Twenty Years of Payments

Last Friday, Dr. SoS and I took our tax refund and some money from savings and paid off the $8,289.58 remaining balance on my student loan. I mentioned on Twitter that I have paid on this loan for 20 years, but there is much more to the story with many personal finance and life lessons along the way.

College – Take One – The Good Life

I left for college right out of High School when my step-father kicked me out of the house. My father lived across the state and paid for me to attend a large state University in the middle of the state. I joined a fraternity and enjoyed my time with my brothers. What I did not like was my classes. My general education classes had 200+ students in an auditorium. I soon figured out that I am unable to learn in that type of environment.

I chose computer programming as a field with a minor in foreign languages. My first computer programming class was Pascal. A student teacher taught the class instead of a professor. I learn best when I understand how something works. I distinctly remember asking the teacher once “why” a particular piece of code on the board worked. She could not explain it, but basically read the code aloud. I asked again, but I really do not think she knew. Needless to say, I did not do well in my chosen subject. However, I did better in my French classes. When I failed most my fourth semester grades, my father told me not only was he no longer footing the bill, but I needed to pay him back for the previous semester.

I have several pieces of advice from this time in my life I would like to share. The first is that if you are just graduating from high school, do not feel pressured to jump right in to college or university. Many people say you lose momentum if you do not go right in to school. I disagree. I was not mature enough to attend a university and should have spent the year working instead of wasting my father’s money. You could also use this time to backpack around the country or even the world. Working during this time helps you save money for school. Traveling during this time helps give you perspective. I would recommend either. School will be there when you are ready.

If someone is footing the bill for your school, don’t screw it up. My sister obtained scholarships, grants, and our father paid the remaining amount of her education. School and the expenses for school are a very serious matter regardless who is paying for it. Take it seriously.

One thing I cannot stress enough is working while attending school. I scored a sweet gig at the local arcade while I was at school. I believe that working while you attend school has multiple benefits. The first is that it enables you to pay for your expenses and makes you less reliant on student loans. If someone else is paying, it allows you to begin saving your money for the future. The other thing it does is force you to learn time management. If you have too much time, you may find yourself partying too much and working less on your studies because mentally you believe you have all the time in the world. Work and pay for your school.

College – Take Two – Night School

After failing my first attempt at school, I moved back to my home town and managed to get a job at AT&T. I worked in the Customer Sales and Service Center. During my two-year stint at AT&T, I attended night school at a local private university. I took Accounting, Economics, and two Philosophy classes. AT&T covered all my education expenses, which was great because I certainly could not afford to attend a private university. I LOVED Philosophy, but my professor, who could see my passion for it, told me that there is not any money in Philosophy. He agreed that it was a worthwhile class to take, but definitely not a career choice.

If your job offers to pay for your school, take advantage of the opportunity. You can advance your skills and eventually earn more money with those skills. Having said that, be careful with your choice of study. If you choose Art History, Astronomy, Geology, Philosophy, or other academic pursuits, that’s great if that is what interests you, but before you choose that path be aware of your future income potential and be at peace with your earnings. This may make you happier, but you will also have to devote more of your income to savings to achieve wealth.

College – Take Three – The Debt Ensues

Ultimately, my manager at AT&T and I did not see eye to eye and I found myself without a job. Luckily, my step-father and I were getting along better and he let me move in with him while I searched for a job. My mother suggested that I look for a job in a restaurant. Bennigan’s Tavern hired me as a server. If you never ate at a Bennigan’s, it had a menu that was as thick as a book. We memorized ingredients and how the cooks prepared items before we could serve the food. I did very well and worked my way to through all the positions in the restaurant including host, bartender, prep-cook, pantry-cook, fry-cook, broil-cook, and then began learning the roles of the assistant manager.

During this time, I began dating one of the bartenders and I moved out of my stepfather’s house and in with her. We married young, at 24-years-old. I am not sure why I agreed to get married. I was not ready, but I thought it was the right thing to do. My advice is if you do not think you are ready, you are not. If you feel pressured by your partner into a commitment when you are not ready, disaster is most certainly in your future.

I have had so many jobs in my life. After leaving the restaurant, I worked in an auto salvage yard and one winter I even worked construction. I do not recall how I found the job at the Walt Disney company, but I began to work in their telemarketing center taking Disney catalog merchandise orders. It was an easy job for me and the money was decent.

