So some of you may be wondering how one lives on $1000/month in a major city. Well that's because I have a room mate with whom I split all costs who often goes by the spelling h-u-s-b-a-n-d. So while I have some tax benefits from being married, we have not combined any of our finances. We split everything 50-50. He brings in an additional $1400 in take home pay. He too is a student like myself and in his final stretch of schooling to become a nurse.
Both of us have been working our way through school. His journey has been made easier by the fact that he has received two educational grants. Also, unlike me, he will be getting his degree from a community college. I will be getting my degree from a public university (an expensive one).
Till this point, I've paid for my tuition out of pocket. This was easy when I had a full time job (when I quit I was making $40,000/year). But this past semester has been difficult in trying to pay tuition (for one class at $1206) and pay the usual bills of rent/utilities/food. To date I have not taken any student loans.
One reason why I don't have an emergency fund (EF) that is satisfactory (its a little over $400 right now), is because I always put my extra money into tuition and school related expenses like books. Also my EF has been my husband up to this point because he saves more because school costs less for him and he makes more money than me. But since I want to have an emergency fund for my own piece of mind, I am going to focus on getting it up to speed once I finish paying of my cc debt (which is now $382.22). After that my goal will be to focus getting my EF to $5000 which will cover my living expenses for about six months
While I did have about $2000 saved up in my EF when I quit my FT job, that got depleted in health insurance payments and tuition payments. Basically my excuse for not having an EF is...its too hard.
Additionally, I have now been offered a job that will possibly pay upto $4000+ per year for my tuition. So I have less of an excuse to not build up my emergency fund. My goal is to get my EF fund done by the end of 2007. So I have about a year.
Next up I discuss specific cash outflows in terms of rent/bills/etc.
Saturday, October 28, 2006
Challenges I face in building my EF and eliminating CC debt
Posted by bc at 4:54 PM
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2 comments:
I would consider a school loan. This will allow you to focus more on your EF and debt retirement at an extremely low rate, if I remember correctly. What are rates these days, 3-4%? Use the loan to cover you through the end of your schooling, then your new job will allow you to retire the debt.
In short, what happens if you need that emergency fund tomorrow? Can you get a student loan for it? No. You need emergency fund now to cover you. I would say paying 4% (deferred until after graduation, even!) is well worth that peace of mind.
After months of thought, I finally decided to take out a loan for 2007 which will be my final year in college. I will be working very little (enough to save and pay rent/bills) and so most of tuition will be funded via a loan. I will also get quite a bit back in terms of Education Credits after filing my taxes for 2006.
Main reason I resisted against taking out a loan was because many of my friends wound up with a lot of student loan debt and no job prospects after graduation. After the grace period ended some took crappy jobs. I was quite afraid of that happening since I feel that I've really worked at enough crappy jobs to last me a lifetime. But I've decided to bite the bullet.
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