Eating Healthy on a Budget

Hey folks! I got to contribute an article that was featured on BadCredit.org today. I blended my expertise in nutrition with budgeting to show how easy eating healthy on a budget can be. I’ve included a little snippet below. Be sure to visit BadCredit.org to read the rest!

I graduated from college with $30,000 in student loans. I got married two weeks after graduation but had one more year to survive before I’d see any form of income.

My husband had a fifth year of school to finish, and I had to complete an internship program before I could become a registered dietitian.

Needless to say, life as broke college students continued after college. We read Dave Ramsey’s book “Total Money Makeover” and learned how to set up a budget.

We tracked every penny, which meant we paid a LOT of attention to food prices. Since I had a background in nutrition I knew which foods could get us the best bang for our buck, both nutritionally and financially.

If you’re looking for healthy food that won’t break the budget, I’ll share my top three favorites to help you get started.

1. Peanut butter…

Head over to BadCredit.org to read the rest of my article!

Fight to Freedom: Meet Life, Dollars and Sense

The following is a guest post from fellow blogger (and Michigander!) Blair. Be sure to follow Blair on Twitter and Facebook.

https://mail-attachment.googleusercontent.com/attachment/u/0/?ui=2&ik=e4fcb72dc4&view=att&th=13d384ca7b38ce39&attid=0.2&disp=inline&realattid=f_hdwf1bg71&safe=1&zw&saduie=AG9B_P9xZXnnUsTtwWJa7wGdIAKZ&sadet=1362535236700&sads=-OOFciiOT6EWlUzTg_RgkC7Apq0Hi Budget For Health readers. I’m Blair and I blog over at Life, Dollars and Sense. Jessica was kind enough to let me share my debt story and mission with you today. A little bit about me. I am a twenty four year old accountant from a Midwest college town. I love personal finance, yoga, traveling, good food and spending a time with friends and family. I blog about my experiences with balancing student loans, a frugal lifestyle, and living my life to the fullest.

My Debt
I headed off to college with a desire to study business. I attended a small private college in Michigan, yet I received enough in scholarships that the expense was that of an in-state public university. I worked hard in college. In addition to the maximum course load, I worked part-time jobs as a tour guide, research assistant, and a desk clerk during my four years in undergrad. These jobs provided enough to keep my personal expenses covered, however, like so many college kids, I had a couple of student loans each year to cover part of my tuition costs. My junior year of college I took a once in a lifetime opportunity to study and intern abroad in London, England. I took out my only private student loan that semester. This was my largest loan and significantly increased my debt. I will not go into all the details of the experience however I believe this was the best money I ever spent. At the end of four years, I graduated with $36k in student loans. Add in a loan on a reliable used car after graduation and other obligations and I was $51k in debt.

My Plan of Attack
After beginning my full-time career, I realized that the debt I had was like a pair of shackles. The monthly payments were not unmanageable, but there they were every month. I felt as though the debt was holding me back. I knew that if I set my mind to it I could pay them off and be free. I have always believed that if you work hard enough at something, you can achieve it. And so I made a promise to myself that I would over come this. And I would overcome it now, not 20 years from now.

I knew I needed two major strategies to make this possible.

1) I needed to be aware of how much debt I actually had. I think this is a huge first step. I had student loans through 3 different carriers and a car loan through my credit union. The balances were all in different places and I didn’t often look at them. I decided to utilize Mint.com to track all of my debt and other finances in one place. And with a free app, I could see them anytime, anywhere.

2) I needed a way to track my progress. I considered a huge debt countdown on my bedroom wall or a daily reminder on my bathroom mirror, but I settled on a blog to track my progress in front of the world (or a small group of readers) that would hold me accountable. I now do a monthly “Fight to Freedom Report” on my blog where I check in on my current debt level, how much I have paid down, what were the barriers, if any, and how far I have a come since I started.

I decided that 3.5 years was a realistic time frame for repayment given my debt balance, my income, and my desire to still enjoy my life as much as possible. However, I hope to be debt free before this deadline ever arrives.

My Fight to Freedom

I have taken steps to make my debt-free goal possible. Some of them are simple and some involve more sacrifice. However, all of them are centered around the idea of living a full life with less. They include:

Set a Target Debt Reduction
I have a goal to reduce my debt by a specific amount each month. Working to reach smaller, more frequent goals keeps me motivated and is less daunting then the whole balance. If I don’t make the mark one month, I have a chance to make up for it the next.

Pack a Lunch to Reduce Small Expenses
I’m working to reduce my small “convenience” expenses as much as possible. From buying lunch and specialty coffee to keeping my dry cleaning to a minimum, I am making an effort to ask myself, “do I really need that?”

