Nurses and Financial Freedom

ThatBigGuy · Apr 23, 2015

I just went ahead and paid off my smallest debt of $3600. I'm kind of crying on the inside right now. I didn't think parting with some of my savings would be so hard.

Great job!

Aliareza, BSN · Apr 23, 2015

One thing not to forget is that student loans are not all created equally. I have ~60k in student loans, all of it federal, and I think there are 11 or 13 groups of loans to make up that total amount. I've decided to max out my payments like this:

1. Pay off accrued interest from being in school before it capitalizes

2. Make a list of all the loans, with highest interest amount loans coming first. Also note which ones are Subsidized vs. Unsubsidized so you know how much of your debt will be interest-free while you go back to school for things like BSN, MSN, FNP, etc.

3. Get on income based repayment -- each loan is individual and thus requires an individual payment. By getting on an IBR, I can pay the lowest amount possible on each loan so that the extra money I'd be paying on a standard plan (my standard plan rate is $630 monthly, my IBR rate is only $15-410 depending on income) can be tossed at the highest interest loans, thus paying off the most expensive loans first.

4. Always try to pay at least double. That's $1200-1300 per month for me, which is more than half of what I'll make starting out. I may not always be able to pay that much, but I'll know I'm making progress as long as I'm not giving in to purchases of things I deluded myself into believing I needed.

Before I do any of that, I'll need to pay off the $3000 I have in other debt that's higher interest than student loans (credit cards mostly). So you can see I have a very long road ahead of me, but I hope that doing this, I can pay the least amount of interest possible and drag myself out of debt. You should also seek to maximize your payoff power when it comes to student loans.

You seem like you're on the right track :). Good luck!

joanna73, BSN, RN · Apr 23, 2015

Agreed. Starbucks is close to 6. Even if it was 4.50 per day let's say, it still adds up and I don't do it.

klone, MSN, RN · Apr 24, 2015

2. Make a list of all the loans, with highest interest amount loans coming first.

This is where TMMO veers from common recommendations. The premise of his debt snowball is not to pay off the lowest interest loan first, but to pay off the SMALLEST loan first. Basically, you pay minimum monthly payment on all your debts except the smallest debt. With that one, you put every single leftover cent into it until it's paid off. Then you're able to take all of that money and put it towards the next smallest debt. With each debt paid off, you're putting more and more money towards the next debt (hence "debt snowball). There is a psychological aspect to this. If you have 10 debts, and 7 of them are under $1000, it feels like a lot more progress to get those small debts paid off right away, and then tackle the larger ones. It feels like you've accomplished more when you've paid off 7 debts in a few months, as opposed to still paying off that first one several months later.

dianalcrn · Apr 24, 2015

The smartest thing I ever did was go to grad school. Sure the advice about living below your means is sound advice. However, grad school allowed me to get jobs that paid over $100K a year. That can help tremendously when you want to pay off student loans. There are plenty of scholarships for grad school and loans that can be forgiven if you agree to work in certain areas of the country.

Good luck! Nursing is a great profession and I am sure you can find your path!

klone, MSN, RN · Apr 25, 2015

The smartest thing I ever did was go to grad school. Sure the advice about living below your means is sound advice. However, grad school allowed me to get jobs that paid over $100K a year.

The two are not mutually exclusive.

And $100K+ a year will not make a bit of difference if a person does not change their mindset on debt and/or spending habits.

joanna73, BSN, RN · Apr 25, 2015

Exactly. Very good friends of mine make over 100 thousand combined. Not a lot, but they have no children, no loans, no mortgage, no car. They are always paying off debt because they both spend constantly.

brandy1017, ASN, RN · Apr 29, 2015

At this point, if I buy a home, it will be a townhouse (i hear they're easier to sell than condos) and then I'd rent it out so that I'm not paying for all of that out of pocket. I kind of would like to get into real estate on the side? And use travel nursing as a way to see the rest of this country while still contributing to my future and having flexibility. I just haven't figured out a specialty that doesn't have me running around like a chicken with my head cut off and that I enjoy enough to want to keep doing. Career-wise, that's where I'm at.

If you want to travel and aren't ready to settle down yet, it would be best to rent. It offers affordability, flexibility and mobility. Put the extra money into a Roth IRA and your 401K. When you are young you get the best bang for your buck for retirement savings because you have the maximum amount of time for the money to grow and capitalize. Buying a house is expensive, down payment, loan closing costs, mortgage, property taxes and maintenance. Renting a house out can be a headache to find a reliable person that will pay the rent and not damage the place. Selling a place can be difficult, expensive and time consuming. It is much easier to move if you are just renting.

Dave Ramsey is a very anti-debt guy, for an alternate strategy check out Deal With Your Debt by Liz Weston. She suggests using debt as a tool to increase your net worth, retirement and financial flexibility in case of misfortune due to job loss, illness or injury. Your Credit Score is another good book she wrote and a good credit score will save you thousands over the years! Lastly I like Personal Finance for Dummies by Eric Tyson, it is a virtual encyclopedia of useful finance info.

joanna73, BSN, RN · Apr 29, 2015

Agreed. Don't buy unless you are ready to settle down. Home ownership can be more expensive than renting, depending on your interest rate, down payment amount, and principal. Invest the funds and buy when it's right for you.

typoagain · Apr 30, 2015

I have a co-worker that went the D Ramsey route big time. She went on a working rampage for 3 months and pain off $48K of her mortgage in three months.

For the next 6 months her husband worked 2 jobs.

They not only paid off their house-along with ever other bill they had. They ended it by taking their 2 kids and all four grandparents to 3 days at Disneyworld and then 5 more days on a Florida beach.

NurseGirl525, ASN, RN · May 4, 2015

I have financial freedom. Have for about 10 years now. My house is paid for, I paid for my new car with cash, I have no credit cards, and my schooling is paid for. My ex and I did Dave Ramsey for many years. When we were married our vacation home was also paid for and my ex's business was all paid for. We paid extra on every loan and lived very simply. We never took vacations, we never ate out, I never bought anything unless it was with cash. I drove basic cars. It can very easily be done. I still live within my means even though I am divorced. I made out well in the settlement but have used very little of it and I work closely with a financial advisor. My son has a college fund right now worth over $40k and he is 9. I think my ex at times to it to the extreme. Even when we had things paid off it wasn't enough for him. While I'm thankful for my stuff being paid for and I own my house free and clear, I wish we had enjoyed life a little more together. I think if we had taken a trip every once in a while or just had a night out for fun, we wouldn't be divorced.

Just make sure you live your life too. People don't say on their deathbeds they wished they had saved more money, they say they wish they had spent more time with loved ones and had more fun.

TryVeganToday · May 4, 2015

We did something similar. Selling our house and going to one car really made a huge change. We are a family of 4 living in a 2 bedroom apartment now. BUT we are debt free and savings are growing!!! We are going to retire as soon as our youngest graduates from high school.