How a Content Specialist Paying Off Student Loans and Credit Card Debt Does Money

Photo credit: Stuart Seeger, CC BY 2.0.

Mac (not her real name) is a 31-year-old Content Specialist living in Austin.

So, Mac, how much are you making?

I currently make $42,500, excluding some small bonuses that depend on company profits.

How small are you talking?

If we hit our EBITA for the month, we’ll get $100 added to our paychecks, which comes out to ~$80 after taxes. This happens maybe slightly less than six months a year. So let’s say $500 company performance bonuses and maybe another $500 holiday bonus, if the numbers are good.

Got it. Those are pretty small — but every dollar counts!

With that in mind, where does your money go? What are your major expenses?

My two biggest expenses are my student loan payments ($350/mo on IBR) and rent ($695 before utilities). I split a duplex with a women from Craigslist.

My expenses are pretty fixed, and my biggest goal for the year is to pay off my credit card (current balance $360) and keep that clear so I can start building my savings (emergency fund goal is $5K) and then start shoveling what’s left at the loans.

Tell me more about your loans, because I know you wanted to discuss them.

Well, yes. I feel like I’m at confession (ha, lapsed Catholic). I checked the balance before our interview and currently I have $159,695.63 in student loans.

I’m nervous to say that number out loud because I feel like every conversation about loans focuses on how stupid someone was to get them, not like, how to live after the deed has been done.

My biggest fear about this interview is that the comment section will be “well, PhD in the humanities…” and “that PhD in Philosophy had no loans so this person is dumb” etc. That’s not really helping anybody.

So, yes. I have a lot of student loan debt and I take responsibility for it. I’m trying to do the best I can.

I think we’re in a space where we can both acknowledge your responsibility for your loans and acknowledge a system that both requires and encourages loans. To borrow from Squeezed: you don’t have to take ALL the blame.

I take a fair share of it. Nobody forced me to sign the loans, but I was very very young when I did and I’d do it differently now.

In what way?

I would have done better research on the funding available to me in grad school. I was told that we’d have our tuition reimbursed (verbally) a year after I’d started. In hindsight, I should have deferred that year or left when it didn’t materialize. I also would have paid interest on my undergraduate loans when I was able.

Still, I worked three jobs the entire time I was in grad school, so it wasn’t like I was just living that sweet loan money life.

For sure.

So let’s talk life after the loans, then. What have you learned about “living after the deed has been done?”

I am very well schooled in the requirements for the different types of repayment programs, and I monitor mine very carefully. It was actually someone in the Billfold comments who helped me secure IBR for the first time, and without that sharing of knowledge I have no idea how I’d get by now.

I’m also very aggressively pursuing my non-academic career. I’m in a semi-related industry now, and I’ve been able to work my way through small but incremental salary adjustments.

I track my spending, but of course with a small salary, it’s harder to gain traction. Still, I’m not adjuncting and have benefits, so it could be way worse.

Had you originally planned to work in academia?

I had. The goal was to work for some public university or community college in a faculty/staff capacity so that I could get my loans forgiven through public service. I still actively apply for these positions, but so far I haven’t been able to secure one.

There’s a lot of academia beyond tuition that requires private wealth. You want to go to a conference? Research trip? Uninterrupted time to write your article? None of that happens without additional funding.

Agreed. That was bad enough when I was in grad school, and I’m guessing the same for you. There are a lot of expenses beyond tuition, and a lot of expenses required to maintain an academic career. Whereas industry often has a professional development budget.

Yes, and I’ve been fortunate to find a lot of networking opportunities in my semi-related field by volunteering.

I’m glad the career transition worked out for you. I know some people have a lot of trouble building a life outside academia.

I was lucky that the part-time jobs I had while working on the PhD gave me enough of a portfolio to get a temp job that I worked hard at to turn permanent.

So let’s go back to your income and expenses. You said that your goal was to build up your emergency fund this year. How are you planning to set aside enough money? Are you cutting back on something else? Or does it not require a tight budget?

Well, phase one is to pay off the credit card so that I can take my monthly $200 or so payments there and apply that to the $250 savings I already put toward the e-fund. Unfortunately, I haven’t had a string of good luck long enough to get the card to stay empty.

I have pulled back on my spending. I don’t really eat out, I share my housing, I bike to work, etc. I track my credit card balance daily to remind me not to add to it. The last week of the month usually gets me.

Yeah, I hear you. I’m in the “the month isn’t over but I’m still running out of food” phase right now. [This interview took place in the last week of July.]

If you didn’t have strings of bad luck, I’m assuming your income would cover your basic expenses?

Yes. It’s things like car repairs ($600 two months ago) or an unexpected X-ray ($200) that keep me just that small threshold from being credit-card-debt free. I feel like once I can attain balance zero for a few months, I can start reaching my emergency fund goals.

I should say that I have $1,430 in savings currently.

In general it’s a smart move to build an e-fund and pay off debt simultaneously — but I’m curious why you don’t just use that savings to knock out the $360 credit card debt.

I’m afraid of not having any liquid cash at all. I had a car stolen a few years ago, just after I graduated, and without the $3K I had in savings at the time, I would have been screwed.

Makes sense.

What about retirement? Are you setting anything aside? Do you have a 401(k)?

I do have a 401(k) and it has about $4,800 in it after the last two years. I put $185 in each month to get my company’s match.

I love the employer match. Free money!

Yes, even I know that you can’t pass the match up.

It does get repeated A LOT on personal finance sites.

Yes, and I am thankful to The Billfold for all of the guidance its given me over the past few years.

This would be a natural transition into “with that in mind, what advice do you have for Billfold readers,” but I want to ask one more question first:

What are your long-term financial goals, not for your money, but for the way you interact with money? Do you want to “do money” differently in the future? Or are you happy with the way you’re doing money, with the understanding that your financial situation will improve as you continue to save and pay off debt?

My biggest goal is to feel like I have some control with my money. When you have a lot of debt, from a very young age, it’s easy to feel powerless and that money is a negative, oppressive force.

Money is neutral and it’s just a tool. I’d like to “do money” differently in that I’d like to continue to slowly turn my ship around. I can’t get it out of the maelstrom, but I can keep it afloat and look for better waters.

Which leads to my advice, for your last question:

I find focusing on what I can control and going day-by-day is much easier to manage and keeps me in check, rather than focusing over and over again on how far I have to go. Even if it’s adding a dollar more to a savings balance, it’s progress.

So, yes, look to the future by looking at the now.

If you’re interested in sharing your Doing Money story or conducting a Doing Money interview with someone who might have a good story, email nicole@thebillfold.com.

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