We Are $900,000 in Student Loan Debt

0:00Brought to you by the EveryDollar app. Start budgeting for free today. I'm paycheck to paycheck and I'm drowning, so I just, I don't know how to get out of it. So I guess that's the question, what do I do? OK. So why are you paycheck to paycheck? And why are you drowning? So my wife and I have been together about 10 years. We have combined student loan debt of about 900 K to a million. Our income was until recently around 200 K year, but I was recently laid off, so now it's cut in half. What are you under for? We're both practicing attorneys. So I just started taking cases on my own just to bring something in, but we always get to the same point whenever we discuss bills. She wants to pay all the bills whenever we have a bill meeting.

1:01And I want to save something because I know once we sell the bills for that time period or billing period, we end up with nothing left. So I just walk around feeling like a fraud most of the time. And I'm scared to be invited to any type of dinner or event because I'm just looking at the dollar sign calculating, do I have enough for this, do I have enough for that? And that's been our life for, you know. Why are the two attorneys only making $100,000 a year each? So we were both nonprofit attorneys. Why if you have $900,000 in student loan debt, did you take that stupid job? The plan was that if you do that for a certain amount of time, you can get the student loans forgiven if you work in that nonprofit sector.

2:05Yeah, not true, because it's not happened for very many people. 5% of the people get through that gauntlet, 95% don't. So you've been underpaid by $150,000 to $200,000 a year for years to try to get through a few hundred thousand a student loan debt. Yeah. So where are you guys at in that process? He's now opened his own firm, right? Yeah, I, yeah, I basically just started. But you're not, you're not like for nonprofit rates anymore, but she still is. Correct, correct. What I make, what I charge is completely hours or months. Yeah. What was the original balance of these student loans? It was around 300 each, but then I think it ballooned around the 450 plus. How long have you passed the bar? It's been about 11 years.

3:05So they were not forgiven? I initially worked in private, so I only did about six to seven in the nonprofit. So in what year was she? She's about at eight. She was a nonprofit. So she worked in a private as well for a while? A little bit. Yeah. All right. Well, our experience is that very few people get those loans forgiven under that program. It's a, the program is full of holes and problems and loopholes. So we've made a whole lot of disillusioned people after working 10 years for substandard wages and service to the community and then don't get their loans forgiven. So I don't have a lot of hope in that. Of course, you've started the clock over now. So yours is not relevant.

4:06So what would I do if I woke up in your shoes? I would make student loan reduction my primary goal. Therefore my income, highest possible income, even if it's in a less than ideal situation, I want to make the most possible money for a short period of time and really jack your incomes way up and live on nothing, beans and rice, rice and beans and attack these student loans with a vengeance. And though you don't need to be going to a dinner party. If somebody invites you, you say I have a million dollars in student loan debt, I can't go. And that's what we're working on. And so it's job one. You got one job. It's that. And you guys get your incomes up as high as you can and your expenses down as low as you can. Now as far as being able to eat and so forth, you pulled that off for a decade. So you haven't thrown all the money at the student loans and then got to the end of the month that had no food. That's not what you're saying.

5:06No, you don't need to be saving money. You need to be getting these debts cleaned up, but you guys have not been aggressive on this because you've not been aggressive on your incomes. Sure. You aren't making a ton of money. I mean, a couple of hundred thousand's good money, but it's not good money if you owe a million. Yeah, I mean, it doesn't feel that way. No, it doesn't. It doesn't move the needle much. It moves it, but not enough to where you don't feel stuck. You felt like a rat in a wheel for a long time. And the maths against you, unless you're paying more than the interest and principle, that thing's just going to move up and up and up. Yeah. You got to get ahead of it by just throwing tens of thousands of this thing every month. Yeah. That's what it's going to take. Yeah, I need you to make in a couple of hundred each minimum and as soon as possible, preferably two fifty each or three hundred each, 80 hours a week and you just work until you're blind, but you can clear this up in three or four years if you do that. But if not, you're going to be sitting here ten years from now still looking at this thing.

6:06You're going to have to do something pretty dramatic with the math, but if you take 900,000 and you start throwing two, 300,000 out of the year, 300 in a year, it's done in three years. But that means you're making between the two of you, 400 and living on 100, not counting taxes, which means you're living on nothing. Yeah. And that's where I'm trying to get you to. Throw 300 a year at it and be done in three years. That's $25,000 a month, not $25,000 a year, which is what you've been doing because you've not even moved the needle. So I've got great hope, but it's all, you know, we call it the shovel and whole thing Richard, the hole that your ends 900, your shovel is your income. You got a huge hole and a small shovel. I'm telling you, get a new shovel and the hole gets filled up a lot faster than it's 300,000 a year above my living expenses and taxes to throw it 900,000 and then I'm done in approximately three years.

7:09And but otherwise if you just say it out loud, it takes your breath away. I have a million dollars. It's I can't breathe. I can't think. Everything revolves around this. But if you have a clear cut plan, you're making 200 each, 250 each are 250 and 150 and you start and we're knocking this thing out in three years. You got great hope. Your energy level is going to come up. The scales are going to fall away from your eyes or your depression is going to slip away. Your effectiveness as an attorney is going to be better and everything else. But right now that it's hard to see anything because you got this huge concrete wall in front of your nose and it just it blocks your vision for your life. And I'm sad man, I'm so sorry. I'm not fussing at you. I'm fussing with you. But you gave up the opportunity to make no money when you took on all this loan. You have to go make as much money as possible now as soon as possible. And the more money you make, obviously the faster you're going to get out.

8:12And you know what I'm talking about. And it's going to be a lot of hours. It's going to be a lot of sacrifice and you're going to put up with some stuff you don't want to put up with. You're going to be working in a firm that's not necessarily love everything about it. Whoppy-dupty. I don't like anything about my life right now. I need to change something and you need to change a bunch of stuff right now. Yeah, the conversation needs to change from are we going to pay the bills first or say first it is we need to get our income way up and keep our expenses down to nothing so that we have that margin. And you can do this math on paper and go, okay, how much are we willing to work? We're both going to work 80 hours a week for the next three, four years and knock this thing out because we've been doing this for a decade and the number went up. So what we've been doing isn't working. We got to try a different plan and the debt snowball like you mentioned, staring down 900 grand will take your breath away. But if you focus on the smallest debt and just go, that's the enemy right there. That's the villain. You have hope to fight the next one and the next one. That's what it's going to take. Create your free every dollar budget today, the simplest way to budget for your life.