income is not included in my monthly payment calculation. I agree about filing the forms often to leave a paper trail – it somehow makes me feel better about the program possibly being changed, if I can prove that I was participating before any potential change.

    • Bridget says:

      You’re not alone! As I mentioned on someone else’s comment above, the first step to getting out of debt is to talk about getting out of debt! 🙂

  12. Kelly says:

    I recommend Google Fi for when Bridget gets her own cell phone plan. I pay around 30 bucks a month, using about 1 GB of data per month. You only pay for the data you use, so she could get it down to under 30 if she was very careful about data. The downside is that you have to pick from a small selection of phones. I have the Nexus 5x, which cost about $250.

    • Bridget says:

      Awesome, thanks so much for the tip! I’ll definitely look into it.

      • Allison says:

        Or split the current bill with your mom. I calculated out Google Fi and the savings were going to be minimal (under $10/month) for questionable coverage (I spend lots of time in the woods).

  13. Ashley says:

    Why is your internet so expensive? I live in Beaverton and I only pay $45 for internet with Frontier.

    • Rochelle says:

      Seconding this. I’m in Portland, but Washington County, and we just switched to CenturyLink from Xfinity and now have a bill of ~$33/month (I think. We were offered credits of $90 so we technically have no Internet bill until May.). Even calling Xfinity–which is my guess on provider, because we paid $82/month recently–can make a huge difference. We did that in January 2016 and got our bill lowered from $82/month to $50/month for the same service, locked in for a year. (No Frontier service on my street, unfortunately. Ugh.)

  14. Cindy in the South says:

    Congrats on buying a house and being frugal! I would concur that paying the student loans would be the way to go. I would double my payments, if possible. I would not go work at a nonprofit. My reasoning is what happened to me. I worked at a much lower salary place which would qualify for loan forgiveness and four and a half years in, I lost my job due to economy (2011) and ended up having to cash in my retirement to eat. No kidding. I am a little scared of ten year plans for loan forgiveness because of this. I would maybe try to reduce my grocery budget. I commend you on not having cable ,and taking frugal camping trips (which sound awesome), and on buying a house!!! Always keep a six month reserve of housing costs, just in case the economy tanks. Do not touch it no matter what, until (and if) you lose a job.I also lost my house, my car, etc., when I lost my job because I had used up my six months cushion working at a much lower pay (my salary kept getting cut until my job was finally cut)… . Thankfully, I have recovered, moved a couple of hours away and got an awesome job, and have a little house and small car, but I am still a bit paranoid. I do not want that to happen to you. It has been tough to recover at my age. So, to be clear, work in private sector and make more money, while you can, sock away a healthy six month housing costs just in case, put any extra money towards student debt. You are doing fantastic! I am not giving any marriage advice because I do not know the laws in your state.

    • @TashaCochran says:

      Cindy, I’m so sorry that happened to you. Private non-profits employment can be unpredictable, just like working in the public sector. That’s why I highly recommend either picking a larger, well-established non-profit or sticking with state or federal government jobs. Plus the added benefit of having a state/federal job is that you most likely also get a pension!

  15. Kerry says:

    Would hesitate to recommend the PSLF program. Ten years is a long time, and unless she is driven to enter the public sector, it is a long time to devote to a career with less earning potential (so the greater money in eliminates the benefit of the less money out). Also, PSLF program requires at least a 40hr work week. Never know what the future holds – a child may come along, and she may choose to decrease her schedule temporarily while kids are young. (I myself am particularly driven and would not have expected I would ever choose to cut down to 4 days/wk, but I did. Expected to go into a job that would pay my loans off for me and didn’t put extra toward them when younger, as I was advised, and now regret it.) IMHO, better to get the student loan debt paid off as much on the front end as possible before more obligations arise so that you have the freedom to make broader quality of life decisions later down the road.

    • Rachael says:

      Hi Kerry. I was actually doing my PSLF verification paperwork recently and my understanding is you need to work 30hrs a week to qualify.

      • Andria says:

        ^^ That’s correct, 30 hours a week at one employer. I was screwed for years because I had three employers who kept me at 19 hours a week or less, even though all three jobs were in non profits.

  16. Stephanie says:

    Get real information about PSLF and then make your decision. I know with the death and disability discharge it was counted as income for tax purposes. Ouch. If you do nothing else, for the love of dog get disability insurance- I was healthy as a horse until I wasn’t.

  17. Jennifer says:

    This is my experience only, so I want to be clear that I’m in no way insinuating anything or passing judgement on anyone. My experience is just something to ponder. While I qualified for loan forgiveness, I didn’t take advantage of it for one simple reason…personal integrity. As I saw it, my loans were my responsibility. Burdening taxpayers because I wanted advanced degrees and restaurant meals and new paint on my walls was, as I saw it, irresponsible. Not everyone will feel this way and many people criticized my decision, but after paying off all my loans I had an overwhelming sense of pride that I took full responsibility for my decisions and didn’t pass the burden onto someone else. Had I taken advantage of the plan it would always be nagging at my conscience. It was initially created to help lower-income borrowers which, according to poverty charts, I was not. I would never have felt at ease with my decision had I gone that route, Only you can decide whats right for you, but loan forgiveness was not the path for me. Good luck!

    • JoJo says:

      I will disagree with you. I don’t think it’s irresponsible. I am a social worker, which requires a Masters degree. Many of my colleagues have student loan debt over $100K, and our starting salaries are around 35-45K. We devote our lives to helping others, and this is something that helps us.

      • Melissa says:

        JoJo I agree 100% plus. I’m finishing my MSW and I already sacrifice for my clients and my agency. If you want people to stay in these low paid, high stress jobs, they need to at least see a light at the end of the tunnel. Believe me when I tell you, I pay my taxes, and I pay much more into society by doing this work than I get out by having my student loans forgiven. If you don’t believe me, ask any social worker, public defender, DA, cop, firefighter, or military member. Yes, this particular reader can take advantage as a person who’s career has public and private sector options, but the above careers really don’t. If you’re a passionate DA or firefighter or even social worker there are no other options THAN public service (or very very few). But masters degrees are required for many poorly paid public sector jobs. Many cops I know have masters degrees, many state troopers I know have law degrees. Social workers need an MSW. DA’s and PD’s need to go to law school. In state tuition here in MA for UMass Law is still about $30,000 per year.
        I think there’s NO personal integrity problem with taking advantage of a program like this if you’re paying into the society in general with your work at a lower rate. And like I said, for many careers, without these programs there would be fewer public school teachers, cops, fire fighters, district attorneys, VA nurses and doctors, social workers,………

        • Caitlin says:

          Melissa, I wholeheartedly agree! I’m a public librarian and most positions in my field require a master’s of library science.

    • Not Karen says:

      But if one acquired student loans due to a lack of education and bad advice, that’s not one’s responsibility. Not knowing any better is not one’s fault.

      • Bev says:

        Unfortunately, yes it is. You’re still stuck with whatever the consequences. I’m not saying it’s right or wrong, that’s just the way it is. If you have a mortgage and you lose your job and it’s not your own fault, you still have to make the mortgage payments.

        • Not Karen says:

          The loans are one’s responsibility now, yes, but not everyone was responsible for acquiring their student loans.

          • Bev says:

            Did they not put their signature on the loan paperwork?

          • Mrs. Frugalwoods says:

            So I think the important thing to remember with Case Studies is that we’re not here to litigate on, or judge, past decisions. The goal is to help the Case Study participant make decisions moving forward.

    • Nancy says:

      My advice parallels Jennifer’s. Regardless of bad financial decisions made early on our adult lives (sometimes due to bad advice, true….but still our decisions) the responsibility to repay them is a sign of personal integrity, in my view. I too have wrestled with this, and it was a decision made with my conscience in view. Everybody is on their own on this one, but it’s a factor to consider.

      Also, ten years is a long time, both personally and financially….not to mention politically. Your personal wishes regarding children and their needs, for instance, might change a lot in that time, and you could find yourself locked into an untenable position. Politically….who knows?

      Make sure you have yourself and potential family members covered for health insurance purposes, whichever path you choose. That can be life changing as well.

      Otherwise, Mrs. Frugalwoods, as usual, is spot on!

    • Jen says:

      I very much appreciate your point of view, but I’d like to say that, as a taxpayer, I appreciate it when people go into non-profit and government work with their fancy advanced degrees. I was fortunate that my masters program was paid for (thank you, Ivy League endowment…) but I am thrilled that friends of mine from other excellent schools have chosen to dedicate their careers to the non-profit and government sectors and will receive some loan forgiveness. I’m happy that some of my taxes can go to pay for those loans since I know that (in general) the quality of services provided goes up with highly educated (and in many cases, specialized) workers! Way to go on paying off all your loans!!

    • Bonnie says:

      Thank you for this viewpoint and not shying away from posting this. Credit to you for your integrity and decision!

    • @TashaCochran says:

      @Jennifer, I see that personal accountability argument so often in the frugal/anti-debt circles. I find that argument to be so strange because all PSLF really is is a 10 year long employer loan repayment program. PSLF is the federal government’s way of incentivising public service work, thereby attracting a talented group of individuals who would otherwise pursue more lucrative careers in the private sector. How is it any different than an employer offering student loan repayment in return for working X number of years?

      To give another example, my law school has a loan repayment assistance program. The program is income-based and pays up to 100% of my student loans over the course of 10 years. Would it be morally wrong to take advantage of that program? My answer is no because that incentive was offered to me to induce me to attend that school (and then to work in less lucrative public service work). So I’m not sure why PSLF is seen differently.

      I can see the argument being made (perhaps) for the general loan forgiveness after 20-25 years because in theory the borrower did not give up other, more lucrative work in order to do public service work. But even then the argument can definitely be made that the person is merely adhering to the terms they agreed upon: X number of payments over X years, with the remaining principle to be forgiven at the end.

    • KBT says:

      Well said. Good for you, Jennifer!

    • Kate says:

      I respect your choice, but I’ve heard this argument before and have never understood the reasoning. Many people who make much more money in the for-profit sector regularly take advantage of tax credits, tax-advantaged retirement accounts, and other things that ultimately help them save money at the expense of other tax payers. You don’t HAVE to take advantage of these, but everyone does it and no one bats an eyelash. So why is taking advantage of PSLF considered poor personal integrity?

    • Leslie says:

      Agreed.

    • j says:

      I don’t disagree that it’s important to take responsibility for ones decisions, however, I’d like to present an alternative argument (and don’t get me wrong, you should be very proud for what you have done – I would be). Here goes: education, whether primary, secondary or post-secondary is something that helps your country. When the population doesn’t have access to it at an affordable price, it has negative impacts on the country socially and economically. Secondly, the public service needs qualified, educated and intelligent people. They can’t necessarily compete on salary but they can compete on benefits and it sound like loan forgiveness is one of those benefits. So in a sense, one could say that a highly educated and hard working person is serving their country by working in public service, rather than pursuing a higher paying job in the for profit sector. To take it further, this person is arguably helping the tax payer. Clearly I’m also biased. I don’t live in the US. I’m a northern neighbour that works in the public service. I paid for my own (highly subsidized) education (2 degrees with a third paid for through my work). And even this was too much in my opinion. If you look at Scandinavia (where I’m originally from) they provide post-secondary education free for anyone that qualifies (not anyone that can pay for it).

    • Stephanie says:

      Jennifer,
      I would love to be working a full time job and be paying back my student loans. Lung failure and the aftermath have made that impossible- I am incredibly grateful for my student loan discharge since it is highly unlikely I will ever work again beyond a few hours a week (if I am lucky).

  18. Samantha says:

    A note about saving a boatload on childcare with a stay at home dad: Maybe. I was actually surprised how reasonable childcare was for us. Full time (7a to 6p) care, 5 days per week costs us about 1/3 of what my husband makes per month (take home, after fully funding his 401k and other deductions). He also gets very reasonable health insurance for our whole family. So if we had him stay at home to save money, we’d lose 2/3 of our income, plus what I’d have to pay for health insurance through my company. (I make twice what he makes, so leaving my job is definitely not an option, plus, I really love my job!)

    Beyond just the immediate loss of income, there will come a point where my son will go to school and my husband won’t need to stay home during the day, but he’ll have a tough time getting back to his current earning potential and manager title after 5+ years out of the workforce.

    I also was very surprised how much I like the daycare experience – I love that he interacts with tons of other little kids, I like that his little immune system is put to work early, I like that he gets comfortable around different people, and (this probably sounds terrible but it’s true) I like farming out some of the childcare work to people who really love it and are good at it! My kid knows sign language and is 13 months. Daycare taught him, I just reap the benefits.

    Certainly some people value wanting to focus their lives on raising their children, and I think that’s excellent as well. It all depends on your priorities, of course, but I don’t necessarily think you should just “stay home with the kids to save money on childcare” without considerable thought, because it can hinder your earning potential in the long term.

    • Tarynkay says:

      Amen to this. I am SAHMing right now. Having me at home rather than in the workforce is absolutely the most expensive thing we do. We both love it and value it, but a stay at home parents is a luxury, not a way to save money. A SAHP can help lower household expenses, but it’s probably not possible for most people to do enough of this to make up for the loss in earnings, benefits, and career equity.

    • Rochelle says:

      It depends on what area you’re in, too. In Portland (where I also live), daycare is typically at least $1,000/kid. Depending on the sector, working from home is always an option, too. I spent much of last year with daycare one to three days a week, and working during naptime the other days.

  19. Kate says:

    Only one piece of advice from me, ask parents/friends for gift cards from Lowes, Home Depot etc for birthdays & Christmas and use those to reno your home a little at a time. Same with if you decide to get married before your debt is paid off! “Register” for gift cards so you can complete your home without spending from your pocket 🙂

  20. Rachel B. says:

    Hi, Bridget! Thanks for sharing your story with us. I taught at a Title I, low-income school for 5 years, in part to qualify for loan forgiveness. Long story short, I ended up not qualifying because I had advanced into a position in which I was still teaching, but not full-time hours. I urge you to be careful and hyper-vigilant if you do go the PSLF route. Last year, I actually re-financed my loans through Earnest. My interest rate lowered two percentage points and by making bi-weekly payments I’ll save thousands over the life of the loan. I’m also on track to pay off my loans in the next three years. Check out Earnest or other companies like SoFi or Credible if you decide to go the for-profit route.