Budget for Health comment: Agreed! You can save $2-3k per year by packing your lunch!

Use What You Have
I love new clothes and accessories as much as the next girl. However, I have made it a goal to wear everything that I have in my closet. I have challenged myself to take my current wardrobe and mix and match the pieces to be like the latest trends rather than running out and shopping.

Sort Through Belongings
I have an ongoing goal to simplify my life and I am working to sell online anything I do not really need to put toward my debt repayment and donate the remainder to charity. Plus simplifying your belongings is very liberating as it makes you realize how much you don’t need to rely on material possessions.

Prioritize What is Important
You can’t do it all on a tight budget. However, I told myself that I would not stop enjoying my life because of my debt. This is where prioritizing is key. One of my main priorities is visiting my out-of-state boyfriend. I work this into my budget and give up other entertainment and expenses to make this possible.

Reduce Your Expenses
I made the decision to move back home with my parents for one year. They charge me reduced rent that allows me to have minimal expenses. The money saved goes toward my debt repayment. Is it glamorous? Is it every twenty-something’s dream? No. But it is temporary and it allows me to get much closer to my goal.

Prevent Lifestyle Inflation
Ever heard of “keeping up with the Jones?” When you get out of school and begin working a job with an adult salary, there is definitely a temptation for a lifestyle upgrade. There can be the urge to get a nicer car, larger apartment, and upgraded clothes. You might even think to yourself “everyone else I know has…” or “I deserve to have…”. I am determined to fight this urge. If I stop to think about it, I know I can survive on very little.  I lived four years as a poor college student and those were some of the best years of my life. I urge myself to live like that college student as much as possible. I remind myself that I do not really have more money now because I still owe a large amount to my loan providers.

My journey is a work in progress. To date I have paid off just under $21,000 in under a year and half.  Paying off debt isn’t easy, but it is possible!

Budget for Health: Are you currently paying off debt? What’s your strategy?

Student Loan Payments- How to get started

Ugh…I hate student loans. I never realized how much college cost until I had to pay it off after I graduated. I saved $24,000 by being a mentor/RA in the dorms for three years since they provided free housing and a meal plan, but along with my diploma came $30,000 of student loans. Do you know what we could do with an extra $30,000 to use toward something other than debt repayment?? When Dave and I got married a couple weeks after I graduated, we both agreed that our first financial priority after getting jobs was to pay down that debt ASAP.

Why did we want to pay them off so fast?
My minimum student loan payments were each around $50 per month. That came out to $150 per month for the three loans I took out. We could have made the minimum payments forever and have the loans paid off by the time our kids went off to college, but when we found out how much interest we would be paying there was no way we wanted to stick with minimums.

How much interest would we pay?
With $30,000 at a 6.8% interest rate, the amount thrown away to interest added up exponentially with each decade.
10 years: $11,487 (payment of $345/month)
20 years: $24,960 (payment of $230/month)
30 years: $40,405 (payment of $200/month)

How much interest did we end up paying?
We paid off 100% of our $30,000 in 9 months. We put a total of $2,287 toward interest because one of my loans started accumulating interest when I took it out in 2007 and we didn’t start making payments until 2011.

Where do YOU start?
If you don’t want to get stuck making student loan payments forever, the following steps will give you a good place to start. It doesn’t take much effort but it does take a little creativity and discipline.

1. How much do you owe?
I didn’t really know what this number was until Dave and I had to make a sample budget for our pre-marital counseling. I knew I had 3 loans but I didn’t remember how much each of them were and how interest had affected them over the past 4 years. If you took out loans through FAFSA, you can go to StudentLoans.gov to find information. This was how I found the numbers for two of my loans and the third loans was from a bank.

2. What are the required minimum payments?
As I said before, my minimum payments were $50 per loan per month, totaling $150/month. Knowing these numbers will help determine how much extra you can throw toward them depending what your budget looks like.

3. Determine what your monthly budget looks like
Do you know the average amount you spend on groceries each month? How about entertainment or gas? If you aren’t sure, I highly recommend downloading the same Budgeting Spreadsheet Dave & I created in Excel and still use 3 years into our marriage. Don’t be intimidated by all the categories, I tried to include all possible categories that might be in a budget so you can narrow it down to the ones that apply to you. I suggest you enter in your numbers in the following order to help you determine how much you can put toward student loan payments:

Fixed Expenses
These categories are payments that stay the same and will occur every month- tithe, taxes, student loan minimum payments, retirement savings, mortgage payment, rent, insurance, phone, etc.

