My student loan is officially paid off

Originally scheduled to be complete in December of 2011, my student loan has officially sucked its last payment out of my bank account. With a final withdrawal of $27.36, I can kiss it goodbye forever. Hah!

I’m supposed to receive a Notice of Balance Paid in Full in about 10 days. I may frame it and hang it on the wall next to the degree it paid for. Tacky? Perhaps. Satisfying? You betcha.

A note to Chickie at Scotiabank: I called Christine at the National Student Loan Service Centre (NSLSC) yesterday. After giving her my account number and enough info to prove I was me, she graciously answered all of my questions about how to close out my loan, rather than acting as though she was doing me a favour by deigning to speak to me. She then gave me the option of waiting until the scheduled payment date of December 31st, or having her withdraw it immediately. Despite my not having a chequing account with them, she was still able to access my funds through a little technology some people call the Internet. Lo and behold, this morning my bank account was minus the exact amount she told me it would be, and when I checked the NSLSC website (which I can access all by myself), my account read a gratifying ‘Balance remaining = $0”. No need to wait for them to get around to acknowledging my payment. Christine also did not hang up on me, nor did she say anything rude. In fact, she congratulated me on paying off my loan, and wished me all the best in my future endeavours. You might consider learning a thing or two from Christine, but I have a feeling she’d have nothing to do with you.

Oh yeah. That was satisfying too. Though I should probably do something about this bitchy streak I seem to have before becoming a mother...

This month’s net worth

Okay. Time to crack out the statements and spreadsheets and figure out where all our money is. You can see all the numerical figures on my NetworthIQ profile for December 2007.

As for the highlights and excuses...

Assets:

• The emergency fund is down, since I used much of it to get rid of Hubby’s obnoxious PSL.
• Cash on hand is up a bit since a couple of our utility bills didn’t clear until after month end.
• We contributed $300 to our RRSPs, though most of that was negated by the market downturn. It'll go back up eventually.
• My stocks are also down a bit for the same reason.
  

Debts:

• Hubby’s PSL is gone, finished, zip, nada, nothing. My student loan is down to $27.25. I still have to call them to see how to close it out properly. We sent $814 to Hubby’s CSL in November.
• Because we pay our mortgage biweekly, it received 3 payments last month, and so decreased by $841.
• The credit card spending is down. Note that we pay the full balance every month on this, so even though I’ve listed it as a debt (which it is), we’re not paying interest.

Current net worth:

$8,370.11

All in all it was a very productive month. Two student loans are (practically) gone. An extra payment went to the mortgage. We spent less. Not bad at all. Too bad I can’t get paid three time every month.

We're on track to reach my net worth goal of $10,000 by year-end.

2008 financial resolution

I saw over at Brip Blap that Cash Money Life is holding a contest on establishing 2008 financial goals in order to promote the new Carnival of Financial Goals. The challenge is to write a SMART (see acronym spelled out below) financial resolution for yourself for 2008. If you choose to participate, you’ll be helping to set yourself up for financial success in the New Year, and you could win an iPod Nano or one of three finance books. Whether you choose to participate in the contest or not, I highly recommend you do the goal setting exercise.

Okay. My SMART financial resolution for 2008 is:

Specific:
To pay down at least $5000 worth of Hubby’s Canada Student Loan by the time our baby is born (current due date June 19th). We’ll start this resolution on December 1st rather than January to jumpstart the New Year.

Measurable:
Once I’m back on my feet, I’ll calculate how much money we’ve contributed from December 1st to Junior’s birthday. If it’s over five grand, we’ve been successful. This is yet another reason not to be premature, kid. You hear me down there?

Actionable:
We’ll submit a large percentage of our Christmas cheques (unless they’re specifically intended for baby by the giver, in which case they’ll go to savings) and bonuses to the loan, and buy used baby gear for items we deem to be safe to do so (e.g. not the car seat). We’ll also start doling out a set allowance every two weeks for each of us to spend as we please rather than spending whatever we like when we like. This should cut down our spending quite dramatically and allow us to reach our goal.

Realistic:
We’ll have to send an average of $834 a month to the loan in order to reach $5000 by June 1st. This should be well within our abilities given our current income and necessary expenses.

Timely:
We’ll be able to tell monthly whether we’ve been reaching our average payment goal. If we’re ahead, great. If we’re behind we can step up the effort. The uncertainty of the end date will give us incentive to make larger payments early, which will help our overall debt reduction by chewing through more principal and thus reducing interest. Once we’re parents our expenses and income will change dramatically and I’ll have to set a new goal once I’ve become accustomed to the changes. This is why I’m ending the resolution at that point.

I’ll post our progress in a trackbar on my side panel.

Thanks to Cash Money Life for the great idea and best of luck to the Carnival.

Student Loan Status Update – the Continuing Saga

I’ve so far sent $1500 towards my student loan. $500 more will be sent tomorrow when I get paid. That will leave about $75. The lender will automatically remove $50 from my account on Monday as per our original consolidation agreement. Once that goes through I’ll be calling them to determine how to finish it off and close out the account. Woo hoo!

Next.

I’ve discussed previously how much I loathe Private Bank (pseudonym), which holds Hubby’s student loans. It’s reached a new level. I’m naming names.