  21. Great advice Mrs. FrugalWoods. I agree…10 years is a very long time. If I think back 10 years, almost nothing is the same as today…including federal programs.

    One big question I had — Why does she have such big student loans? That’s a lot of debt for 4 years of college. I myself went to school with student loans, and it was nowhere near that bad.

    • julie says:

      She went to NYU and has a masters. That amount of loans is a lot, but it is not unheard of.

    • Caitlin says:

      When and where did you go to school? I went to a state school in NH, where our “state schools” are not really funded by the state so the costs are higher (so are private colleges and so is attending an out-of-state state school). Also, if you went to school even 20 years ago costs were much cheaper than they are now. College costs have been rising exponentially for the last 20 years and depending on where you live in the country, there might not be any reasonably priced options.

  22. Kris says:

    Mrs Frugalwoods’ advice about working for nonprofits seems right on. Do check to see if you can switch organizations and what the program’s definition of a nonprofit is. Only do this if you really want to work in the nonprofit sector. If your heart is in corporate world, it’s gonna be a tough culture for you (possibly). Do stick to the larger nonprofits if you want higher pay. If I lived in Portland I’d try hard to get a job at Mercy Corps. https://www.mercycorps.org/careers But that’s just me!
    A nonprofit hospital or university or community college might also be good, if it qualifies for PSLF.
    I echo what others have said about 10 years being a long time. If you have kids, you might find yourself longing to stay home with them for a while. Jumping in and out of FT employment is easier in the corporate world than in nonprofit higher ed or any union environment, where if you get off the train you can’t get back on. See if PSLF allows for employment gaps.

  23. Beth says:

    I would look at refinancing the current student loans. My recommendation is SoFi as I have a few friends that have used this and it has dramatically lowered their interest rate. After that your choice for pursuing a higher paying for profit job or going the non-profit PSLF route is yours to choose. Both are good options in my opinion.

  24. Seymore says:

    All of this serious financial advice from people who know what they are talking about requires a short break:

    WE NEED NEW PHOTOS OF FRUGALHOUND. These photos are re-runs. Frugalhound’s adoring public wants more photos of that artistic and creative model.

    Purdy please.

  25. I agree with your recommendations, Frugalwoods.

    The PSLF might not be the best option if she doesn’t work for a non-profit as it won’t apply there. I think that it’s also important to note is that government programs like PSLF can and will change at any time.

  26. Jason says:

    With this type of debt I would defer to the Dave Ramsey approach. His get out of debt methods work. Throw every single penny at the debt and work like a crazy person to get rid of it ASAP. It is gonna suck and its gonna be hard but it is one of the best ways to get out and never look back.

    Good luck!

    • Not Karen says:

      There is nothing special about “the Dave Ramsey approach” that makes it work better than any other method. In fact, mathematically, the snowball is worse than the avalanche.

      • Jason says:

        Agreed…but with this amount of debt you can throw mathematics out the window. What will get her out of this mess will take hard work, grit, determination, delaying pleasure, patience, cooperation, and from boyfriend/fiance/husband.

  27. Juli says:

    A few notes on PSLF:

    1) You don’t pay taxes on the amount forgiven. The term the program is now using is “canceled” to correct this interpretation. Normally, loans forgiven after income-based repayment require taxes on what’s forgiven, but the public service program does not require it.

    2) You can work as many different jobs as you want under PSLF. You just have to have 10 years of payments while at public service jobs. Technically, they don’t even have to be consecutive.

  28. Ms. Montana says:

    All I have to say is I LOVE the idea of Chipotle catering. I swore if we ever had a another big formal event I would go that route. It’s so delicious! Anyways, I think your wedding plan is awesome!

  29. I can see from the previous 26 responses, that I am definitely late to this party 🙂 I’m sure I’m not going to say anything that hasn’t already been said before me today. Definitely pay the student loans off first. The interest rate is much higher than the mortgage. I wouldn’t worry about paying off the mortgage at all. You’re so young and it’s a reasonable rate – go ahead and let it ride. As far as getting a different job with a 10-year service loan forgiveness program, I’d say it’s a good option, but one I would hesitantly chase after. I would, instead, pay off the student loan by adding the extra couple thousand to the principle each month…especially since you’ll be able to eliminate it BEFORE the 10-year forgiveness would kick in.

    And marriage – you go get married, girl! this should NOT stop you and your boyfriend from walking down to that courthouse and enjoying some Mexican food 🙂 This is just one of many obstacles you will face as a couple. Don’t let it hinder your personal life!

    Mrs. Mad Money Monster

  30. My only advice regarding PSLF is that it’s a long time to wait it out, and you don’t know what Congress will do to change the program in the next decade. So, you might be halfway through the PSLF time period and then the program goes away. I’ve also had friends start with PSLF only to find their timeline has changed due to job considerations. I think gradually working towards higher salaries and aggressively paying off your loans is probably the better way to go, rather than relying on the PSLF program to still be there in 10 years.

  31. J Dubs says:

    Thanks for sharing, Bridget.

    1 – get the 401(k) match. It is literally the best investment you can make – 100% return for each dollar that is matched.

    2 – Think really hard about the public sector. The comments above are good. This is really an emotional and life/ career decision that will have money ramifications.

    3 – If you go with the public sector route – ignore all the points below 🙂

    4 -Private Sector – Start looking for a promotion and/ or new job with higher earning potential. You’re working for a start-up. Is that because you need to be in the medical field? You have a master degree from a prestigious university – NYU. Hit up that alumni network. You can public relate in any industry, right? Switch to where the money is at. No shame. Make it rain, girlfriend.

    5- Refinance your student loans. The negative is you lose some of the federal benefits like the PSLF. However, you can probably get a sub 5% rate from SOFI or Commonbond or one of those startup-student-loan refi companies. That 2% savings a year would be almost $4,000 your first year. That’s like an extra monthly payment towards principle instead of debt. I think this is a big one, that hasn’t been mentioned as much in comments.

    6 – House Appreciation. Owning a home is great. Renovations are fun. Portland seems like the coolest place! And Portlandia! – put a bird on it! In a few years, your 280,000 house might be worth close to $400k. In that case, you could probably sell, and the profit would not be taxed. You could plow this into your debt. Remember it is okay to rent and renting isn’t throwing away your money. It’s controlling your costs.

    7 – Get married earlier before later to save money on taxes. Again, this probably doesn’t apply if you go the public sector route.

    Okay, what do you think!? Good luck.

  32. Mr. PTM says:

    I agree with Mrs. Frugalwoods’ advice and would second those who suggested refinancing your student loans. You’ll give up those income-based repayment options by going private, but you’ll pay much less in interest and get them paid off faster. I would go with a variable rate on the longest term offered, then make additional principal payments every month. The nice benefit here is that as your loan reamoritizes (mine is quarterly), you’ll reap the benefit of the additional principal payments with a lower monthly required payment, which means more money to put towards principal. It’s like another version of the debt avalanche payoff method. Also, if you ever needed to cut spending due to some emergency, you’ll have the flexibility to only pay the minimum during that time. Good luck to you!

  33. Danielle says:

    PSLF may not exist for much longer under the current Congress and Administration and I encourage you to refinance for a lower interest rate if you can. I am a social worker and I ‘ve been struggling to pay my student loan debt which was $110k total when I came out of grad school. Six years later, I am down to 55k, in part thanks to a State Loan Assistance Repayment Program grant that I received for working in public service. As a mom now I think it’s a great idea for one of you to be a stay-at home parent, because we pay 13K in day care costs per year and when my 2nd arrives this summer, that cost is going to about double. Good luck to you and your boyfriend! I am so impressed that you are so proactive about your debt and financial goals.

  34. bev says:

    I agree with Jennifer. She said it best. You just have to pay it off, you, yourself personally. Find the highest paying job you can, throw all the money you can at this debt, sacrifice, and just do it as quickly as possible. It appears that you received a wonderful education, so you now know what needs to be done, and you have the education to do it. I worked two jobs for ten years and paid mine off, just as many other people have done. As Mrs. FW stated, it CAN be done. Just make it a priority and do it. Trying to find forgiveness here and there for debt that you knowingly incurred will only drag it out and morally I just don’t agree with it for anyone. Just my two cents. Sounds harsh, I’m sure, but it is what it is.

    • AW says:

      I do think that is a wee bit harsh. I found this on the internet about the PSLF program. It “was created to encourage individuals to enter lower-paying but vitally important public sector jobs such as military service, law enforcement, public education, and public health professions.”

      I say this as a person who paid back a boatload of student loan debt through working relatively high paying corporate jobs. Even though I did it myself, I don’t begrudge people loan forgiveness if they put in their 10 years in a non-profit or the public sector. I actually feel a little guilty that I although I’ve paid back loans and done a reasonably good job of saving money, I haven’t made a meaningful contribution to the world. Often the “highest paying job you can get” is one that will compromise your morals far more than taking advantage of a government program meant to give people financial incentives to work in non profits.

      A lot of other commenters have noted cons of the PSLF program such as the uncertainty of the future of the program and losing the flexibility to take time off work to care for a child or to switch into the private sector before 10 years is up. I think those are very valid things to think about. But I think to say she morally shouldn’t take advantage of this program is not true.

  35. tkid says:

    Priorities:

    1. Build up emergency fund.
    2. Pay off student loan.
    3. Begin investing for retirement / pay off mortgage.

    in this order. $185k of student loan is a whopper. That would be my focus for the next decade, and I’d look for the high-paying jobs, even if they were high-stress, in order to get the student loan paid off as quick as possible. High-stress jobs might not be what she wants, but it’s do-able if she can see the financial benefits. And when she has the student loan paid off, she can quit and get a job with a better life balance.

  36. I love Mrs. Frugalwoods’ suggestions!

    Mr. Picky Pincher and I lived together while we were engaged but waited to fully combine finances until we were married. To pay joint things like rent, groceries, and utilities in the meantime, we opened a joint checking account. We deposited half the rent, etc. into the account and kept everything else separate.

    And once you get married you can likely save on a few bills by combining them. Mr. Picky Pincher and I got a better rate on our cell phones once we combined.

    My only other suggestion would be to consider moving to a cheaper area. $280k for a small house is pretty pricey to me (I’m in Texas) on such small salaries. Mr. Picky Pincher and I make roughly what Bridget and Jack bring in, but our mortgage is $145k, so we’re able to save significantly more money because the cost of living here is much lower. Consider remote work and live in a cheaper area with a higher salary. Just a thought!

    • Liz H says:

      I was thinking the same thing. $280k might be cheap in Portland but where I live it’s a HUGE house and they could easily match their salaries or even be ok with a little less with a much smaller mortgage. It’s one of the reasons I hesitate to move anywhere. We have 5acres, an 1800 sq ft house and a 10 minute commute to work and pay $1000 per month on our mortgage/escrow on a 20 year loan. For something the size of what you are living in, you’d pay maybe $60,000! In our “downtown” you could have something even bigger for that price and still be on the bus line.
      So, yes pay off student loans after getting a healthy emergency fund in place, but seriously consider a move to a cheaper area, especially if you are considering kids. In my experience, kids do best when they have room to roam, especially outdoors.

  37. shannon says:

    Option #1 ALL THE WAY – I would NOT go the nonprofit/PSLF route. It locks you down into having to stay in that job or a similar job. You will be limited in terms of income and career growth. Plus if you lose your job and can’t find another one that qualifies for PSLF, you have added YEARS to your student loan repayment process, and you still have to pay it off yourself. Not to mention they could change PSLF rules at any time and there is no guarantee that you would be grandfathered in. Not to sound paranoid, but I really don’t trust it.

    If you can find a job in the for-profit sector that pays significantly more (which should be doable), you will more than make up the benefit you would have received from PSLF and you maintain your freedom to grow and change your career however you wish. With that higher income level and paying off the loans YEARS faster than under PSLF, you will make up for at least some of the lost savings that might be possible under PSLF. Depending on how high your salary goes, you might be able to pay it off even faster than the 6.7 years you are estimating here.

    No matter what you choose, you must tap into “gazelle-like intensity” (to borrow from Dave Ramsey) to get this done. It is admirable that you are ready to tackle this debt, and if you focus on paying it down like crazy it will be doable.

  38. Sara says:

    As someone who has worked back and forth in the non-profit/profit sector (I am in education and healthcare as a speech-language pathologist) I can tell you that the loan forgiveness program begins to limit your thinking. You become anchored and afraid to take jobs that might be more fulfilling, higher paying. or have the potential for advancement–sort of like golden handcuffs. Ten years is an incredible long time in today’s job market where large income boosts are often attainable only by changing employers. What if you want to stay home with the kids or your SO gets a great job opportunity somewhere else where you can’t find a non-profit job? I have heard Dave Ramsey say to people in your situation that you could stockpile the money you would put towards your loans in a separate account (that is really hard to get at) and then if you don’t end up staying with your non-profit (or the program gets yanked) you can dump that savings at the loan and be no worse off (except for some interest). I would also check out SoFi who should be able to get that interest rate down.

    • Rachael says:

      Sara — I am so glad you said about PSLF beings to “limit your thinking.” I have been at my current position for 4.5 years and actually didn’t realize until about 1.5 years in that my job qualified for PSLF. Now that I have logged so much time, I don’t feel like I can leave. Or if I did leave, I would have to find another job that qualifies for PSLF — which makes me feel rather trapped. I would not recommend going and looking for a job that qualifies — especially here in Portland, since you could end up in a career path you really don’t enjoy, which defeats the purpose of getting an education in the first place!

      Like others have said, I do worry every day that the PSLF program will simply go away, so I continue to pay my minimum payment + interest to ensure my loans don’t increase over the time period over the length of the program. What so many don’t understand is that ICR/IBR/PAYE all sound great on paper, but the amount “forgiven” after the designated time period is TAXABLE. Depending on the size of your loan, and how much interest accrues over the time period, this could put the borrower into a financial disaster. (Yes, I did the math on this myself and it left me in tears and figuring how I would pay off a $55k+ tax bill).

