After college I had my mind set. Study abroad had given me a little taste, and I knew I wanted to move abroad post grad. I was completely addicted to travel and working abroad was the ideal springboard for that lifestyle I envisioned.
Problem was, I had to find a job. I started looking into works visas, best cities for expats in Europe, American companies with global offices and post grad professional programs with international options (you know, the ones that rotate you to a new city every year). I soon realized, though, that my debt was going to be too overwhelming to handle in any of these situations. I needed to get a grasp on my finances before making any big moves.
Enter Teach For America. An option I had hardly considered, let alone known about, started to look like the perfect compromise. I could live in a new city – the chances of being placed just about anywhere in the US increased the thrill factor – while saving some money.
Let me explain something really quickly, if you’re unfamiliar with student loans. When you don’t want to, or can’t, pay off your loans you can put them in deferment or forbearance. Deferment is like freezing the loans (they don’t change) while forbearance simply puts off your repayment schedule (but interest accrues causing the loan amounts to slowly grow).
During my time with Teach For America I was also able to put my loans in forbearance and Americorps (the big umbrella over TFA) handled my interest payments so there wouldn’t be much consequence for putting off my loan payments. There were other financial perks for joining TFA too. I earned a $5,500 educational grant at the end of each year of service. So that’s $11,000, in addition to my teaching salary, that I could use to pay off my loans. I knew teaching would be a huge challenge but I was intrigued and excited. By the time I received my offer from TFA I was so sure it was my next step, accepting was a no brainer. No matter where they placed me.
I was placed in New Orleans and landed a job teaching high school Algebra in Jefferson Parish. I was thrilled when I learned my salary was $41,000 (ironically the same amount as my student loan debt – funny, right?). Moving to a new city was expensive though. I spent most of my first year paying off an Americorps relocation loan, tuition for my teaching certification program and rent. I saved everything else that I could. Ideally, I should have been chipping away at my loans here and there. Maybe next time I’ll consider taking out installment loans, this way I can take out a set amount at a time and then pay back in monthly installments, rather than the whole clump at once! But its too late, I’ll definitely consider this option for future purposes though.
That was my small mistake. I also made one pretty big mistake.
It was my responsibility to request forbearance for my loans each year and submit the paperwork for interest payments from Americorps. Unfortunately, I didn’t realize two of my eleven (twelve maybe?) loans were handled by a different servicer. They were totally overlooked, missed in my requests and went delinquent for a few months. I was confused and upset – mostly because it was technically my fault but I had no idea what was happening and had never received communication from this other servicer. I had to make a lump sum payment to cover all the months I missed. It was more money than I could really afford at the time. The servicer promised nothing would be reported against my credit score if I paid the missed months in full, processed my forbearance request, and added contact information to my account so a similar mishap wouldn’t happen again.
Well just a few months later my car was totaled. When I went to buy a new car I realized the servicer had in fact reported the late payments. I had to hound the provider to remove any derogatory marks (which they did since they had not made sufficient attempts to contact me during the delinquency) on my credit score so I wouldn’t be affected when buying the car. It was a big pain in the ass. And of course, at the time no one told me how does a pink slip loan work, or about the other options on the table that would have saved so much time and energy.
At this point, I started learning as much as I could about credit. I applied for an entry credit card. I looked at the best credit cards for no credit and ordinary credit cards to see which cards suited my needs best. Kept a detailed calendar of all my bills and made all my payments on time. I saved much more my second year of teaching. I used some of this money for Thailand and the rest for paying off loans – my mom’s parental loan, the two stray loans, and my highest interest rate loan in full. It was so important to me that I paid off these loans. Overdue loan payments can reflect badly on your credit scores, preventing you from getting mortgages or car finances. Obviously, I’m going to want a house in the future, so I needed to try and improve my credit score to allow myself to get a mortgage. However, one of my friends told me that I could always get in touch with a bad credit mortgage broker to try and find a mortgage with my current credit score. Whilst I’m not looking for a house right now, it was relieving to hear that you can still get a mortgage with a poor credit score. I was still determined to pay off some of these loans though!
I wasn’t able to move abroad as I had hoped but I found a good compromise that allowed me summers to travel and the time I needed to save a little money to pay against a chunk of my debt. But then those loans affected my plans again…
I wanted to stay and teach a third-year but I decided it would be too difficult to pay loans and rent, etc. on my teacher’s salary. Instead, I moved home last summer to cut cost of living and focused my job search on positions paying enough money to make aggressive loan payments (plus save and travel). I thought I’d live at home for one year and have enough cushion to take off, but it’s looking like I need at least one more year. It’s not what I planned, but fortunately, my job is supportive of my travels and gives me time off.