Happy New Year, Everyone!
I’ve been thinking about my 2021 Goals since September … you might say, 3 months ahead? Am I crazy?? Nope, not really.
Epiphany Moment #1
I gave away $2000 scholarship to one of the college that I attended aiming at the High School Student that went to my high school. I was disappointed that they only release 1/2 of the fund to the student. What??!! At that point, I was thinking to myself… Should I continue to blindly give the money to the “Corporatized” Foundation, who keep the money instead of release it to the student in need, or should I just help myself, and pay off my own student debt? The latter wins. That’s my goal for this year, 2021. I’m going to pay the heck out of it, and totally get rid of my student loan.
Epiphany Moment #2
I was coming home for a visit, and my sister was going to take a $10K loan to buy a used car at 8% interest rate + GAAP Insurance $900. I couldn’t let that happen, so I gave her a $10K loan at 0% interest rate. I went home, thinking I had to pay 3.88% on my home mortgage, 1.88% on my student loan, but I’m loaning money out at 0% interest rate. Yikes!! Let’s me be my own personal bank, then! hihi ^^
Epiphany Moment #3
It was 1 am and one of my tenant texting me that the tenants upstairs were having a party. Many many many … way too many complaints about noise and marijuana scent later, I realized I don’t need anymore properties, I need peace and quiet enjoyment. And that, it’s time to simplify my life and take care of loans. And be debt free.
**The one driving factor was, the New Tax Law. Originally, I was thinking $1350 is my expense, and that I don’t need to make more than $20K per year, and my student loan interest will be deducted for tax advantage. Now that the standard deduction is $12K, $24K for Mr.W and me. I’ll take the standard deduction, the logical steps is to pay off my mortgage and student loan.
Student Loan
Upon graduation from graduate school, I had $100K in student loan. Granted, I was 18 when I started signing paperwork the student loan. I wanted an education, and I got one. I paid $30K pretty quickly within the first year of graduation. After that, I’ve been making a monthly payment of $330 to get it down to $44K level.
$44,000 in student loan debt (give or take, maybe a small change in between). Methods:
- I can pay $4K/mo x 11 month (plus some interest).
- I can pay $10k/mo x 4 month (the last month pay $14K)
- I can pay $44,xxx x 1 time
***I’m going to call them to see if I can pay with my credit card without inuring a fee, or this fee is small enough to score some hotel points.
Home Mortgage
$195,000 in my mortgage. Mr.W offered $100K, and I’d fork out the other half to just pay this off. ***I’m still think about this one.
Risks
- As some of you might have already known, I’d like leveraging. I could have use this cash for investments, soaring up my dividend portfolio, but a saving of $350/mo in student loan payment or having a portfolio of $100K to earn this much per month to offset this payment. For that I can have $350/mo extra in cash flow.
- It’s harder to find a loan that only charge 1.88% nowadays. I could have use that cash to buy a property in cash instead of borrowing at 4-5% interest.
- In a few years, when I retire, the tax law might change back, and I might qualify to deduct the interests on the loan again 🙂 But the last time any major change in tax bracket was 1980s. So that like almost 40 years. I wouldn’t count on this, you give people a bunch of money, it’s hard to take it back.
- A Major stock decline, signally a strong buy opportunity, and I wouldn’t have the cash for it.
- A major repair – HVAC, floor, fire, etc.
Benefits
- I can say I’ve paid off my Student Loan.
- $350/mo extra in cash flow
- When I die, my beneficiary parties don’t have to deduct this loan from their inheritance.
- Not wasting about $1000 in student interest that I can’t deduct a year.
- Suzi Osman would be proud of me for making myself as priority instead of other people’s student loan
Having one goal for 2021 for just completely pay off my loan seems selfish, however, I feel like it’s the right time.I’m at the point where I don’t need to increase my income substantially anymore. I don’t need anymore property. I don’t need to take more risks in taking more loan or leveraging. Taking student loan off is a responsible thing to do for myself.
*******************
Update #1: I called the student loan office, and they will not charge a fee if I make a payment with a credit card. So my choices are:
Barclay – I’ll get $1 per $100 spent, basically I’ll get $440 off for traveling
Bank of America – 1% cash back = straight out $440
American Express – 44,000 points = 11 night stays at 2.5 – 3 stars hotel such as Aloft
Capital One – 44,000 points = $440 refund in travel
**
I might resign up for Marriott credit card should the 2 years sign up still around, then turn around and turn it back to Starwood points. LOL don’t know.
Do you travel hack? What suggestions you might have for me?