      I would encourage anyone considering consolidating their debt to make sure they don’t qualify for any other government funded loan repayment program first. For example, my husband is a nurse practitioner and works in public health, which qualifies him to apply for loan reimbursement through the National Health Service Core (NHSC). If he had consolidated his loans through a private company, he would NOT be eligible to receive repayment — most programs like NHSC, PSLF, etc. all require you to be in a federal loan program. Based on his ability to get direct reimbursement we have prioritized paying off his loans while I continue to pay my interest only. (And thanks to our frugal methods and YNAB — best OCD budgeting software ever, have paid more than half his loans off in 5 yrs). If PSLF goes away (I agree with what others said that there is so much uncertainty around the future of student loans we are seriously discussing backup plans) we will have minimized his debt so we can then prioritize mine.

      I will echo what others said as well about filing jointly as a married couple — this WILL impact your loan repayment if you are on an income based plan. Depending on how much debt/income you and your partner have this could increase or decrease your monthly payment. Also remember that if you file jointly and pay off your debt, his monthly payment will increase. If you file separately my understanding is only one of you can claim the house, which has a variety of tax implications.

  39. Not Karen says:

    I want to address some of the misunderstandings regarding PSLF, a couple of which have been addressed already above. If you choose to go this route, please do more research to really understanding what you’re signing up for. Student Loan Hero has some good posts about it, including this one: https://studentloanhero.com/featured/public-service-loan-forgiveness-do-you-qualify/

    1) Forgiveness under PSLF is NOT taxable
    2) You can switch jobs, but only payments made while working for a non-profit will count. I’m pretty sure these payments do not have to be consecutive.
    3) Federal Perkins Loans and Federal Family Education Loans (FFEL) are not eligible for forgiveness
    4) There is a lot of doubt around whether or not the program will stick around, especially considering that no one’s actually been forgiven under it yet since it didn’t start until 2007.
    5) At one point a cap at only $57,000 was proposed. Although it did not pass, I would not be surprised if another one was proposed again.

  40. Cambria says:

    Another option for the PSLF is working for the government instead of a non-profit. I just made the switch from a non-profit to a government role, better pay, benefits, and retirement match (11.35%!!) with the benefit of still receiving the pay-off.

  41. Tarynkay says:

    Since you are living together and planning an eventual maybe someday in the future courthouse wedding, I’m assuming that marriage is not all that central to you. That is, it’s not a religious sacrament to you. If it you have a covenant view of marriage, I would say, call your preacher and get married today!

    If it’s more of a legal formality to you, I think you both need to fully understand the legal implications of marriage first. Ideally, I would say sit down with an attorney well versed in Oregon state law.

    Here are some things to get you started in your research:

    1) Oregon is not a community property state. It has surprisingly complicated marital asset laws. Since you own this house, I would want to understand the implications of this in the event of divorce.

    2) Someone above mentioned that getting married might effect your eligibility for loan forgiveness, so I would look into that.

    3) Unless Jack cosigned your loans, he shouldn’t be responsible for them even if you marry, so that’s good for him

    4) If you do get married, will you combine finances or keep things separate? Think through how this will work if Jack is SAHDing for your hypothetical children. Will you give him an allowance when he’s not bringing in his own paycheck?

  42. Lori McClellan says:

    The one area I am sure Bridget can cut down on is her food expense. Careful planning goes a long way toward being able to eat for a lot less than $10/day. That being said, I must ask, am I the only dumpster diver that reads this blog. Three years & nine months ago, my husband and I looked in our first dumpster. We brought home $25 worth of yogurt & cheese. Sure, they were out of date, but is yogurt & cheese really going to go bad 5 days after the date? Since that time, the only things we have bought have been coffee and once in a great while, butter. We have more fresh produce, eggs, dairy, meat, pizza, you name it than we could ever eat. On average, we feed another 10-20 people throughout the month. It is not nearly as nasty as you might imagine. We NEVER enter the dumpster. And, we always leave it as clean as we found it. Dumpster divers have rules of behavior, even if they are self-imposed.

    • Cindy in the South says:

      I think it is awesome your dumpster dive! Unfortunately, it is not allowed by Walmart, which is 20 miles away, and it is also not allowed by our local high priced grocery store….sigh. I live in a very poor area so it really gripes me that it is not allowed by law. I would happily do it if I lived where it is allowed.

  43. Erin says:

    Good for you living on so much less than what you earn. You are on the right track!
    We got married in debt and had it all paid off including school debt and mortgage within 7 years.

    1. Read Your Money or Your Life by Vicki Robin and Joe Dominguez. Vicki may still be in the Portland area. Certainly there will be support groups there.
    2. Since you are already vegetarian check out Spud Fit on YouTube. My husband and I eat mostly potatoes and spent $220 CDN in January and that includes hosting friends and bringing food to pot luck dinners.
    3. Pay your school first.
    4. Do maximum employee match.
    5. Treat every little thing you do together as a ‘date’. There is great joy in the small things.
    6. If you want children don’t wait too long. Fertility decreases with age and if it is important to you, you don’t want to miss out, or spend huge money on fertility treatments.
    7. Ask the advice of successful people. Parents, grandparents, friends. Just because people have ‘Stuff’ does not mean they have money and just because they don’t have ‘stuff’ does not mean they are broke. Frugalwoods is a great place to find smart, creative people.
    8. Examine every upcoming expense and ask yourself if there is another more creative and less expensive way to do it.

    Congratulations. I know you are going to be very successful in life!

  44. Kelsey says:

    So interesting to read about PSLF! My husband and I looked into this a few years ago because we both work for non-profits. We started the process, but got discouraged after a year or so for several reasons…1. We got married and didn’t qualify for reduced monthly payments anymore, so we were suddenly paying a monthly amount that was going to leave very little (if anything) to be forgiven after ten years. We considered filing taxes separately, but since we wanted to buy a house together and have kids, we worried we wouldn’t be able to take advantage of certain tax deductions if filing separately. Also, you can’t contribute to a Roth IRA if you are married and file separately. 2. We had both consolidated our loans about 6 years into making payments and found out that all the payments we made before consolidating didn’t count toward the PSLF! So we were starting at square one 6+ years in….and that made me so angry I gave up on the whole thing and decided I would just try to take pride in paying them off myself as fast as possible. Good luck to you in your decision!

  45. Liz says:

    Hey Bridget! My husband and I went through a pretty similar situation (he had student loans & I was debt free). We decided against trying for loan forgiveness just in case the program went away and since our payments wouldn’t cover interest, we would be in a far worse situation. You seem to have pretty open communication with Jack, but I would definitely talk with him about how he feels paying off your loans. There have been plenty of times I was resentful about “our” money paying “his” loans (looking back I see it was petty, but I still felt it). Looking back, I wish we would have split payments so he was focusing on his loans and I was focusing on building savings. So if you happen to be just like us, that is my advice 😉

  46. Laura says:

    Hi. Thanks to Bridget for sharing and lots of good advice here. I just wanted to chime in on the matter of paying off your mortgage. I agree with Ms. Frugalwoods that NOT accelerating your mortgage can make excellent sense. We paid off a massage mortgage ($400,000) in a decade with a combination of frugality and some dumb luck. We then purchased a second property and deliberately carry a mortgage on that property. Our only goal is that is paid off in time for my husband to retire in approximately ten years (his choice). Our mortgage sits at under 2% interest and our investments earn much more than that. As Ms. FW suggests, it makes far more sense to throw extra cash at our investments than our mortgage. Like you, I don’t like that big number debt. I totally get that feeling of wanting to pay off all debt yesterday. We accelerated our mortgage on our home because I hate debt. But I have learned to get past that number in the interest of savvy investing.

  47. Anon says:

    What do you need from a cell phone service, Bridget? If it’s just talk and text, you can look into Republic Wireless. Their plans start at $10/month for unlimited talk and text, but you have to buy one of their phones (they use the Sprint network, if memory serves). I have an unlocked phone and use US Mobile. I pay $15.26 for 750 voice minutes and 1000 texts, but I may choose a different plan next month, as I’m not using all of these. I don’t pay for data, as I don’t feel it’s needed. I have wifi at home, and when I’m out, most places have free wifi.

    As Mrs. FW said, you need to stop the renovations; you simply can’t afford them right now. I’d also strongly suggest you try to find a cheaper internet. People have had success with calling their ISP and threatening to cancel because the rate is too high. This usually gets you transferred to the “retentions” department, and they will, more often than not, cut you some kind of deal. Also, I hope you’re not paying to rent a modem or similar from your ISP. This is an unnecessary fee.

    Have you considered trying to rent out a room in your house (if you have space)? That could bring in some extra income to help offset some of these expenses.

  48. chasesfish says:

    I think Bridget and Jack are running a very efficient household. I think this is 100% an income problem and the advice in using her 20s to get a six figure job is critical.

    She needs to use LinkedIn and invest nights/weekend into networking and consider a job in sales. $175,000 on student loan debt for a $45k/year job doesn’t work.

  49. Two things I’d contribute: ask your employer if they will cover your bus pass (or at least offer a discount, many do) and shop around for all services. Internet has been a big thorn in my side lately and after the yearly promotion expires they jack up the price. Worth it to spend the time to shop around every once in a while.

    • Lisa says:

      Great idea!! Since it’s a start up maybe even explain to the employer that the salary is a barrier to paying off the student loan debt and ask if they can contribute to that in some way that is tax advantaged for them.

  50. Cora says:

    As you are both on the same financial path, it does not really matter, when or if you get married. If you (obviously both) feel like it, do it. And do it your way. Don´t wait. You simply don`t know, if there is enough time left, to do it “someday” with all the familiy members and friends you love.
    For me, the answer for question 3 is hidden in the question itsself. When you ask: should WE pay of (..), then obviously you pay on what you both need and want first. And apart from this and disregard the interst rates: a payed off student loan won´t give you both / your family a warm place to live. A house could. Please do not underestimate the weigth of debts over the years, when you don´t feel save in your home; afraid to loose it. Those debts can haunt you through your life (i felt that, and happily, i will be finally totally debt free latest by end of March 2018, with only a litte morgage left).
    And – yes- you will always need an emergency fund.

    Greetings from Germany, all the best

  51. Professor Kate says:

    First of all, as someone who is married 30+ years, I can tell you that there is never a “perfect” time to get married, buy a house, or have a baby. If Jack is “the one,” and it sounds like he is, have that frugal wedding and enjoy it!

    Second, I think I’d concentrate on paying off the student loans simply because they have a higher interest rate. I echo others’ concerns about the PSLF program. Your needs, both financial and emotional, WILL change in 10 years, and such a program may not be a good fit after a few years. I’d think twice before committing myself to that. If you are looking for extra money, How about a middle road of, say, taking on extra freelance work (if your career lends itself to it) and tossing that money at your student loan, too? It’s hard, but if you can maintain your focus, you will be OK.

    Third, make sure you have an emergency fund. I just found out on Friday that my 16 y.o. Volvo needs over $600 of work. And last month the alternator on our 11-y.o. Ford crapped out. You just never know.

    Find a cheap cell phone plan… they’re out there.

    Finally, finish those renos on the house and be done with it for a while. Or, as Mrs. FW and others have suggested, as repairs come up, learn to do them yourself.

    Good luck! I think you and Jack are on your way to a bright future! Max out those 401(k) contributions and make sure you have health insurance!

  52. Emily K says:

    Not sure if you have an extra room, but I have to echo Anon’s comment about considering renting out a room. Portland is a great market for Airbnb and you could easily bring in an extra $500 a month that you could throw at your student loans.

    Thanks also for sharing your story! I am about to turn 28 and definitely feel the same pressure as you do on eliminating student loans and saving enough for retirement. Also, I am married and would highly recommend it! 😉

  53. Cindy Brick says:

    Gee, am I the only one to advocate paying off your mortgage early?? We used part of the Brick’s inheritance (from his mom) to do this, in spite of various experts advocating putting that money into investments. (The stock market was especially touted.) Soon after we did it, the Brick quit his job (for medical reasons) and the market crashed. Having the house paid off, without the pressure of trying to find the mortgage payment, was an incredible relief. (We would have lost about 25% of our original investment, anyways, based on what we were considering doing with it.)
    This can be answered all sorts of ways, without people making a mistake — it really depends on your situation. And there is a tax advantage to not paying it off. (Though it’s not as big as some would imply.) But if you have a mortgage, the company doesn’t care whether you’re sick, unemployed or Aunt Tilly just died — you still have to make that payment. Every single month.

    YES, absolutely if you have an employer match, contribute enough to your 401K to get all of it. That just makes sense.

    If (God forbid), you and Jack break up, will he decide that he owns half of the house, since he’s making half the mortgage payment? You need to have something in writing to protect yourself…or at least clarify.

    Going to work for a nonprofit certainly makes more financial sense, given what you’re describing. But it does limit you. (And if you work for a state organization and get a pension, like what the Brick gets from PERA in Colorado, it will negatively affect your Social Security payout, too.)

    Finally, I’m certain you could cut some costs out of that $300 monthly for food and going out. Yow…for one person…

    • Christine K says:

      No, I agree with you. We are almost done paying ours off (about another 10 months), and I don’t see it as just a psychological boost. I see it as a payment I no longer need to make ever again, especially if we experience a job loss or other hardship. To me, not having any debt is freedom. Maybe I could make more by investing that money, but that’s a gamble. Paying off the house is a certainty, if that makes sense…maybe it’s just how my brain works though. I don’t want to have any debt, and the mortgage is debt. I guess that makes me extremely debt-averse, but I’m OK with that.

    • Laura says:

      I was one of the posters who advocated carrying a mortgage and investing extra cash. The math makes sense and we now deliberately carry a mortgage on our second property. That said, I will admit I hear you and agree at some level. We moved heaven and earth to pay off the mortgage on our home (and renovate without debt). Having that debt paid, if you can afford it, provides all sorts of emotional advantages. And with an expensive, medically complicated kid it provided a huge sense of financial security. We were fortunate that through frugality we could do both – pay off a mortgage and max out investments. Bridget will need decide what makes sense for her, but if money is limited the math supports carrying a mortgage.