I have always enjoyed working with computers and when one of the managers noticed my aptitude, I began to quickly move through the ranks. I moved to customer service. I helped out in the scheduling department. Then I worked as a call coordinator managing the call volumes for the entire call center. My manager introduced me to Lotus 1-2-3 spreadsheets and the power of formulas. It did not take long before became an order services supervisor. We switched from Lotus 1-2-3 to Excel, I was not a fan, but when I discovered macros and that you could automate your work, I had no problem converting.

I became friends with the assistant telecommunications manager. He helped manage the equipment and switch that allowed the call center to work. He was attending DeVRY for a degree in Telecommunications Management and he sparked my interest in returning to school. He explained that it was the only management degree offered, but it was also the shortest path to a Bachelor of Science degree in the school.

By this time, my wife and I were together for several years, both had reliable cars, and managed to buy a small house. We discussed how we were going to get ahead in life. When we spoke about one of us going to college, she said that since I already had experience in college that I should attend first because my job opportunities would be better and she was already making good money as a manager with only a high school diploma.

I took my friend’s advice and went to speak with DeVRY. They offered several programs, but as he said the shortest to a Bachelor of Science was the Telecommunications Management degree. In only two years and eight months of going to school year round, I would have my degree. I believe the cost at the time was $28,800 for my degree. Because school was less than three years, compared to the cost at the state university, this was much more. The class sizes were small, much more to my liking, and the school promised to help me find a job when I graduated.

I took out student loans through Sallie Mae to cover the cost of my education. They also allowed me to take out some extra money to cover living expenses. We were living well beyond our means, or we never would have needed the extra money.

All things considered, I did very well. I went to school from 7:00 am to 1:00 pm during the week. I worked at Disney as an order services supervisor from 2:15 pm to 11:15 pm, Monday through Thursday and management allowed me to open the call center on Saturday mornings working 5:45 am to 2:15 pm. I plowed my way through school, joined with the smartest people in class, and completed most my homework between classes.

I graduated, Magna Cum Laude, in early 1998, nearly 10 years after graduating from high school. I was a late bloomer, so sue me. My student loan was up near $36,000 by this time, but payments did not start for several months. After graduation, a local software company hired me in their Telecommunications department. They paid me more than I was making as an order services supervisor and I began work with them on April 6th, 1998.

The Results

Despite having a great new job, a nice house, and three cars for two people, working full-time and going to school full-time took its toll on my young marriage. By October 1998 , my wife filed for divorce. The long divorce and resulting debt is a story for another time.

I remember about five years after graduation, the valedictorian of our class, one of those smart people I hung out with while attending school, sent a message to me and told me she paid off her student loan. She became the Telecommunications manager for a large national corporation and used all her increased income to focus on paying off her debt. She was definitely the smarter one of the two of us.

Despite being out of credit card debt after paying off all the bills from my divorce, I never prioritized paying off my student loan. It was just one more $185 payment per month. As Dave Ramsey said, I had my student loan so long that it was a freaking pet. I named mine “Shelly” after my ex-wife. Once I paid off the credit cards, I should have rolled those payments over to my student loan. Instead, I kept it around and it cost me far more than the original $36,000 to pay for school. I paid $12,487.65 in interest and that is only what I can see back to January 2003 when the new student loan company purchased my loan. Please do not make the same mistake that I made.

Advice from Mr. SoS

Thanks for reading my story. There were many things I learned from this experience that I can share with you. Student loans are a debt just like all other debts. We finally paid mine off after 20 years of paying interest. This interest increased the total cost of my loan by 33% from the original amount. The good thing is that we saved $3,037.45 in future interest payments instead of paying on the loan for another five years.

If your parents or employer are paying for your school, take it seriously or you may find that you lose this opportunity and your personal cost will be much greater.

Do not borrow extra money to live while you are going to school. If you need to borrow money to live, you should save up some money to pay for school, and then attend. Search online for scholarships, grants, and work while you attend school. Look for other ways to pay for education. Become an apprentice in a skill and learn while you earn. Attend a free software engineering school like 42 US. If you have no other option, other than student loans, you should still work to pay them back as soon as you possibly can. It is even possible to graduate from college or university with minimal or absolutely no debt.

If you had student loans, how long did it take you to pay them off? If you still have student loans, what is your plan to pay them off as quickly as possible? If you attend school right now, what is your plan to complete your education with the smallest debt possible? I look forward to hearing from you!

Take care and keep swimming!

Mr. SoS

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