Wednesday, February 07, 2007

Education, money, and artificial milestones

I've been paying on my student loans for close to 10 years now. I've always told myself that going into debt to the tune of $50,000 total for my undergrad degree and my law degree was a fabulous investment in my own earning potential. After 10 years, I think I finally believe that's true.

God help me, for the first year, I actually paid on the 10-year schedule, because the idea of being so far in hock annoyed me. After a year, though, I went ahead and consolidated to lock in what seemed at the time to be a ridiculously low interest rate: 5.25% (although the rate eventually went even lower than that). Around the same time, I started putting $50 per month into an IRA.

Since then, I've kept hacking away at the student loans at $300 a month, watching how they've gone from paying almost all interest and principal to maybe half and half, taking advantage of the student loan interest deduction as it was phased in. At the same time, I've tried to keep contributing a bigger and bigger chunk of my earnings to retirement savings, initially just to the IRA, then to a 401k, and now to 403b. I'm up to $500/month, which is about 8.5% of my gross salary. In the last year, I've also bought a few individual stocks, too.

Thanks to the interwebs, I can, at any moment, watch my savings go up (or down) and watch my student loan balance go down. Recently, I realized that I had passed the point where the balance on my student loans was about equal to the amount in savings. So in a sense, I guess I've finally got myself back to zero (although in a different, more real sense, I'm still plenty in hock, onnacounta a mortgage, another year of car payments, and some outstanding debt for the purchase of a couch and a couple chairs, not to mention the fact that my retirement savings are pretty damn illiquid).

Then, there's a distinct possibility that the family educational debt stands a pretty good chance of going up. My wife is pretty seriously thinking (with my not-so-subtle encouragement) about going back to school to get a nursing degree. Seems like a good fit for her. The only problem is that despite an abundance of nursing programs in the area, there seem to be significant waiting lists to get in. So despite the acknowledged shortage of nurses, we're not so much short of people who want to be trained as we are short of people to do the training, at least that seems to be the story around here.

1 comment:

mdmhvonpa said...

I nurture the same mindset as you do. I really dislike owing anyone or being in debt. To that point, taking out a home equity loan is an anathema to me. I have more than enough debt to make me queezy, I don't need more. And what if I REALLY needed to leverage those assets for an emergency!? Yep, being in the black is a never-ending quest.