      I also agree with you about the $300 food budget. Like Bridget, I don’t eat meat (I am vegan). One can eat pretty cheaply and certainly well below $300/mo.

  54. Bridget B says:

    I was a teacher and thought about taking advantage of the teacher loan forgiveness (5 years and up to $17,500 forgiven). I soon realized that I may not be a teacher for 5 years, so I paid off my loans quickly. My loans were only a little over $15,000. I’m glad I just paid them off, because I ended up being a teacher for only 2 years. Even though you have such a large amount of student loan debt, I would still try to pay it off as quickly as possible. Circumstances can change.

    • Leah says:

      I too paid off my teacher loans early. I’m still a teacher 5 years in but no longer at public school; I took a pay cut but am at a private school that works better for my family. I had much smaller loans than Bridget, so it’s easier than done. I wish her luck in her decision!

  55. Michelle says:

    “plus the tax I will have to pay on the forgiven portion, which I’ve unofficially heard is taxed at around 25%, so perhaps $30K in taxes?”
    FYI – in the Public Service Loan Forgiveness program, you won’t owe taxes on the forgiven portion after 10 years of payments.

    Aside from that, you have to be making payments in an income-based repayment plan or your payments don’t count towards the forgiveness program. By the end of 10 years, even in a non-profit job, you may end up making a high enough income that you won’t qualify for income-based repayments and then you won’t be eligible for public service forgiveness. For help in figuring out which repayment program you are eligible for, check out the Repayment Estimator on the Studentloans.gov website: https://studentloans.gov/myDirectLoan/mobile/repayment/repaymentEstimator.action

    Personally, I have a similar amount of student loan debt as you, I work for a non-profit, and I’m making payments in an income based repayment plan. But I’m not counting on public service loan forgiveness: not sure the program will exist in 10 years and if/when I get a higher paying job, I plan on just getting the thing payed off. In the interim, its a bit disheartening to watch my loans grow every year due to accrued interest. If you have the option to pay your loans down now, you should just get it done.

  56. Bree says:

    Hi Bridget – Thanks for sharing your story!

    My husband and I are in a similar situation, in that we have over $200k with his doctoral degree in the medical field. The hospital he works at is non-profit, so his loans are going through the PSLF program because he is eligible BUT we are not counting on forgiveness. Ten years in quite a long time – keep in mind not a single person has actually had loans forgiven under the program, as the first eligible date is 10/2017. Time will tell, but it isn’t something I would count on as a certainty. As it currently stands, your loan is growing each month. It’s scary to think that would likely continuing growing for ten years before it *may* be forgiven.

    We also recently bought a home (similar price, interest rate, and down payment as your own), so I know the feeling of wanting to pay off the mortgage quickly. We ultimately have decided to not to pay more to our mortgage and instead increase our emergency fund and attack our student loans…the interest rate is double what our mortgage is, so the numbers make sense to do so.

    My overall suggestions would include:
    Contribute more to your savings account, perhaps three months of living expenses, or whatever number you are comfortable with.

    Start paying down the student loan. If you have an extra $2300 to pay toward your mortgage, than you should easily be able to pay off the loans. It may take time, but student loans weigh on you more than a mortgage does.

    Good luck!

  57. Miranda says:

    A couple of other points about PSLF:
    1. Just to repeat from above, the forgiven amount is NOT taxable.
    2. You are required to work 30 hours a week. That can be 2 part time jobs or one, but if you work only one they need to classify you as full time.
    3. It’s not just non-profit jobs; government jobs count, too. So any city, county, state or federal job.
    4. The payments do not need to be consecutive. If you take since time off, that’s fine, but it extends the time frame.
    5. The best source of information is to go right to the souce: studentloans.gov

    It’s a personal choice. Like Mrs. Frugalwoods wrote, you need to look at jobs on both sides of the fence, be realistic about what you can expect to earn in the next decade, and crunch the numbers. Make sure you look at benefits, too. Not all non-profits offer heath insurance, matching retirement funds, etc. Once you decide about that, the rest will fall in to place.

  58. Anon says:

    I feel for you on the student debt. When I graduated from law school, my then-fiancé and I had about $340,000 in student loans combined. I was responsible for $275k of that. It has been quite the journey, but five years out we are married, down to $40k in debt, have a child, and have saved for a down payment on a house. We could pay off the debt instead of using the down payment.

    Here are some things to consider:
    1. On an income based repayment plan, including the public service loan forgiveness plan, the amount of your monthly payment depends upon your income. If you marry, your spouse’s income will be added to yours for purposes of determining the amount of money that you are expected to pay monthly. Avoiding marriage for ten + years for tax and loan purposes wasn’t for me.

    2. Regular income based repayment is taxable when the amount is forgiven. (I think its about 20 years out) If your monthly payments are lower than the interest accrued, the amount of your loans after this time period could be quite hefty. The entire amount is considered forgiven in that final year. So, if you have 150k left, then your taxable income for the year is 150k plus whatever you (and your spouse) made in other income. That will stick you in a higher tax bracket than normal most likely. If you aren’t even paying the interest, then it will grow substantially over time – making the tax bill exorbitant.

    3. Public service loan forgiveness – is not considered taxable in the year of forgiveness. However, this program is subject to change and there are strict reporting guidelines. You need to make sure that all your documentation is in order. And remember, your husband’s income is also considered. For me, it wasn’t worth it because I didn’t like the uncertainty of the program – the thought of interest accruing over ten years and then having the forgiveness not be there was too much risk for me. I also didn’t want to worry about suppressing my and my husband’s wages over the next decade.

    The path I took was to pay it off as fast as possible, particularly at first until it was under control. In the early days it accrued more than $1000k in interest each month. It was awful. I put over half of my income towards the debt, all bonuses or other money, wedding gift money, everything went to the debt. We worked jobs that paid very well but were otherwise awful. When we had our son, things changed a bit. It was harder to put as much money toward the debt (daycare is pricey) and working 24/7 was just not possible any more. We took lower paying jobs in a lower cost of living area. However, they still pay very well for the area and we can still put money toward the debt and our goals.

    If I were you, I would get married, but spend the least amount of your own money as possible on a wedding. I prefer to deal with financial stuff as a team with my husband – all debt, income, assets etc are joint in our eyes, but that is a personal choice. Try to refinance your loans to get a lower interest rate and then pay it off as fast as you can. No extras, postpone having kids, and buckle down to get rid of the debt on your shoulders. I would 1. get an emergency fund, 2. contribute up to the match for 401k, 3. refinance student loans and then pay them off, 4. focus on growing your income by whatever means necessary, when things get under control and you start a family then look for more balance with work.

    Keep in mind, I am not a tax professional and there are major tax implications for loans and marriage – make sure you know what you are doing! Also, refinancing will result in losing the benefits associated with federal loans.

  59. Amanda says:

    Hi Bridget! Just wanted to weigh in on the PSLF issue. Like many other people have said, you should definitely be committed to working in public service if that’s the route you’re going to take, AND you want to make sure that you are employable in that field and will continue to be. I live in the SF Bay Area (so, somewhat similar to Portland in terms of social justice/public service atmosphere) and have worked at a non-profit since finishing law school eight years ago. I have a lot of student debt and I’m looking forward to having it forgiven in the coming years. BUT I think that people here are often surprised by how competitive non-profit jobs can be, how low the pay can be relative to cost of living, and the irregular hours that are worked. I went into law school knowing that I wanted to go into public service, so PSLF was an awesome perk, but I don’t think I would have made the switch if it hadn’t been my intention all along. Like SF, Portland is a highly desirable area, and public service minded people are happy to move there from all over the country. So those low-paying jobs get a lot of applicants, and employers look for a demonstrated commitment to public service and specific experience in the particular field you’re going into. ALSO in today’s political and budgetary climate, I’m anticipating some funding cuts in the coming years, which will equal fewer non-profit jobs. So there’s no guarantee that folks entering public service jobs will be consistently employed in them for the next ten years, which will delay forgiveness. Also consider the rising cost of living in Portland; it’s amazing that you locked in an awesome house at a good price, so you’re set in terms of housing, but the rest of your money may not go as far in the coming years. Oh, and hours vary widely of course, but I’ve found that at all of the non-profits I’ve worked at, the people tend to go above and beyond, frequently working outside of normal work hours because there is such a high need for assistance among the populations that we serve. All that said, I am immensely happy with the path I’ve taken; it was the right one for me and I would never trade my work with foster kids for a higher paying job in the for-profit sector, and always encourage people to enter this field IF it’s what they want to do. Good luck with everything! I’d love to see a follow-up to check in on what you and Jack decide.

  60. Kaylin says:

    I’ve been in a similar place but admittedly with a smaller (still large to me) amount of loan debt. First off, the only thing I know to be certain in life is uncertainty. I bet you are a totally different person than who you were at 18 and this will also be the case when your 38. While the loan forgiveness plan is a nice idea it’s based on who you are now and I guarantee you won’t be the same person in ten years. That’s not to say the loan forgiveness plan isn’t a good idea but I would build flexibility into your life and don’t build your whole life around this plan. You want to have the option in the future to change your mind. I would pursue a career track that you want – if it happens to coincide with meeting the requirements for this loan forgiveness program then great but if not then just proceed on what is best overall for yourself. If you have $185k in loans then I’m assuming you have several loans totaling that amount. I would pay the minimum amount on all loans except for one you choose to put extra towards – I chose to do this contrary how is usually suggested and tackled my smaller loans first. It felt SO good to pay off a loan even if it was only $4,000 total and it encouraged me to keep on going. While your doing that you also want to max out your 401k contribution because that’s FREE money. Also, start building an emergency fund. I would also start having honest conversations with your partner about whether helping you to pay off this loan amount wil create any resentment within him. I would challenge yourself now to save/pay off debt aggressively because it does get harder once you have kids. Best of luck, you got this!

  61. M. says:

    Thanks so much for your story! Wishing you much luck in making your decision! I also have a Master’s Degree (from City University so the degree cost waaay less than yours, I was able to pay it off after a few years of me and my husband literally throwing every extra dollar at the loan), and I happen to work at a non profit. While my salary is decent-ish for someone who has a Master’s Degree, my health insurance cost is REALLY high; even though my company pays for 2/3 of the plan. From what I understand, this is pretty standard in my area that non profits’ health insurance coverage requires the employee to pay lots and lots (for not a great plan :/). I would definitely look not only at the salaries, job descriptions and ability to grow within a non-profit company, but also at their benefits package before making a decision to move. I am currently walking away with a really small amount of money due to my health insurance contributions. I would gladly take a pay cut to pay only $25 a month for healthcare! Just another factor to think about. Best of luck with your financial journey!

  62. Mandy says:

    Thanks for opening up and sharing your life with us. If this was me, I would:
    1. Sell the house and find a tiny studio apartment to share. (or move in with parents?)
    2. Get married now. Don’t wait for the ‘right’ moment
    3. Search for a higher paying job or one that doesn’t require you 24/7 so you can get a second job
    4. Pump every windfall into the student loans until they are gone
    5. Celebrate and live the life of your dreams

    Good luck to you and don’t give up!

  63. Christine K says:

    Is it OK to talk about something not suggested? If so, I’d honestly sell the house and find comparable (or better) jobs in a lower cost of living area. Portland is lovely, but it’s very expensive! It doesn’t sound like either of you is set on keeping your current job forever, so perhaps a comparable job can be had in a cheaper area, putting the remainder to work paying off the loans. We actually did this (moved from MA to FL, HCOL to moderate COL), and it made a huge difference in our monthly savings while actually upgrading our quality of life. I don’t know if you follow Mr. Money Mustache at all, but he has written about this issue and the gist of it is that moving should always be considered as an option to improve your financial situation/savings rate. I wouldn’t depend on the loan forgiveness programs…there is too much uncertainty in my opinion. Plus, 10 years is a long time to carry such heavy student debt. I’d go at that debt hardcore and pay it off as fast as possible.

    I’d also get married asap, because I don’t think that that’s something you really need to put off unless your partner is uncomfortable with marrying while you carry the school loan debt. I agree thta your idea for a wedding/party sounds fabulous and frugal 🙂 I don’t think you’ll see a tax penalty to getting married with your current incomes, and perhaps it will even be a benefit to how much you get back at tax time. Great job focusing on your finances and having a plan for the future! You are doing great!

  64. Barbara says:

    I used to live in Portland and work for Trimet. If you only use the bus to and from work and average 20 days a month, buying 2 books of 10 2.5 hour tickets would only cost $50 a month. That would save you $50 a month.

    Also, Portland has a lot of free events going on all the time. You can have fun and not spend money. Willamette Week is a good source of information for these.

    Good luck!

  65. Naomi says:

    I’m probably repeating things others have said . . .
    (1) Absolutely take FULL advantage of the 6% match and contribute at least 6% to your retirement account. Not sure if you’re doing it or not right now (maybe I missed that?) but DO. It’s like a 6% bonus.
    (2) Don’t count on sticking with a job for 10 years. I thought I’d do my first job after grad school for 20 years. In fact I got offered a “better” job after 1 year, then got let go from that job a year later, didn’t like the job I took after that and quit after 6 months. I know I sound super flaky, but I’m not. I’ve stuck with the same husband for 15 years (since I was 19). I got a master’s by the time I was 23. And I’ve stuck with other organizations since then for 5+years. But I don’t recommend locking yourself into a work environment you don’t like for a long time. Like others have said, who’s to even say that policy will still be in place 10 years from now?
    (3) I took the “pay off the house” route & bought a house with cash when I was 27. (Birmingham’s super cheap..) I don’t recommend it, unless you’re income fluctuates a lot (so that you’d have a hard time getting a mortgage), though. Unless you’re the type to spend any money you have on hand, then you’re better off locking it into a house than other crap you might spend it on.

    I think I’m in agreement with others — at least the matching part of the retirement account first, emergency fund second (super important since you’re counting on two salaries to make your monthly expenses and there will likely be a time when one of you is unemployed at some point in the next 10 or 15 years), then student loans, then house.

    Good luck!!

  66. Liz says:

    I didn’t see any comments from B that she is interested in public service – just the loan forgiveness. If your career goals aren’t service-oriented, I submit that the right thing to do is pay back the money that you chose to borrow.