Variable Necessities
The amount for these categories will vary month to month but are necessary to have. Be honest with yourself and only enter REAL necessities- groceries, utilities, transportation expenses, etc.

Variable Desires
These are the last entries you’ll put in your budget for the simple reason that they are DESIRED but not NECESSARY. This includes entertainment, eating out, vacation savings, gifts, clothing, gym membership, hair cut, subscriptions, etc.

If you’re not sure how to figure out monthly costs for odd categories like clothes or make up, this example should help: I get a hair cut every 4ish months. That’s 3 hair cuts per year. If one hair cut costs $20 (I pay way less but I’ll aim high for this), then I’m spending $60 per year which comes out to $5 per month. I would enter “$5” into the hair cut category. You can take a rough average for other categories to get a basic idea of what your monthly budget breaks down to.

4. Determine where you can “trim the fat”
The first place I recommend starting is the variable desires. Depending how quickly you want to pay off debt, you can trim as much fat as you want/can from these categories. For Dave and me, we worked out at our apartment complex gym so we didn’t have to pay a membership fee to a commercial facility. Instead of having cable, we rented movies from the library and watched our favorite TV shows in Hulu the day after they aired. Eliminating a gym membership and cable alone gave us well over $100/month to put toward student loans. Since our goal wasn’t “debt payoff in X amount of years” but rather ASAP, we continued to search every nook and cranny of our budget for more fat to trim. We found ways to whittle down our “fixed” expenses by living in an apartment right next to Dave’s work so he could walk and we didn’t have expenses that come from having a second car.

You’ve got to start somewhere
Get as extreme or conservative as you need to according to the time frame you want to pay off your student loans or any other debt you may have. I can’t complain that I came out with $30,000 since I know many friends who finished school with much more. You may have all the motivation in the world to pay off debt but there are circumstances outside of our control that may prevent you from paying off $30,000 in 9 months like we did. You’ll have to determine a realistic goal that works for your situation. Whether you have $5,000 or $500,000 of student loans you can still save a lot of money in the long run by making even a few extra payments each year. It may seem overwhelming to think about at first but if you walk through the steps I provided you may find that you are able to trim the fat on your budget and attain financial freedom sooner than you thought.

If all hope seems lost, you may want to consider going back to school for a graduate degree. Though this might seem counter-intuitive to do so, as this will increase your total debt, a graduate degree will give you access for jobs with much higher pay. Pursuing a Master of Science in Health Care Administration online is an excellent option if you have a related Bachelor’s degree. This is just one of many options at your disposal, and online school is significantly less expensive than a conventional university. It only takes moments to look at more info and it just might be the first step to debt freedom!

If you had debt and paid it off, what methods did you use to do it?

WE’RE DEBT FREE!

As of today, we are 100% debt free and no longer have student loans to pay off! I screamed with excitement when I pushed the “submit payoff amount” button. Our payments started in June 2011 when Dave got his first paycheck and we’ve been pouring into these loans like madmen ever since. Nine months later and our day has finally come! Here is a breakdown of the total cost of my student loans:

Total amount of loans taken out: $24,838
+ Total interest paid: $4856.39
Combined total: $29,694.39

The amount of debt we had isn’t too bad considering the average debt of a 2010 college graduate was $25,250 (which I thought would be higher). I know others who have WAY more than that racked up. We are very grateful Dave’s parents saved up for his school and that I saved a lot of money getting free room and board for 3 years at Michigan State. I knew nothing about loans when I took them out other than I couldn’t pay for school without them. I took out 3 loans total, two were subsidized and one was unsubsidized. The unsubsidized loan started racking up interest the day it was disbursed to MSU in 2008. The amount of interest we paid makes up 19.6% of the total amount we paid.

Just to give you an idea of how much we saved by paying our loans off early, take a look at this table. I used a handy loan calculator from CNN.com to see how long it would take to payoff if we continued to make the minimum payment on the unsubsidized loan. Keep in mind that capitalized interest isn’t taken into account with this calculator, so the amounts would probably be higher since it was unsubsidized.

Loan amount: $11,500
Monthly Payment: $100
Interest Rate: 6.8%
Payoff period
: 15 years, 7 months
Interest paid: $7,163

Combined amount paid: $11,500 + 7,163 = $18663!

The interest would end up being almost the same amount as the loan I took out and nearly double the final cost! We only ended up paying $1618 in interest for this loan since we paid it off in 4 months. We are proud of our victory and very excited to make our money start working for us rather than dishing it to lenders. GOODBYE, DEBT!!!!

Do you have student loans? What’s your timeline for paying them off?