Also, this pisses me off. I went to an in-state school in Minnesota, and in addition to my OUT OF STATE graduate degree, I still owe 38K from an original 45k loan. How did I do that? By overpaying my student loans in the hope that one day I might be able to get loan forgiveness.
I might some day. IF I DIDNāT KEEP HAVING ANEURYSMS FROM PEOPLE WHO COMPLAIN ABOUT HAVING NO MONEY AND CAN AFFORD HBO.
Iām not going to fault the guy. People come at life from all perspectives. Most people can only manage those minimum payments, especially fresh out of school. Thatās all I could do for a few years after getting my bachelorās. My payments were about $350 a month through the mid 90ās.
But then I wised up. I realized that if I could swing even $50 more per month, I would be knocking down that principal much faster. Then, it was $100 more and towards the end I just lumped it and paid off the last 6 grand in one payment to get out from under the monkey. Key, though, was paying more than the minimum. It sure did hurt. Took me forever to save for buying my first house and I had to drive crappy old cars.
Now Iām used to crappy, so hey, whatās new. Thanks, college!
Its not āfront loadedā its just the nature of paying back a loan over time with approximately fixed payments.
On the first payment toward a $500,000 mortgage you are paying interest on $500,000. On the very last payment when you only owe $2000 you are paying interest on that. Unsurprisingly the interest on $500,000 is 250 times more than the interest on $2000.
[quote=āMikeTheBard, post:20, topic:68158ā]I couldnāt afford the higher monthly payment of a 10 or 15 year mortgage. I understand how compound interest works, and made that choice because it was approximately the same price as rents in this area.
But it was still a choice made because there were no good options. Yes, this is how the system works, but that system exploits the poor for the benefit of the rich. Just because youāre forced to choose the lesser of two evils doesnāt mean youāre no longer able to recognize it as evil.
[/quote]
What would be a less evil alternative? We could ban home lending, in which case you would have been forced to rent, which you say (and I agree) is a greater evil than the one you chose. We could restrict long-term lending (e.g., the government could stop subsidizing home loans longer than 10 or 15 or 20 years), which might bring down the purchase price of homes a little, but probably not enough to enable you to afford something with a 15 year loan than you can only afford with a 30 year loan today, so youād still be stuck renting. We could go full communist and outlaw private ownership of housing altogether, because [sarcasm] that has worked SO well in the countries that have tried it. [/sarcasm]
I guess we could have government-sponsored anti-HGTV broadcasts that discourage people from coveting more home than they can afford. Is there something better than Iām missing?
So. This dude clearly has never looked at the total monies paid back on a mortgageā¦has he. Because my $250,000 home when paid back on time for the full 30 year loan would run me about $600,000 out the door.
Guys guys guys. There are things that are different about educational loans: rates frequently higher than other securitized loans, sometimes weird fees, and the big one is that they canāt be discharged through bankruptcy. Those things are totally fair game for griping. But whatās being talked about here is how all loans work.
If someone offers you a different kind of loan (e.g., an āinterest-onlyā mortgage, or the ābullet loanā where you pay the principle and accumulated interest all at once, or a balloon loan which is halfway in between) you should probably run screaming away from it, unless you have highly specific needs and resources. Otherwise, this is as square a deal as youāre going to get while still being charged interest.
Same deal with your mortgage, same deal with your car loan, same deal with your credit cards, same deal with your home equity loan. Every month the amount of money you owe goes up from interest. Every month you pay it down. By the power of arcane mathemagicks, you will owe much more interest on a balance of $100,000 in month 1 than you will on a balance of $500 in month n-1.
Anything else would be the lender failing to charge interest. And if you can get a zero interest loan, by all means grab it, but itās a bit much to expect that on demand.
We joke about being ādisappointed in BoingBoingā but honestly, I am a little disappointed that, of all the possible kvetches they could air about student loans, they picked the one that amounted to ānobody told me Iād have to pay back more money than I borrowed!ā Is basic math not a Wonderful Thing anymore?
That sounds pretty much like libertarian-communism. I donāt know if they got around to doing this in Anarchist Catalonia or in Makhnovist Ukraine but they would be the first places I would look at the history of.
This is one reason I never refinanced in the mid-2000ās when everybody was treating their home equity like a piggy bank. Iāve been paying off my mortgage for over 15 years and have reached the point where most of my monthly payment is going towards the principle rather than interest.
Iāve never understood the people who are always refinancing in order to get the lowest rate possible - all theyāre doing is resetting the interest clock and never really significantly pay down the principle. Yes, my rate of 5.8% is quite high compared to others but Iām actually ahead of schedule in being completely mortgage (along with all debt) free in less than 5 years.
In my case, I refinanced (twice) with the explicit goal of lowering interest. I did not borrow additional money, and I did not finance the fees of the refinance process. The remaining balance of the loan prior to (each) refinancing was the same as after. In addition, Iāve continued to pay exactly the same amount each month, which was originally above the minimum payment. Therefore, Iām just paying more additional principal than I was before. My payoff date is still the same, even though the end date of my loan has been pushed back (twice).
Good luck finding a part time job that will cover room & board. $10 bucks an hour @ 25 hrs/week at the book store wonāt cut it anymore. At all of my stateās colleges, R&B is actually more than tuition (~$12K/year). Total college expenses typically comes out to around $25-30K per year.
Where the hell are you kids living? Or is that like the dorms or something? If the butler came in every other day would that make it cheaper?
I lived alone in a shitty apartment. I had friends who rented houses and had way more room and paid way less in rent because they split it like 4 ways.