    Definitely do the math before you get married. There is a “marriage penalty” for working couples – our tax system was designed for women who don’t work. Limitations on income for things like IRA contributions do not double when you are married – they are higher, but definitely look at ALL the numbers. We did not… If we had not married we’d net about $15k more per year than we do right now, even splitting up our health care policy – we could actually tax advantage of separate FSAs for daycare, could both contribute to Roth IRAs (or deduct traditional IRAs), etc. There are advantages to being married in some situations, but not all!

    • S.G. says:

      I threaten my husband with divorce every year when I do the taxes. The first year after marriage when withholding let us down I almost cried when I realized the check I’d have to write.

  67. Mollie says:

    There are non-profits with NO work life balance, and there are for-profits with reasonable balance. Try to evaluate whoever you may work for with this in mind and find the best company/organization that fits with what you need professionally.

    I started out aiming for the PSLF since my background is social services. The 10 year time frame concerned me, but I didn’t think I would ever have any other option. As things turned out, I left my non-profit (no work/life balance!) and found myself in the for-profit world. I decided to pay off my loans instead of inflating my life, and now I’m happily back in social services with no loans and better balance.

    Since I already looked into it for my situation (unless they’ve changed rules in the last 5 years), the work does not have to be with the same employer and government work also counts as long as you’re a federal employee and not a contractor. It does not have to be 10 consecutive years, but make sure you save your paystubs so you can document the 10 cumulative years of full-time non-profit/government employment.

    My biggest concern about the 10 years was the potential of having kids and thus not wanting to be in full-time work and consequently lengthening the payback period. If your partner is the one staying home, this may not be an issue, but think about whether there are any other reasons you may not want full-time work at some point in the future.

    Good luck!

  68. Jason says:

    Here is an old site that talks about a guy who paid off his student loan debt. Good story of working hard.

    https://nomoreharvarddebt.com/

  69. Jessica M says:

    Something worth considering… I know when we first started paying loans back, it was an enormous amount of stress—my husband and I both came in with loans, and I felt extremely TRAPPED by the loans and the approximately $2000 payment we had to make each month. My husband created a spreadsheet and we started throwing all extra money at the smallest and created a snowball. It has been so beneficial psychologically for us to reduce our minimum payment—we are down to about a third of the initial amount we owed, and it seriously just gives me room to breathe. I kid you not, I would have nightmares about paying for things before. And after a few years, it is just such a relief. If we have a really tough month, we just pay the minimums but then get back to the snowball as soon as we can. So I would strongly encourage paying things off if you can. 🙂

  70. Christine says:

    Refinancing student loan debt will bring that rate down considerably. In MA/NH (Citizens Bank) around 2.something percent. However you would then be ineligible for the PSLF program.

  71. Chelsea says:

    For you, like me, PSLF seems great on paper, but in my case, I’ve chosen not to pursue it for a number of reasons. Firstly, I had been working in a qualifying job (higher education) but not making qualifying payments for several years before I realized it existed. I considered changing plans to qualify, but in the end a 10-year commitment plus the idea of my balances skyrocketing on an income-based plan scared me off. I have a stable job and it was a fair shot that I’d remain in the non-profit sector for 10 years, but even so if I lost my job or wanted to pursue different opportunity I could be left owing far more than I started out with. The lack of freedom and the anxiety of watching my balance increase just wasn’t worth the savings for me. As others have mentioned, a small part of it was also the idea that it is my responsibility to pay them off.

  72. Lauren says:

    As someone who works at a nonprofit, we are facing some funding cuts this year and major funding cuts next year. I may not have a job come 2018. My husband and I determined we wouldn’t go the PSLF route from the onset because of unpredictable situations like this.

    If you want to go into the nonprofit world, do it because it’s where you want to be. Any financial benefit would be on top of that. Oh, and be wary of nonprofits that receive state or federal dollars as a large chunk of their funding. More than likely, they’ll be the hardest hit over the next couple of years. And to be clear, I am not trying to make political commentary in any regard. This is just merely what I am seeing in my corner of the nonprofit world.

    If you do go the nonprofit route, be very careful about refinancing. By moving your federal loans to a private refinance company like SoFi, you no longer can participate in PSFL.

    I might disagree with Mr. PTM about variable vs. fixed. I have variable right now for one of my consolidations and it’s great until interest rates spike up to 8% (something I experienced in the late 2000’s). If your repayment plan is a long one, it leads into the uncertainty. If it’s short, hey, it may not matter. I know my husband was able to get around a 4% fixed interest rate for his refinancing of student loans, which now allows us to focus on putting more $$$ into things that get a better return (retirement, investments, etc.).

    Just some thoughts from my own student loan experience. Like others, I applaud you for thinking through all of this at this stage of your life. You should be proud!

  73. Shannon says:

    When considering getting another job, or comparing the loan forgiveness program with your current situation, don’t forget to factor in your $25/month health insurance. I am not american, but everything I hear would suggest that the true value of your current employer’s plan is far greater than the cost you are paying a month, so when comparing salaries etc, you need to take that into account.

  74. Laura says:

    There’s a lot of great comments here. I’m curious – Bridget, you & Jack have been together for 5 years and hope to marry, but only you bought your house? Or did you & Jack buy it together (given that he pays half the expenses)? Is his name on the title and/or mortgage too?

    While some folks advocated moving to a cheaper COL area, it sounds like you really want to stay in Portland. In that case, I think your strategy should be about boosting your income. You said you work as a Social Media Manager for a healthcare startup but would like more regular hours; could you leverage your work experience into a non-profit hospital or other non-profit health care facility? If the salary and benefits are equitable, that might (might) provide you with the shorter hours you want as well as having a non-profit job as a backup. I say as a backup because I do agree with others that aggressively paying off your student loans is a better strategy. If you can move to a comparable job with more regular hours, then you might consider a PT job, maybe something freelance that gives you flexibility, to bring in extra income to throw at the student loans.

    Incidentally, you only pay $25/month for medical insurance??? WOW that is great! Envious! Our family plan with Blue Cross Blue Shield runs around $150/week (yes, week, not month). This is another reason to stay in the health care field!

    You do a good job at living frugally; the only exception is that this isn’t the time to make non-essential renovations to your house. You’d be better off building up an emergency fund so when (not if) essential renovations, e.g. repairs, are needed, you have something to cover them with. And yes, definitely contribute to the 401K and get the match! Your future self will bless you.

    Also, frankly, as long as your mom is o.k. with covering your cell phone plan, why change that? It sounds like it’s a pride thing, but if she really doesn’t mind and it doesn’t rock the boat, leave it as is. You can always treat your mom to a great homemade meal at your new house as thanks!

    Last, you might want to track the $300/month on food and see if there are good ways to cut costs. For example, if you tend to run out to the store when you’re out of something instead of keeping a list and shopping once a week, you’re likely spending more money. You may find that you can eat just as well on less simply by using a few hacks.

    Good luck! I’d love to hear in 6 months or so how you’re doing and what decisions you made.

  75. Kate says:

    Fellow mid-twenties PSLF-er here! Few things to consider:

    1.) Some people are saying you should refinance for a lower interest rate, but be careful with this. Your loans might not be eligible for PSLF anymore if you refinance

    2.) Your loan payments are going to be based on your AGI, so that’s another good reason to contribute to your 401k instead of IRA! Your AGI will be lower which makes your student loan payment amount lower each month. You can still pay extra every month if you want of course, although you have to ask the loan company to remove “pay ahead” status to avoid messing with PSLF credit

    3.) Look into a nonprofit university! I work for a big one, and they subsidize both my health insurance and bus pass. They also have good life insurance, pension, disability insurance, and even legal insurance. My salary is not that much lower than yours (45k entry level), and you’d probably make more since you have an MA (I only have a BA). It has a great work/life balance as well. It can be a little tough to get in, but once you’re in it’s easy to move around to different departments.

    No advice about the risk of PSLF being discontinued. Hopefully we’d all get grandfathered in if it did, but no way to know for sure. I pay a bit extra on my student loans so that if it did get discontinued I wouldn’t be completely screwed, which to me seems like a good way to hedge my bets.

    Good luck! 🙂

  76. What a brave woman you are Bridget! It takes a lot of courage to take such responsability at 28 years old. Good for you!

  77. susan says:

    Hi-
    I worked for five years in an area of need that offered loan forgiveness. Unfortunately, when I finished my time, I was informed that because my student loans were not started within a particular time period (I had undergrad/grad loans), I was ineligible. It was a bummer, but working at that particular school was not just for the loan forgiveness, so I was ok.
    My ultimate advice is to maximize your work income. At least you have a little more control over your own situation without too much government dependence.
    Best to you.

    PS-Chipotle is an awesome wedding party idea!

  78. Kate says:

    I don’t have anything to add here but instead wanted to chime in with words of support. The fact that you’re asking questions and exploring financial options in your 20’s speaks volumes. Keep up the momentum and you’ll have a bright financial future 🙂 Good luck!

  79. Another Laura says:

    From an oldster, let me just say: don’t let the tail wag the dog here. Make the big decisions about the life you want first, then figure out what version of finances makes the most sense.

    Do you want to work in public service? Is there a cause that draws you? Great! Look for a job in that area that offers loan forgiveness. No? Ok, look for a job/career that you want and tackle that debt. 10 years is a loooooong time to stay in a job you don’t love because your loans might go away at the end of it (heck, it’s a long time to stay in a job you DO love!).

    Do you want to be married? Great, get married! No? OK! In either event, talk/plan how you are going to split expenses, who owns the house, etc. Do you want to have kids? Very cool (wouldn’t trade mine for anything). Would you rather sacrifice a salary to have a SAH, send kiddo to daycare, have nanny, find local/family care, etc.? Again, no right or wrong answer, just different preferences with different financial consequences, all of which will affect how slowly/quickly you can pay down debt and reach financial freedom.

    I would also suggest to be a little realistic and prioritize a bit. I know your “where you want to be in 10 years” is your idealized life, but: you want to be debt-free with a SAHD and a 9-5 job. You owe $450K between student loans and mortgage and make $43K/yr. If you maintain your current pay, you will not even *earn* the principle of what you owe over the next 10 years, not even counting interest.

    This is not bad or horrible! It’s just life! So, given that “everything” is not an option, which is more important? Do you want a higher-paying job if it requires longer hours so that you can pay down the debt faster, or are you willing to extend the term out longer for a 9-5 job? Do you and your BF agree that you should pay them down yourself, understanding that this means the debt lasts longer, or will he chip in so you can both be free sooner? Does he want to SAH, or is he willing to work longer to get that debt gone? Etc. etc. etc.

    Again, none of this is “right” or “wrong! No one gets everything they want. So you just need to figure out which of those wants are the most important to you. Once you know what you care about most, you can focus your considerable energy and talent on making that happen.

    In terms of where to put your money, I’d say:

    1. Emergency fund. Things almost never go exactly as planned.
    2. 401(k) match. Free money.
    3. Student loans. Because (a) higher interest rates, and (b) not dischargeable in bankruptcy (whereas at least with a mortgage you can sell the house if worse comes to worst).
    4. Full 401(k)/IRA/Roth/etc. This is special tax-sheltered space that is “use it or lose it” every year.
    5. Mortgage. (I recognize some folks never get to this step for the reasons Mrs. FW laid out; I am listing it here because you identified it as a priority).

  80. Cody says:

    I’m so glad we’re talking about PSLF! I, too, work at a nonprofit and I’m continually surprised how many of my colleagues don’t know about the program. So huge kudos for that!

    I’m in a similar boat and, even before addressing the financial tradeoffs, there’s a huge question about how much to rely on the PSLF existing in the future. As the program stands right now, the forgiveable amount is not capped or taxable. So, after 120 qualified payments in qualified employment, you’re done. But, both of those parts–the total amount forgiven and the tax implications–are under debate. President Obama’s budgets often included recommendations to cap and tax, which means after 10 years, only ~$50,000 would be forgiven AND it would be taxed as normal income, whatever your bracket is.

    That’s scary. The tax implications are less scary–you can plan for those. But, depending on your monthly payments and interest rate, if the forgiveable amount is capped at $50,000, there’s a VERY good chance that won’t even make a dent in your total amount owed after not even covering interest for 10 years under the IBR payment plan! You could very easily still owe $100,000 after forgiveness!

    But, those aren’t part of the program yet.

    I’ve been told by connections at FedLoan and the Dept. of Ed that the best thing to do if you are considering this is to file your annual certification form very frequently. You’ll need to demonstrate that you relied on the program by taking a lower paid, nonprofit job. You may be grandfathered in if you can demonstrate that.

    Just some more stuff to think about!

    • Christine says:

      PSLF being capped/taxed/taken away is my biggest fear too! I have been at a non-profit for 2.5 years and just submitted the PSLF form for the first time. I have been putting it off but I definitely won’t anymore – that really is the only way to prove you are planning on this program.

  81. Karen says:

    Bridget, life doesnt come with guarantees, does it? Stay open and honest with your partner, embrace the life you deserve through your obvious talents and strengths. One dollar at a time, one frugal decision at a time you’ve got this. Good luck:)

  82. S.G. says:

    I think a lot really depends oh the salary adjustment you’d be looking at, and opportunities for advancement with either one. Cutting your income in half, or severely limiting your opportunities for advancement, in order to save money in the future is penny wise and pound foolish. And what might the rate shift be if you refinance?

    There are so many working parts to such a decision, both personal and financial, that it’s difficult to offer advice. I think you need to dig a little deeper on both options (specifically wrt salary and interest rates) to get more substantive feedback than what has already been given.

  83. Johanna says:

    Thanks for sharing your story! I agree with Mrs. Frugalwoods on the importance of establishing an emergency fund. I finally have mine and I can’t tell you the stress it took off me. You need some liquidity in case of emergency. Just my two cents. Best of luck and keep your head up!!

