Archive for the ‘IBR’ Tag

To Splurge or Not To Splurge. That is the Question

A few years back the Federal Government iniated a loan repayment plan for students and former students who wanted to enter the non-profit or social service sector after graduation called the Income Based Repayment Plan (herein called IBR).

IBR sounded fabulous to begin with. It reduces student loan payments for students based on the percentage above or below the national poverty level. After a certain number of years of paying off your loans, and depending on the type of work you’re in, your loans get canceled and they get added to your taxes as earned income (Bummer! But it’s just for a year). This all took effect on July 1, 2009. I began counting down the days when I found out about this in late May.

¡Dios Mio!

¡Dios mio! ¡Demasiada deuda!

So, come July 1, I called up my lender, Sallie Mae and said, “Hey, what do I need to do?” I answered a few questions, filled out a few pieces of paper and found out that I didn’t have to make any payments (this wasn’t a deferment, this was just no payments y’all!) for a year. But, then after that…my payments would jump from the $278 that I was paying before to $376.

Ummm..where’s the fun in that? And you have to re-qualify every single year. Right? Well, I took that option, and decided to save that $100 every month (in my own private lock box of  a savings account). It gives me an extra $178 a month to spend on whatever I want.

However, here’s the real kicker everyone. I deferred these loans in November of 2008 because of my loss of employment. I saved close to $1,500 to pay off my loans. Wow! And what would you do with that money? I didn’t need to put it towards the loans anymore because the government said, “Here…we’ll let you take a year off of paying that…just save $100 for a while and then come back to us.”

So, what to do with that money? In the Luxury fashion world that is not a lot of money. Not at all, no,no,no.  I pulled out about $750 for a long overdue laptop for myself (oh happy dance!) and then another $350 for extra stuff that I really just didn’t need but wanted.

And that’s where the splurge comes in. Do I hang on to that $350 or do I just stash that back away with the other money that I put in my private lock box? Oh wait! Too late. I spent $160 on shoes. Whoops. And $60 on a cardigan and the rest went back to savings. But, to be honest…. they were all investments. One was a pair of sandals that I’m going to wear to death and another was a long overdue pair of Uggs.  And finally, the cardigan. If you read Splendicity you know I love them and will wear them every single day of the week.

This IBR thing is great, for the people it’s going to help a lot, and to be honest, I really don’t know who it’s going to help. It just deferred some payments for a year and then tacked on $100 in the long run. In the housing counseling business you would call that a crappy forbearance agreement. It’s just a matter of understanding what you’ve gotten in to. So, now that I’ve got all this under control, it’s time to stash that cash and forget about it until something else comes up.

Have you gotten set up with IBR? Did it affect you? Have you made any changes based on your loan payments?

For more information on IBR you can go to IBRinfo.com

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