How a Teacher in Tennessee Does Money

chattanooga flickr

Mal is a 30-year old teacher near Chattanooga, Tennessee.

So, Mal, tell us a bit about your finances.

My husband works part-time from home so he can stay home with our two-year-old son, and I teach full-time. We make about $48,000 a year combined.

We are buying our home, have no car payment, and my student loan balance is higher than what our house cost.

You’re in the process of buying a home?

We bought a foreclosure in 2012—30-year mortgage.

My husband had terrible credit, but it ended up that they wouldn’t put my name on the loan because of my student loan debt. I was shocked! I had spent a couple years cleaning up our credit reports, but he had an old credit card that had gone to collections. I was sure it would count heavily against him, and he was approved by himself for the loan!

I am also surprised that student debt would count against you like that. It’s supposed to be the good debt!

Right? I was so shocked!

So how heavy is your loan burden, and how much are you putting towards it every month?

I hate typing this number out! I try so hard to pretend it doesn’t exist. I owe about $82K, all federal loans. I’m on income-based repayment, so I pay a little less than $200 a month. I’m not making a dent.

I’m hanging my hat on the Public Service Loan Forgiveness Program. This is my third year teaching… seven more and supposedly the balance will be forgiven.

My education was not from fancy schools or anything. I took out more loans than I needed to because we were so bad at managing our money. I worked during school, but it didn’t really cover living expenses, so I used loans to fill in the gaps. I had no idea what I was getting myself into, and I’m embarrassed by that giant number, but my husband is cool with it and we have a plan (that depends on the government not overturning the Public Student Loan Forgiveness Act, unfortunately), so I try not to freak out and am working on forgiving myself for being so stupid with our money.

I’m not sure it’s about being stupid. The system is set up to encourage these kinds of situations. You were, in fact, doing exactly what people wanted you to do.

Well… we bought some non-necessities when those overage checks came. I could have been more frugal.

I grew up in a very low-income household, so it was hard to tell myself no when I was out on my own. I’m still a frugal person—no designer clothes or anything for me, but my husband and I love to dine out, for example, and it is hard to curb the habit of going out a couple times a week, even though cooking would be less expensive.

What’s the splurgiest thing you bought with those overage checks? I’m curious because I often feel guilty about my splurges too, even though they’re often necessities that feel like splurges, such as “a new pair of shoes to replace worn-out ones.”

I’m so embarrassed to say it! We bought a new TV once. The old one was technically still working, but it was one of those big old tube TVs, and I didn’t think we needed a new one. But my husband won the argument. This was in 2009-2010 so we spent about $600 on a flat-screen.

I am trying to find the balance between splurging and really needing to replace long-worn out items. Where is it? Clothes are something I struggle with. I had to buy a bunch of maternity clothes when I got pregnant, and they had to be things I could teach in. Then I had to buy non-maternity teaching clothes that I could easily pump in. I got down to pre-baby weight and then gained 10 lbs back, so I had to buy even MORE clothes.

But how many clothes do you need before you’re buying non-necessities?

I don’t actually think that’s a rhetorical question! I’d argue that you need enough clothes that you can go two full weeks without repeating an outfit (you can wear individual components like jeans more than once), and that none of your items, including underthings, can have worn-out spots or holes.

Obviously a lot of people get by on less clothing than that, and I’m not meaning to say that everyone should drop everything and buy stuff… but until you have that much clothing, all clothing you buy is necessary and not frivolous!

I like that answer.

Also, that television might have turned into a necessity at some point. Didn’t we all make the switch to digital around that time, making most old-school TVs obsolete?

Yes! That happened. I think we got one of those converter-boxes but could hardly get it to work.

So let’s switch up the conversation a bit. You’ve made what you call “financial mistakes” in the past (spending your money on outrageous items like clothing and a new television!), but what do you hope to change about your finances going forward? 

Just to be clear, the new clothes during pregnancy, etc, were not bought with student loan money. Just the TV and copious amounts of fast food!

Oh, sorry. Got it. But do you have resolutions for the New Year? Thoughts about increasing earnings or decreasing expenses? Five-year plans?

Going forward, I would love to not carry credit card debt. We had a clean slate until this past summer when our air conditioner went out the same week as our 15-year-old car broke down. So we are slowly paying on a 15-month no-interest card. The AC and car repairs would have wiped out our savings, so we kept the cushion of cash and will pay the card off before the interest kicks in.

No-interest is good, though! Better than interest, LOL.

I know! I felt so proud that I found that deal!

I would love to cut our food expenses, but honestly in this season of our life, we just need someone else to cook sometimes. I work 10-hour days a lot, and it is hard to cook every night. My husband is tired when I get home, I’m tired, and we are not good at embracing the Crock-Pot meal! (I’m working on it, but he’s picky!)

I would love to get some sort of retirement plan set up for my husband. He works for a tiny family-owned business, so they don’t do a lot of benefits. They actually asked him last week if he “would be interested in a 401(k),” but who knows if that will ever happen.

I have a 403(b) through the school system, but haven’t thought about upping the contributions or anything.

Five-year plan? My kid will be in school by then, which will change our income, which will hopefully change our savings situation. I would love to pay more into our retirement and build up a bigger cushion in our regular savings account. I’m not worried about paying our house off early—we owe less than $60K on it. And I told you my plan for the student loans. I would love to, like, start a college fund for my kid or start investing, but those things just seem intimidating right now.

Really, it sounds like you’re doing everything right, from my perspective. I’m sure there are various ways to nitpick your situation, but you aren’t living ridiculously outside your means (even when you buy on credit you’re doing it because of a specific, necessary purchase), and you’re solving the otherwise expensive child care situation right now in a way that makes sense for both your income and your husband’s career options in the future.

I bet if I asked you how much you spent on eating out every month, I’d get a figure that was relatively small, and possibly equivalent to grocery costs. Less than $300, right? That’s my educated guess.

This month we have spent $662 on groceries, and $347 dining out. For two adults and a two-year-old.

Okay, so my estimate was $47 dollars short.

Haha. I would have thought it was more, actually. Last month it was about $650 though, which included a 6-day road trip and a separate week-long visit with out-of-town friends.

But still. You’re doing great with the resources you have and the financial environment we’re living in!

With that in mind: do you have any advice for Billfold readers?

I think my advice would be: if you’re feeling bad about your spending habits, talk to a financial expert like Nicole who can ease your fears!

Ha ha ha ha ha ha thank you!

 

Photo credit: Ron Jones

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