  84. Barbara Barry says:

    Life financial decisions ARE long term…don’t be in such a hurry to PAY OFF DEBT. You are in a 30 year mortgage for a small house and you want children, Bridget…you will be selling at some point so you will not be there long enough to pay it off. As the years go by, both of you will be making more money which will cover things to like paying off student debt, having children, buying or renting a bigger house and paying for child care. There isn’t much work/life balance when you are starting out…there will be time for more later. It IS possible to get creative and less expensive child care…we found a local stayathome Grandmother of two who helped raise our two as well and they love her to this day. Gave them a great start. When I decided to work less than full-time when my son started middle school, I started an evening accounting business that I could do at home for a local winery…and I’ve done consulting jobs at home and at night when the kids were asleep. I agree with Mrs. FW that diversifying your assets so that they are spread out will give you a real estate investment, deferred or 401k/IRA investments, taxable stock market investments, cash emergency fund investments and a decreasing student loan balance (preferably at a lower interest rate) that will allow your gradually increasing income to cover all your various needs, including kids and have it all. In ten years the PSLF could be long gone or radically change, NEVER hold your breath for ten years. That student loan balance will not stop you from achieving your dreams: kids, changing jobs, starting your own business, retiring early….and dreams you haven’t even thought of yet. You need to juggle everything successfully and drop only the balls that are not important. It will help to have an equal partner…hopefully your SO will continue to have an increasing income as well. If you wish to commit (and see an attorney first), then marry and enjoy your life, have the kids (I recommend spread out a bit so you have time to enjoy them). Be creative with child care. You haven’t mentioned parents but often they can be helpful in many ways. Your budget is pretty barebones, congratulations! Increase 401k contributions, increase emergency fund contributions and stop fixing up the house which is obviously a favorite hobby. It sounds like your are underemployed by about 20,000 a year or more in Portland…as the years go by, as much as you love your job, decide whether Portland or its environs is where you want to raise your kids and if not, move to where real estate is less and jobs pay better. This might be a two year down the road plan…by then your SO will have two years experience in his job and his next job will be better. There are places in CA where you can buy a 3 bedroom house for less than $200,000, as an example. Every state has its cheaper areas. When you have a low mortgage payment ($800), you have more money to throw at other things, keep your baskets many and quality of life high as well. Good luck, Bridget! You can do this!!

  85. snowcanyon says:

    Agreed on paying down the student loans first (I have to say I’m mystified why people go to high-priced private universities without hefty scholarships, but I digress) for all the reasons stated above. I’m sure she’s not going to like this but…sell the house. The Portland real estate market is hot, and it sounds like the renovations mean a profit. If she weren’t thinking of having kids, I’d say keep it, but unless she’s sure she wants kids in a 750 sf house, her money would be better spent renting something cheaper and putting that money towards the student loans.

    Good for her for facing down all that debt!

  86. Lisa says:

    I haven’t made it through all the comments yet, so apologies if this is a repeat. Consider refinancing some or all of the student loans through a company such as SOFI where you get lower rates, though variable. If you are shooting for an accelerated pay off the variable rates are capped at x increase per year and it would take 10-12 years to get from the offered 4% back to the 7.25% you currently have. Also be absolutely certain that extra payments go towards principal. I made a year of additional payments through fedloans.gov that I thought were going to principal but were paying down interest.

    Second, know your tax deductions. This is my general understanding from personal experience, so please cross check against other sources. Between the ~2500 student loan interest credit and deductions for mortgage interest you should be nearing eligibility to itemize deductions and increase your refund. Combined with 401k and a pretax health contribution you are close to the Earned Income Tax Credit limit of AGI $39,617. If you can get your taxable income down to $37950 you can drop to 15% tax bracket and further increase the $ that can go to debt payoff.

    We reduced out tax withholding to 1 to increase monthly income and pay off 50k in student loans, then used tax deductions and write offs to balance out tax bill at end of year. Went from 13 years of repayment to 3 with other non frugal debts and expenses at the time.

  87. Jason says:

    I think it is commendable that you are thinking about your student loans and how to pay them off. Personally, I would actually opt for PSLF. Personally, I am doing that now. However, you can also find higher paying jobs at non-profits (e.g. a university) that will pay more money (check out higheredjobs.com for these kinds of positions). I recommend this because you will actually save yourself money in the long-run by paying the payments and also throwing that money at investments. I would also advise against paying off the condo. I mean if worse comes to worse you can pay off the house and then take out another mortgage to pay off the loans.

    The problem you are going to have is no matter what those loans will accumulate interest at a rapid pace. Your payments won’t even keep up with interest if you just do PSLF. However, if you are committed to it then you don’t necessarily have a problem with that.

    Final caveat is the 10 years. 10 years is a long-time. Can you stick with that job for 10 years? Do you want too? Are you doing income-based repayment now? There is no good answer. However, based upon my experience I would enroll in PSLF (you must be enrolled in income-based repayment…which you probably are) once you find a job in non-profits; 2) take extra money and invest it; 3) pay off the mortgage in a normal way; 4) get married that is fine, but it will increase your payments on your student loans (which isn’t necessarily a bad thing per se); 5) make sure you are committed to staying in non-profit work/501(c) organizations for 10 years. If not, then pay off the loans ASAP.

  88. Lisa says:

    Wedding stuff- we catered a taco bar through our favorite local restuartant for almost $2 less per person than Chipotle quoted us!!! Don’t do something because you think it’s cheaper, make sure you know it is! I’m also in an outdoorsy town, the local parks are gorgeous and the deposit to have our wedding in one of the parks was 100% refunded following clean up! Our friend married us and we used nice clothes that we either already had or were comfortable purchasing knowing we would wear them again so our ceremony was FREE aside from those clothing items. Our flowers were handpicked wildflowers from a hike the day before!

  89. Sherikr says:

    Hi there. Thanks for sharing your case study. It’s great to see how you are planning and taking control of your finances and your life. I think that, with your intelligence and energy, you will go far wherever you land. 😀

    As you think about you options, I’d like to put something out there. Control over your destiny. While PLSF sounds like an amazing way to support those who choose public sector careers (and I’m sure glad we have awesome and caring people who make this choice), you may be relinquishing some control over your own destiny. Your payoff terms will be determined by a government program that can be changed over time. You won’t have control over those terms and how they are changed. So your payoff plan is contingent on external factors.

    If you go the private sector route, you get to call the shots. You can decide what you pay and when. If payoff gets delayed for some reason (like you want reduce monthly payments for a period of time to take some time off, hang with any future kids, change jobs, etc.), it’s your decision.

    My friends and family will be the first to tell you that I’m a bit of a control freak. But, hey, I don’t mind that when I’m planning money.

    I know you will make a good decision either way. Just thought I’d throw this idea in the mix, as you ponder your options.

    Good luck!

  90. Bridget – getting started tackling a mountain like this is the hardest part. I commend you for taking control of your financial future.

    My recommendations:
    1. This one is tough, but I would recommend against taking a job for the possibility of your loans being forgiven in 10 years. You don’t want to find yourself stuck if you end up in a bad situation. I would seek a job that allows for upward mobility so you can increase your income and tackle that debt faster.
    2. If you have been together for 5 years then I’m guessing he knows about your debt situation. I would make sure you have an in depth discussion about how finances will work once you’re married to make sure you’re both on the same page. Arguments over money is the #1 cause of stress in a relationship. As long as you are up front about money and have a plan going into it that he is on board with, I say go for it!
    3. Definitely tackle that student loan debt first. With an interest rate that is 3% higher than your mortgage, that debt should receive all your focus.

    One other piece of advice. Dont’t forget to pay yourself first! Definitely contribute the minimum to your 401k to achieve the full employer’s match. Don’t let free money go to waste. After that, it depends on your risk tolerance. You’re earning a 7.25% rate of return by paying off your student loans. The market has historically returned around 10% with dividends, but that’s an average over many years. In reality it will be up and down. If you have a higher risk tolerance, put a little more towards your 401k while paying down your debts. If you’re more conservative, contribute enough to get the match and then take the 7.25% return by eliminating that student debt.

    Good Luck!

  91. Virginia says:

    So many great thoughts from the community! I agree with Mrs. Frugalwoods almost to a tee. Some additional thoughts: I work in non-profit near the PDX area (the Gorge), and it is NOT lucrative. You tend to hit the top of the pay scale and stay there. I think if you keep plugging away at for-profit, you will see major results in a few years. I also second getting a side hustle (soical media’s a great career for side-hustling! Plus Portland is a great city to find side jobs) to make some quick headway. If you had an uber frugal year with tons of side hustle you might really surprise yourself. Then after the year (or really any set period of time) you could reevaluate.

    One thing I wouldn’t do is let debt dictate major life decisions like career or marriage. Consider it as a piece of the pie, but not the whole enchilada (check out them mixed metaphors!!). I love your idea on a Chipotle wedding; we had a potluck and it was awesome!

    Last thought: we listened to a TON of Dave Ramsey as we were paying off debt. We don’t follow him exactly, but hearing so many other people get jazzed about paying off huge amounts of debt is super encouraging. I also really liked reading the blog Dear Debt.

    You GOT THIS, YO! Let me know if you wanna come get some debt encouragement out in the sunny side of the Gorge 😉 I had some great side hustle in PDX when we lived there, if you want tips.

  92. katscratch says:

    I went to school specifically to work in non-profit healthcare and chose not to pursue PSLF. I agree with others who have said if you’re driven to work in non-profit or public sectors, go for it – but if you’re only looking at it as a way to pay your loans, you may end up dissatisfied.

    As to my own choice – I didn’t like the idea of not paying down my principal. The terms of my current loans do not allow extra principal payments (I check yearly in case this changes), so check that if you do want to make extra payments.

    I completely agree with the advice to have your employer pay for transit. In cities like Portland or Minneapolis, where bike paths are everywhere and there are multiple transit options, I almost feel this should be mandatory when so many companies already do this. I myself won’t take a job that doesn’t provide badge access secure bike parking and free metro passes.

    And YES to the 401(k) at least to get the match!

    As far as your expenses, I really like Republic Wireless but don’t know how they compare to Google Fi in Portland. Regarding the grocery etc line item – maybe separate spending for groceries alone vs household items vs eating out to see if there is somewhere you could cut back easily.

    I don’t know anyone in Portland who spends $300/month for one person, both meat eaters and vegetarians/vegans, one with severe food restrictions, unless they’re eating out a lot more than normal. I visit often and my friends all price compare and go for the good deals, whether that means Fred Meyer instead of New Seasons or the corner store instead of the co-op. And yes, I’m a nerd and talk money with my friends because the second that Portland is cheaper than here I’m moving back west 🙂 Organic is a huge priority for everyone I know there except my brother, so it seems doable. Meal plan and eat on repeat for breakfast/lunches.

    I think it’s awesome you’re working at all of this now. Being proactive at the beginning of your career is smart!

  93. Ellie says:

    I’m with Another Laura – make your life choices based on your personal goals and values, then find the debt pay down / investment schedule that works best to hit that priority.

    My career track was biased toward the private sector, so I opted to refinance my 6.80% federal loans with private lenders to take them down to 4.61%. Whew, just typing the lower interest rate makes me breath with some relief. Like Rachel B, I went with Earnest to get the biweekly payment option (allowing me to pay of the loan one year earlier). As an aside, my private sector job is 8-5 with great work-life balance – I think private and public sector both can have downsides (e.g. drama, bureaucracy, intense workaholics, etc.) and it’s more about the company and its culture than one sector or even an industry within a sector. Also my private sector job is also mission oriented (it took a while to get there) – so don’t think the public sector has a monopoly on doing good #conscious capitalism #social enterprise #community development.

    This is a bit repetitive of earlier student loan comments – but like others have suggested, I recommend looking into refinancing your student loans – but this only works if you are okay moving from a federal loan to a private loan, e.g. giving up income based payments and PSLF. There is a growing industry of student loan refinancers/lenders, e.g. SoFi, Earnest, CommonBond, Darien Rowen Bank (DRB), etc. and even Student Loan broker websites like LendKey and Credible. The key benefit here is a lower interest rate, e.g. your 10 year loan interest rate could look more like a mortgage interest rate if you qualify, have good credit, etc.

    Due to the size of the student loan, it would be hard to move your entire loan balance to one student loan refinance (run the student loan calculators and figure out what your monthly payment would be using your current loan amount…. gulp) since you would lose public loan forgiveness. But you could potentially explore moving a portion of the loans over, or even just $5,000 at once (I like baby steps to keep momentum) to keep the required payments on the rest of the portion more reasonable. Many options with refinancing if you are open to it. Be sure to shop and negotiate your student loans just like you would a car. Everyone thinks of Sofi first because they have great marketing, but that’s like only checking one dealership to buy a car you could get at twelve places. As in, your offer that they quote you is only your first offer – but you have to know to ask for a second and third offer.

    Also when I see the small payment you are making relative to the size your student loan and the high interest rate, I have to imagine that your loan is actually growing because that minimum payment can’t be covering interest, unless you have a long-lasting interest rate subsidy that I haven’t heard of. If this is true, it’s another reason to make a plan ASAP.

    On the other hand, if you do go PSLF, you could invest the difference in an investment account… when it grows big enough, you could then decide whether you want to pay off your loans or spend it on something else, e.g. house, kids, vacation, etc. That way you’re not missing out on investing but could still potentially pay off the student loans later if that remains a priority.

    Another great budget cell phone pick: Ting / pay as you go phone service, can bring your own phone
    Also if you’re in Portland, see if you can switch to a cheaper interest provider, e.g. CenturyLink or Verizon or vice versa

    MercyCorp is a great nonprofit if you do humanitarian work, but uber competitive to get into… like a lot of great nonprofits in Portland where the labor market values social justice jobs and supply of jobs relative to the ever increasing incoming stream of labor moving to Portland.