I don’t think you can go wrong with paying down a loan.
You not only get a guaranteed return, but you also get a peace of mind knowing you don’t owe them nothing!!!
-MH
You’re absolutely right about guaranteed return. That’s why I’m working my angles.
I wish credit cards sign up bonuses are still generous. It seems harder with chase credit cards nowadays.
I am someone who will (hopefully) benefit from PSLF, so I hear what you’re
saying. I had planned on paying off my loans using standard repayment, but
found I would be better off financially if I did the income-based option
and threw the extra money into my retirement fund.
However, in theory, I don’t think PSLF is a fair or good forgiveness
program. By offering unlimited forgiveness of federal student loans, it
incentivizes spending way too much on graduate school. With a cap, it could
make sense. But I am hearing about people spending $140-$550k on master’s
degrees in public policy. That’s really ridiculous – these are people who
are going to graduate and earn $50k out of grad school already $550k in
debt. I can’t help but wonder if these schools could get away with charging
so much if students knew they’d have to pay their loans back in full.
Moreover, it’s unclear to me that it’s fair to offer such a broad
forgiveness program on the basis of working in “public service”. Sure, for
teachers and social workers it makes sense. Maybe also doctors who choose
to work in rural areas. But right now, the definition of “public service”
is so huge that this program could quickly result in unsustainable costs
for the government and ultimately for taxpayers. The program should be
targeted better at professions/jobs where there are true shortages. so right now you are free to have a loan of your choice so get a loan of how much. You know I can get your business or bored so I have your loan email or WhatsApp +2349030371538 to get your loan………..;
Well, if the income based works out for you, go for it! But I’m a little wary nowadays reading article like this:
https://money.cnn.com/2018/01/02/pf/college/public-service-loan-forgiveness-lawsuits/index.html?iid=hp-stack-dom
basically, this person found out some of the loan didn’t qualify, so she has to start all over. She’s “lucked” out by finding out “early” she graduated in 2016, it’s 2021.
That’s very nice to give your sister a loan. I’m not so generous. I gave my girlfriend a 3 year loan but charged her 5% annual rate, lol. Happy new year.
I dig the 5% interest rate that you charge your gf. In my case, I could have charged my sister a 4% rate, but I didn’t. I was giving away scholarships, giving away money to families. Heck, when I garden, I even plant crop outside of the gates so rabbits, birds and squirrels would get some 15-30% of my crops. Hihi in turn, I can sit in my kitchen, or my dinning room for hours watch them eatin’ them food. Hihi.
I supposed, when I’m kind to strangers, i must be 10x more generous to my own siblings.
I do have my vice though. Hihi
Not only that, there are things that my family would do for me, that can’t be measured in monetary. So, it’s all good, as I still ended the year with $100k in cash. I’m thankful for that. I haven’t made this much money in a year. I haven’t saved this much money in a year.
Debts are for certain while investments are never guaranteed. Having said that, loan for good cause are always look differently 🙂
True that! I guess, that’s why Mr.W doesn’t want to get into any sort of debts at all to avoid the compounding effect and a peace of mind. 😛
Do you need a loan today? If yes feel free to send a mail to
We can help
It’s never a bad idea to reduce any type of debt. Student loan, mortgage, CC debt, whatever. As you said, paying off a loan is like creating extra positive cash flow for yourself. Keep up the good work. As far as travel hacks I wish I could give you some recent advice. Since baby DivHut was born I haven’t been out of the country but we might take our first trip this summer somewhere with him, other than a road trip. Thanks for sharing.
I’m with you on your priorities. On the charity angle, I’d identify the reason why it wasn’t fully allocated. Two reasons could be not enough applicants fitting the criteria or the school’s desire to evolve this into a self-sustaining grant. Either of these would be legitimate. One alternative would be to establish a charity of your own. Hmm … maybe I should establish one … now you’ve got me thinking …
Well, I didn’t want to give it to the foundation, so I was making sure that the fund I gave was in itself a scholarship in my mom’s name.
Then I was making sure that there is no criteria- they don’t have to be a poor student, all they have to be was student from my high school. The community. Ollege is literally 5 mins from. Y high school, there are a lot of students from my high school that go here.
She insisted to put a c average on it. Like a two point o. No problem. I remember, all you got to do is showing up for class and you get a c.
I spoke gave the fund in may, spoke to the gal in September, she got super mouthy with me, and made it seems like nobody qualified. Sorry, but I’m not a fool. I was mad, I went quiet after this. They can’t fooled me twice. I’ll contact my high school myself. Can’t trust people getting paid …