  94. Gillian says:

    Hi there! I am in UK, so different finance set-up here. But I will say, now is the time to get some emergency savings under your belt (while you have a good full-time job and salary). I did this in my 20’s & 30’s by hiving off 50% of any bonuses, overtime and pay-increases into long-term investments; in my late-30’s & 40’s, these funds were my life-saver after illness, redundancy and period of unemployment – none of which events could have been anticipated. Also, remember to enjoy your life!!! and what you have already achieved!!! and don’t waste your life in a job you don’t enjoy!!! – time is too precious in my opinion. Gx

  95. PJGT says:

    I’m older and went back to school for a second masters and am working on my advanced degree. Unwisely, I have accrued student loan debt (and through parent plus loans) Because of severe financial setbacks that no amount of savings in the bank would have saved. My advice (since you asked)…
    1. Emergency fund
    2. Pay off house
    3. Take advantage of the 10 year repayment plan while paying off your house and see where it goes
    4. always stay insured…health, disability and term life

    Working this way for 6 years will give you and Jack options if things fo not go well for the economy, job situations or you decide to make changes in your life with children or something. Life does not always go as we wish it would and having a place to live that you own could make all the difference. This from a history student and farm girl who took her own advice and has weathered some rather tough times – even with student debt to repay.

  96. Kathryn says:

    Assuming the 185k is not all one big loan, I’d advise looking into the snowball or avalanche method for your debt. I would advise AGAINST consolidation because then you can’t focus on one loan at a time. Also, the monthly minimum will never decrease until everything is gone. Refinancing may be an option though. Oftentimes there is a minimum amount they want the loan to be to refinance so you may only be able to do this with some of the larger loans, but any savings would help.

  97. Julie says:

    Have your wedding at the courthouse, and make the reception a potluck. That’s what we did for our wedding 12 years ago. Ask for cash or checks to build emergency fund or pay debt. That’s the only thing I have to add.

  98. - N - says:

    I am not going to say anything that has not been said by anyone else. But, I do speak as an older person who never thought about debt until way further in my life, and being married to someone like me (ignoring the growing problems of debt), only made our situation more difficult. Naivety and ignorance and finances can make for a deadly combination. Fortunately, we are now tackling a problem long ignmored, and while difficult, can be done.

    First, I want to congratulate Bridget and her SO on their thoughtfulness in addressing their situation. With a 185K debt and a possible stay-at-home husband, it sounds like Bridget makes good money. That will be a help. For us, we do make good money and have good retirement plans. We are able to put money aside monthly – $1000 – to build a good cash account. Our own networth is about 500K, but we still are paying off student loans, credit cards, and a car. We live in a high-cost area for housing – as is Portland – but we can manage it. If we were to really focus on everything, we could pay off everything in a very short amount of time, but it would come at a cost to our physical and mental health, as well as our economics. Having cash – not networth – is important. Things happen. And, not having that buffer creates issues when something comes up.

    My advice to Bridget is to find a calculator to come up with a variety of scenarios for rate of debt pay-off. Budget for a regular savings plan to grow your capital at a steady rate, both in 401K and in cash. Get that match from any employer. Make sure your 401K is not a rip-off, and pay attention to the quality of the funds.

    Pay off any credit cards first, simply because they are more likely to be higher than any student loan, and you cannot write them off on your taxes. Next, focus on the higher of the remaining debt as far as interest rate. Finally, set your priorities, remembering being debt-free is great, but if you cannot have a life for several years, why bother?

    As with debt, there is a reason for borrowing money and there are reasons for choosing life-work-debt payoff balance. Each of us is an individual, so we need to understand our own psyches. I work 11-hour days and lose 4 days a week to mere existence and work. 3 days a week for a life is not my idea of fun, but it needs to be done for now. 3 days? Yes, to pay bills, do chores, care for the house, and have a life. The other half works 5 days, from home, and takes on a lot of the house-related chores, but we both pitch in.

    We sold a second property for a loss, but a good tax write-off, don’t eat out, don’t buy clothes, have a gardener, have good computers we build ourselves, have an expensive house, and have hobbies that are creative and satisfying. We make things and do things that give us the intrinsic pleasure of creating. We are saving money, paying down debt, and have a plan in place which is working – not super fast, but one which works for us.

    What is great here is that so many viewpoints will give Bridget ideas, and continue the forward momentum she has. Just don’t be caught in your later life with debt and nothing for your retirement. Nothing in life is guaranteed and the world always changes. Savor the present, learn from the past, and plan for the future to the best of your ability.

    • - N - says:

      PS – We chose to consolidate student loans so we have a fixed budget. The anxiety of variable payments on anything makes me crazy, so the knowledge of a consistent payment is better for us. We also opted for the longest term and lowest payments possible as we know that as one debt is cleared, more money may be applied to the next, and the snowball effect works very well for us!

  99. Danelle says:

    Hats off to you!!! If you want to do one of the two plans and really are pretty much at a 50/50 split I say flip a coin. Personally out of the 2 options I would not want to tie myself down for 10 yrs. Seems that could cut off to many potential opportunities. Unless you used it as a needed stepping stone for the job you really want.

    We are debt free yes 100% finally. Made many many mistakes along the way. Mainly listening to others because we were trying to find a way to get debt free without the needed work and sacrifice. Once I came to the reality check there is ONLY ONE WAY to get out of debt did things really start to rock and roll. The only way? Pay if off. Every penny we made was not spent unless something would die if we did not spend it. Those pennies that were not spent on death prevention went to #1 ER FUND. Once that was where we wanted / needed it we moved on to the debt.

    Yes I said we only spent on death prevention. If someone or something would die if we did not spend the money we did not spend it. PERIOD. Food will you die if you don’t have it YES so you buy food. BUT will you die if you eat lentil soup daily for a few weeks? NO Will you die if you don’t buy that gum or bag of chips NO. So for our hard core meals it was buy a 25# bag of lentils a big bag of carrots. (what ever was less expensive between organic and regular or local) bag of onions some celery and that is basically what we ate daily for a period of time. We also bought a 25# bag of rolled oats & rice. Very inexpensive and goes a long way. We grew what fresh veggies berries and herbs we could. Then there is foraging. Living in Portland there are lots of opportunities to forage. Many people have apple trees and never use the apples You can gather them and preserve FREE food. Dandelions nettles wild berries. You are also very close to farm land. You can glean fields for pennies if not free. Then you can preserve the food can, freeze, dehydrate. Stove breaks down but you have one burner will you die if you don’t get a new stove NO you can use that one burner or for 40 bucks or so get an induction hot plate. Do you replace the roof? Well if you have a leak the interior walls will die. Meaning they will be destroyed. Mold will grow and over time that can mean the death of your house & or you if you get a toxic type of mold growth. Fix the car? well if the job can not be gotten to without the car then the job dies. So yes you spend on the car. My coat has a hole in it Will I die if I don’t have a coat? YES but I do have one that works. FIX the hole. Will we die if we don’t buy gifts for each other? NO Will we die if we don’t buy Christmas gifts for others NO. Will the children die if we don’t buy gifts for them well YES part of their magic of childhood will die. At least for the young ones. BUT that did not mean we had to spend boocoo bucks either. Will we die if we don’t chip in for the never ending office parties? NO. We did explain to others family and friends what we were doing. Many were very upset with us for doing it. Yes we lost friends over it. I didn’t care. They were not going to be the ones to pay off my debt. I figured they were not true friends any way. Yes it was hard at first. Yes there was doubt. But we did it any way.

    Look for different jobs? Work in WA no income tax. Sell your home and get over all living expenses down lower. Move to WA mobile home park you can buy a place for 70K which would lower those monthly bills. Get a less expensive apartment if it’s possible to find. Shared living with parents or friends. Camp trailer that you can move around yet still be fairly close to work. Get 2nd & 3rd jobs even if it’s delivering dominos, cleaning houses mowing lawns. What ever you can do to make money. Sell all things that are not needed. It’s just the 2 of you so 2 chairs for 2 butts to sit or pillows on the floor.

    I would take the IRA and see about putting it into a ROTH IRA that way after the wait period you can always take the money YOU have put in out WITHOUT penalties should you need it. No do not invest in other things at this point. 401k are already being taken over by government and there are way to many regulations that prevent you from getting YOUR OWN money. IF there is another crash at this point all could be lost any way. Paying off your debt is a sure way to keep more of what you make in the long run. You are saving 7% on your money making payments You would have to make more than 7% to make up the loss in interest you are paying out. That is just your student loan you have to add in your home loan as well.

    Once your student loan is paid off then at that point you slam again for a home. Pay cash for it. Unless you are going to use it as an investment. Then you really need to study up on that. Home repair project for us came to a stop again unless something would die. The toilet seat cracked. Will we die if we don’t buy a new one? NO duct tape it was. Stayed that way for 3 yrs just fine. Back steps rotted out. Pallets were free so we built temp steps out of pallets. Again 3 yrs with those make shift ugly steps. They were safe and they worked. Now we have a very beautiful deck that is 27 x 16 , 3 levels , covered, pressure treated construction, with beautiful railings. All EASILY paid for in CASH.

    That was our hard ball game plan. Like I said you can dig in as deep and hard as you want to. When my youngest son decided to play hard ball he turned down his heat to 35-40F. goal was to just keep the pipes from freezing. You went to his house to visit you left your coat on or he had blankets he passed out. Now that is major hard ball. LOL My only regrets is I did not do it sooner. ALL the sacrifices we made were very well worth it. We learned a lot about ourselves and our connections with “stuff” We have a greater respect for our hard work The most important thing we have a huge amount of FREEDOM. I can’t even begin to explain how wonderful that feels. The stresses of cancerous debt is gone. For once we can actually see where retirement will be an option for us. Now all those nay sayers look at us and say wow must be nice wish we could be debt free. Thing is they can but they have to be willing to do what it takes. I would venture to say that you would be like the average person and could be debt free in 3-5 yrs should you dig in and count those pennies. (haha the funniest thing I use to laugh at my grandma who lived through the Great Depression at washing her plastic bags and foil. I still laugh every time I wash my bags and foil. Way to go grandma.) I wish you the very very best. What ever plan or rules you use for your game stay the course you can do it. Yes there will be times of tears and doubt. There will be times where it all seems so impossible like there is no light at the end of the tunnel. There will be times you will be sick of it. DON’T GIVE UP. And those beautiful throw pillows that are 80% off just back away get out of the store hahaha

    *PS now we are living our dream house on 5 acres with a creek bought and paid for in Clark county WA. Growing our gardens and raising our critters. Currently working on alternative energy sources Oh how I would love to get rid of the electric bill. That dream may not be yours. What ever your dream is go for it.

  100. Amy says:

    Definitely contribute to your 401 k as it may help with lowering your Oregon Income Tax. I would focus on paying off the student loan debt, set a percentage aside each month. Round to the nearest 100 on your mortgage payments. Every little bit helps and it’s nice to see it shrink faster too! Craigslist “free page” in the Portland area is a fun and inexpensive way to remodel your home on a dime. Work on that as you have time and $$ (before kids). Recycle cans, rent a room, or do side work for added cash. You are on the right path!!

  101. Lanae says:

    You’ve received excellent advise and I echo much of it, except the eventual mortgage pay off. I am a huge proponent of paying off a mortgage, even though a house is an illiquid investment and the math doesn’t always make sense, mostly because it provides security. Once your house is paid off, if you do lose your job and the car breaks down and the dog gets sick, a monthly mortgage payment is one less expense you have to pay. My logic goes with assumption that you have a 6 month emergency fund in place so that when a job loss or illness does happen you rest easy in your paid for house and dip into the emergency fund to pay monthly expenses without worrying that you one day will fall behind on your mortgage and have your house foreclosed on.
    That being said, I would look for jobs that would allow you to participate in the loan forgiveness program but work on paying your student loans off. I would think of the program as a best case scenario but wouldn’t work a job I didn’t love or limit my income potential to have the loans forgiven in 10 years if I could pay them off in 7.

    My only other recommendation is to combine your grocery bill with your boyfriend. My college roommate was a vegetarian and I was not but we had a combined grocery budget. If you have a moral or ethical stance to not contribute towards the purchase of meat then I would have your boyfriend purchase the meat separately but would combine everything else. Good luck!

  102. cathy says:

    Some great suggestions here, and I think Mrs. FW is spot on. I’m in my mid-50’s and we’re currently a single-income family. There are pros and cons to paying off your mortgage. Obviously on the plus side is not only one less payment, but also the security of fully owning your home. For us, we’re not worried about paying off the mortgage. Yes, I’d like to do away with the monthly payment, but we do see a tax benefit and it also gives us the freedom to move or downsize if we choose. Better to save that money (and earn interest on it) than tie it up in the house. You mentioned that your BF pays half each month, but does that half also include taxes/insurance? I’m guessing since you only put 5% down on your house that you also owe PMI. This is one of those areas where you have to see if you’re putting out more $$ in the long run, which may be OK when you pay taxes. Or not.

    As others have suggested, if you’re paying $300/month for food and your BF is as well, that’s A LOT. (We live in a city where food costs are comparable to Portland–I know because a) I used to live in Portland and b) we were there 6 months ago–and we spend ~$600/month TOPS for a family of 4 for groceries and eating out. Three adults and a teen boy. We buy almost all organic + a lot of specialty food to accommodate food allergies.) You two ought to explore having a joint monthly food budget, even if one of you is vegetarian and the other isn’t. If you’ve been together for 5 years and are talking marriage, why do you still pay separately for food? Will you continue to keep separate accounts for everything after you’re married? Something to ponder. I’d also guess you enjoy eating out. After all, Portland is a great place for that. But even that should be budgeted. To save more money, you should eat/prepare virtually all your meals at home. If you go out with friends a lot, you might propose alternative gatherings at one another’s homes–potlucks spread the cost around and the food is usually awesome.

    One other thing that stood out for me was your budgeted $100/month for home improvements. Since you noted that this isn’t for needed repairs, you’d do better to put that $100/month (think of it as $1,200/year) into an emergency fund or at least an emergency home repair fund. We’ve been homeowners a long time and I can tell you something will always come up that needs to be repaired. If it’s something you’re truly not qualified to do, or don’t feel safe doing it (electrical, maybe?) hire it out. Otherwise, there are tutorials online for everything. If there’s something you want to spruce up your home, see if you can find it free on Craiglist or join a buy nothing group. I understand there are several in Portland. CL, facebook yardsales, Habitat ReStore are also great places to get home decor and building supplies cheap, if you need them. Put the word out to friends and family and you’ll probably receive an abundance of stuff for your home. Talk to gardeners too. Someone always has plants they’re dividing or a fence they’re getting rid or. Above all, embrace the idea of delayed gratification. We’ve been in our home for over 8 years and there are still plenty of things I’d like to update and improve, both inside and out. If you have the idea that “if I just do ____, my home will be ‘finished'” you’d do well to let go of that idea. Homes are a work in progress. And since it sounds like you plan to stay there for awhile, you can afford to stop fixing it up for now. One other suggestion here: If you read any home decor blogs online, stop. They will always make you feel like you need this piece of furniture or that rug or a kitchen with subway tile and live-edge shelves or, or, or…

    Emergency fund. You need one. We’ve weathered underemployment, unemployment, big salary but no benefits (including no health insurance). An emergency fund will get you through those times.

    Finally, follow your heart and trust yourself. If you’re drawn to work in the non-profit sector, then do. But think of the PSLF only as an added bonus. Sign up for it early and hope it’s still in place after you’ve made 10 years of qualifying payments. As others have said, working for the government counts. I suspect this also means working for state colleges and universities, which tend to have awesome benefits. My spouse works for a state university and gets a free public transit pass, super inexpensive (but great) health insurance, and a 14% (not a typo) employer contribution to retirement account. Our kid gets a 50% discount on tuition. On the other hand, if you don’t necessarily care about working in the non-profit sector, or have better earnings potential in the private sector, go for it. Same with marriage. If you guys are ready to get married, just do it. Best of luck Bridget!

  103. Emmy says:

    As a SAHP who decided (14 yrs ago) to be a SAHP without really thinking through the long-term implications (especially the one where I try to re-enter the workforce after what will be 18+ years, in my late 50s, and female – husband thinks it won’t be necessary but really, what am I going to *do* at home besides be bored out of my mind?), I can’t recommend full-on SAHP status for Jack. Yeah it’s great to raise your own kids (I homeschool, it’s great to teach them, too), but if something happened to YOU when your youngest is, say, 5, Jack would have bupkus to live on outside of your insurance, which won’t go far. Alternately there’s the prospect of divorce which everyone believes will never happen to them (half are wrong) and what happens to you and your kids when their Dad has no income and his lawyer is hitting YOU up for alimony? What happens to all of you if you are hurt but don’t die, you’re just mostly disabled, can barely work if at all, and Jack hasn’t worked in his field for 8-10 years?
    It’s not that I don’t love the SAHM experience, it’s that I’m a LOT older now and can see the corner I inadvertently backed myself into. It’s a “hopefully everything will be fine, however IF any number of scenarios did come to pass…” and I’m not sure how to head off those scenarios given how far out of school (can’t afford to go back) and work experience I am.

    • Thedollysmama says:

      Childcare in Portland is breathtakingly expensive. I can totally see one parent staying home because if both are working one is just working to pay for child care, truly. If they are concerned about Jack keeping current in his job skills he can take on line classes, volunteer appropriately, or eventually work part time while munchkins are in school.
      (My niece’s day cares in Portland were about $2500 a month for run of the mill, nothing fancy day care. Outrageous.)

      • Emmy says:

        WOW. The brief time our first spent in the top-knotch daycare we’d chosen, it ran $750 a month, and I thought THAT was expensive. It was 2002, though, much has changed. Also we were in a 1600 sq ft house on 1/4 acre I’d bought for $96K when I was single – my entire mortgage payment including property taxes & insurance was less than the half Jack pays now. Portland is too rich for my blood : ) but I hear it’s beautiful!

  104. Robert says:

    Bridget, sounds like you ended up in the best part of the country.

    My recommendation would be to start making payments on the highest-interest rate debt you have. If your student loans are 7.25% and you don’t have credit card debt, I’d start with the student loans. Since your Mortgage is below 5% and you can reasonably expect long-term gains of 7% from a low-fee index fund, I’d start looking at investing some of your money whilst paying off your Mortgage in the monthly amounts.

    I am a huge advocate for having emergency funds. I’ve read that 3-6 months is a good start. If you don’t have that cash buffer to handle emergencies, then you may end up taking on more debt to cover your current issues (I’m thinking payday loans).

    Marriage has it’s financial benefits, but that’s no reason in and of itself to do it. If any part of you would be getting married because of the financial benefits, I’d recommend you rethink the course of action.

    Similar to the marriage answer, I don’t think you should make career decisions based on the money. You can get out of debt pursuing either option, so go with the one that makes you happier. It’s easier said than done, but worth doing none the less.

    Anyways, best of luck!

  105. Robin says:

    My recommendations are the same as a lot already mentioned:
    1) take advantage of the 401k match
    2) get an emergency fund
    3) work on paying off the student loans and keep the mortgage (you can work on paying it off after the student loans) and I would look into refiancing your student loans to lower rate if possible.

    I would consider a higher life insurance, especially if you get married – look for a term one outside your employer.

    I would recommend using one no-fee reward credit card and pay it off monthly. The rewards can be very useful.

    If you get your own cell phone plan get the minimum you can live with, the no limits one can be expensive and cutting back on data can save a quite a bit as long as you don’t go over.

    I would look at cutting other expenses if possible – internet, food, bus pass.

    Love your wedding plans, so many people spend a fortunate on it that they can’t really afford.

    Good Luck.

  106. Hello! I just want to say this rings SO close to home with my $113k student loan debt! I love the recommendations here. I would add a reason to focus on the student loans (which is what we tell our clients at the financial planning firm I work at) is that because the debt is unsecured it’s much riskier. That should be a number one priority over a mortgage any day of the week! … And I just want to say kudos to you! I rarely meet another person as dead set on getting out of student loan debt as I am, so it’s refreshing! 🙂

  107. Lynn says:

    I have similar student loans and am on the PSLF program. FWIW, I make over 100K, and I would be homeless if I had to make that student loan payment without the PSLF and the various payment caps. I couldn’t make that payment. I have five more years to go, and I am so glad I didn’t throw everything into repaying that at the expense of a mortgage and savings account. Counting interest, I’ll save over 100k when it is all paid off.

  108. Jennifer says:

    I agree with Mrs. Frugalwoods that getting a chunk of money tucked away for emergencies should be a priority! If you can afford to put $2300 against your student loans you definitely have some wiggle room for where your money goes. My suggestion would be to break that amount apart and put smaller amounts towards each of your goals. For example: pay the minimums on your student loan and mortgage, and the matching minimum on your 401K until you have a specific amount set aside for emergencies (whatever you decide is best for you – I think most people are happy with 3-6 months of monthly expenses). Once you have the emergency fund looked after take that amount and break it apart again, adding a few hundred bucks to your student loan payment, a little to your mortgage perhaps, and the rest into regular savings/investments. I think you want to avoid what Mrs. Frugalwoods calls “putting all your eggs in one basket”. You may not pay off your student debt and mortgage as quickly as you were hoping, but you are young and should take advantage of the fact that your savings and investments have upwards of 30 years to grow if you start now, as opposed to when your student debt and mortgage are paid off. Hope this helps!

  109. Louisa says:

    Hi, Bridget: Want to confirm you used the phrase “cut up your credit cards” with the understanding of what that means. If you cancelled the cards, you have no emergency credit and perhaps no credit in your own name, which could hurt you in the future. If you cut them up physically so you won’t use them, the accounts are still available to you. But you would need some way to access them, and you need the card numbers to do that. Use a card once a year to make sure the account stays active, (charge and pay off immediately), and of course, don’t have annual fee cards. As you and Jack continue together, be aware of how your credit does or does not merge upon marriage, joint accounts, ownerships, etc.
    Good luck to you! Portland is lovely, and having a house small in square feet pushes careful and wise living– what fun!

  110. denise says:

    What about joining the National Guard? They would pay a third of your debt, from my understanding, and it would also qualify for the loan payoff program?

  111. Hiiiii fellow Duquesne grad – I’m sure quite a bit of that debt was accrued there (I’m sure they’re already calling you to see if you’d like to make a donation back to the school. Hahaha).

    Just my two cents, and sounds like it’s been outlined, while the loan forgiveness sounds like a good idea, it both takes longer, and may not be around in 10 years. Not to mention, taking a possibly lower paying job in the non-profit sector just to end up with a low salary in 10 years doesn’t seem like a good place to be. I would focus on maximizing my earnings & tossing that all at my current student loan debt.

    I too, true to the Frugalwoods comments beef up my emergency fund as well. I carry more than 6 months of expenses (which I know is not needed) but as someone who found herself living away from home, roped into an apartment lease for another 6 months and suddenly without a job, I was grateful for that fund to keep paying rent + my student loans + other expenses.

  112. Louise says:

    Hi Bridget – I’m going to go against the grain here, but if I was in your situation I would focus all my energies on paying off the student debt asap, including doing extra work, getting promotions and continuing to apply for better positions. I would not do 401k matching. 7.25% is very high and every dollar thrown at the debt now will make a big difference in the following years.

    If your boyfriend becomes your husband, then this becomes his debt as well, so hopefully he will also help you to aggressively pay it down. I would go Dave Ramsey on this, beans and rice from here on out, and this load should be out of your life a lot sooner.

    A lot of the other options suggested have not included risk – there is risk putting money in the stock market (including index funds), there is risk relying on government programs, there is risk in allowing this debt grow. I don’t think you need to add any more risk to your situation.

    What if you hate your non-profit job because you have a horrible boss, etc, but then you can’t leave or stop working because of the program, and what if you can’t find another non-profit job in a reasonable time-frame because it’s highly competitive (surely lots of other graduates with large student loans will have this same plan)! I just can’t imagine how horrible all this would be for you as your debt accrues 7.25% interest.

    However, don’t put off having children too late either! Babies always come first 🙂 Good luck girl, you’ve got this!

    • Christina says:

      I’d just like to comment and say that, unless her boyfriend/spouse co-signed on her student loans, they do not become his debt in a legal sense. Perhaps you meant that it “becomes his” because it will change the household finances, which will likely be true!, but he will not become legally responsible for paying them back.

  113. Christina says:

    Hi! I would suggest that now is a good time for Bridget to increase the “work” part of the work-life balance equation. Not having children or a loved one who needs a lot of care is a great asset right now. Use that time and put it towards your work to increase your income and experience. That will be much more useful to you if/when you decide to have children. Here’s an article (not by me! I have no affiliation with the author or website or anything!) about what I’m talking about. http://www.getbullish.com/2010/12/bullish-maybe-work-life-balance-means-you-should-work-more/

  114. Lindsey says:

    I would say go for getting married, if it meant taking on more debt I would advice against it for now but it doesn’t seem like it will. Also I do agree that your grocery budget could be way lower. I don’t eat meat and my fiancé does and we still spend less than that each month.

  115. Caitlin says:

    I too have a lot of student loan debt–about $120k. I appreciate your honesty and bravery in sharing your story, Bridget! I’m hoping to qualify for the PSLF program but not sure yet. I’ve been working as a public librarian for nearly eight years and making payments, but I am about to apply to see if I qualify and I’m a little nervous. There is something in the fine print (about the particular type of loan–not just that it has to be a federal loan but that it has to be a “direct” loan and I’m not sure if mine are and having trouble finding out) that concerns me and that is one reason I would caution you to look into this very closely if you decide to go this route. The fine print can be tough.

    I too try to talk with all the high school students I meet to caution them against taking out student loans. I will never understand why, nearly 15 years after I entered college and when the national total of student loans is over $1 trillion, people are still allowing (ENCOURAGING) 18-year-olds to take out mortgages’ worth of student loans.

  116. Rachel says:

    Hi Bridget! I live in Portland too! I’ve lived in lots of places and can say without hesitation that this is the very best place I know of to live and raise kids, so I would encourage you to ignore the people who suggest moving somewhere less expensive. The higher cost of living here (not even as bad as Seattle or SF) is worth every penny in terms of the community, the outdoors, the job opportunities, the public transit, and the vibrant culture – so much value added. Your house is an excellent investment, and will certainly appreciate considerably over the next 5-10 years if the real estate market stays strong, so definitely hang on to that and don’t worry about paying off the mortgage in a hurry. Your interests/goals/needs will certainly change over the next 10 years (I’m 10 years older than you and can say that with a lot of certainty), so I would encourage you to make 3-5-year plans at this point rather than 10-year plans. Keep on being frugal and make sure you have a healthy savings, as others have said. If you’d like to meet up for coffee or a walk along the river sometime, I’d love to chat with you in person – a little meetup of fellow Frugalwoods followers!

  117. Since you already have a home, I would zero in 73% of your disposable income on paying down your student loans. 7.25% interest rate is 5% above the 10-year bond yield. That is a HIGH rate for this environment in other words.

    Use the remaining 27% for investing.

    My two cents using the FS-DAIR methodology.

    Sam

  118. Reid Hamel says:

    Hi Bridget! Thanks for sharing your story and being an inspiring example of taking control through knowledge empowerment! I love this blog for exactly that reason – it encourages people to make decisions based on math rather than on feelings, and to better distinguish between the two (so thanks, Mrs. Frugalwoods!).

    I’m in my mid-30s and have had a lot of experience with student loans over the years. I STRONGLY recommend refinancing even though you’ll lose access to the forgiveness program. I think the salary difference in the private sector will more than offset it, you get greater flexibility, and you aren’t committing to a 10-year timeline. I had a FANTASTIC experience with Earnest, a company I haven’t seen mentioned here (I may have missed it). They’re a private refinance organization similar to SOFI, but they are more flexible in terms of rates and repayment periods (i.e. you want 7.5 years instead of 5 or 10? great, you get the midpoint of those two interest rates… or 6.7 years, or 8.3 years… you get my point). And the rates should still be about half your 7.25%. They’re going up as the Fed is likely to raise rates a few more times this year, so best to do this as soon as possible. Check out their website and talk to their reps and I think you’ll find it’s at least a very compelling option! I swear I don’t work for them, but I’m now student loan debt-free and this was a big piece of that puzzle for me.

  119. B. Lyman says:

    I think you should marry and not put it off. Your financial situation will be the same as it is now but you’ll have the unity, stability and commitment that marriage brings.

    The best wedding reception I’ve ever gone to was a potluck dinner. The bride didn’t have the money for a reception so she asked everyone to bring a favorite dish. It was a relaxed evening and very enjoyable. I think people were happy to contribute, too.

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