Private Bank is Scotiabank.

I’m aware that some of the Canadians reading this probably love Scotiabank and hate TD. Or BMO, or Royal or CIBC. Everyone in Canada seems to have one of the Big Five that they refuse to deal with.

Scotiabank is mine. Here’s the latest reason.

We decided that we would use part of our emergency fund to get rid of the Provincial Loan (PSL) that is so irritating. Hubby called them to find out how to do so. After confirming his information and identity by putting him on hold after ever question (Last name? Please hold. Date of Birth? Please hold. Social Insurance Number? Please hold.) Chickie (who refused to give her actual first name, and so receives my arbitrary derogatory nickname) announces that it’s not possible to transfer funds directly to the PSL since those accounts are not online. Hubby points out that the consolidation forms state that they can automatically withdraw monthly payments from his account, therefore they should be able to withdraw the full amount from his account given his written permission. Hubby is informed that monthly payments can only be automatic if the chequing account is from Scotiabank.

Hubby is irritated but says that he will write a cheque, can he please be given the total amount of the loan including interest for the next three days? Chickie states that it’s not possible for her to determine what future interest will be. Hubby points out that they’re a bank and since their profits are tied to interest coming in it seems odd they’d be incapable of future projection. He asks what the daily interest was from yesterday, and says he’ll add that amount times five to the cheque.

He dropped the cheque off at a branch yesterday. The people at the branch had no access to his provincial loan accounts (since apparently they keep them securely locked in the Stone Age), so couldn’t process it themselves, but were kind enough to put his cheque, loan document and letter directing that the cheque be used to pay off the full amount into their interdepartmental mail. I have no quarrel with the people at that particular branch.

First issue solved, though with no help from Chickie.

Hubby then tries to set up payments on the much larger Canada Student Loan. This one sends out statements and is reportedly available to other banks. However Hubby had already tried to set up bill payments through our PC Financial account. Scotiabank CSLs were not one of the available bills. He called PC and was helped by Shaila, who said she’d be happy to set it up for us but Scotiabank had not supplied them with a merchant number for that type of account. If Hubby could have Scotiabank contact PC or get the merchant number from them himself, Shaila would arrange it.

Fast forward to Chickie. She laughed when Hubby asked why PC Financial didn’t have access to those accounts. Her response was that they only dealt with the other ‘old banks’ for these types of accounts. Apparently in her mind the old banks consist of Scotiabank, TD, and Royal.

I looked it up. The Bank of Montreal is older than any of those three, and all five of them (CIBC being the fifth) are over 140 years old if you don’t count name changes. Nice argument. Quite the snob for someone working phone support. Here’s a hint: If you’re going to be condescending, do try to at least have a clue what you’re talking about. It’ll make you appear merely rude instead of rude and stupid. Still, she’s right in saying that PC is a new bank. But since its services are run through CIBC, it should have access.

Hubby requested a merchant number for the account type and Chickie had no idea what he was talking about. She suggested that he open a Scotiabank chequing account and deal with the payments through it. Hubby valiantly refrained from telling her hell would freeze over first, and instead asked to speak to her manager since she couldn’t help him.

Chickie hung up on him at that point. I could understand if she hung up on me, because by that point I would have been rude, vulgar and belligerent. Hubby has infinitely more patience than I do, both through natural gifts and years of working IT phone support.

Anyway, what are we going to do?

We have a currently unused line of credit through TD, one of the two banks deemed worthy for Scotiabank CSLs to deal with. I’ll be sending payments to it from PC, and three days later sending payments from TD to Scotiabank. We won’t pay any interest on the line of credit, though we’ll lose out on the three days of interest from PC.

I’ll probably also draft a letter to their complaints department and cc Rick Waugh, the President and CEO. He deserves to know why we will never, ever get another service through his bank.

Good thing he’s 'richer than you think’, because I bet he won’t care in the slightest.

My big money mistake and how to avoid it

The Canadian Capitalist is running a contest in celebration of his third year blogoversary. He’s offering some truly snazzy prizes. Go check it out and recall your own biggest mistake for him. We’ll all learn from it.

My biggest monetary mistake was taking eight years to graduate from university. Yep. Eight. Impressive, no?

Why did it take me eight years? A combo of reasons, the first of which is going to sound arrogant as hell. Apologies in advance.

I’m an intelligent person. It doesn’t always show (this being a case in point), but I score highly on IQ and other aptitude-type tests and breezed through most of my school years with no trouble at all. I never learned how to study because I never needed to. My parents never noticed the deficit. I was getting As, clearly I was doing all right.

My grades started to fall in my upper high school years as the work got harder. Sadly, this corresponded time-wise with my highest levels of teenage insensitivity and angst, so I didn’t even try to figure out what was going wrong. Consequently I still got into the university of my choice, but I didn’t get the scholarships my earlier marks would have assured me. Financial mistake #1: Not realizing the potential savings four years of free schooling would have provided. Luckily for me, my parents were prepared to pay for my first two years, and I had enough saved up to cover the other two.

Enter first year. Become overwhelmed with entirely new level of expectations and knowledge. Still fail to learn to study. Ergo, fail first year.

I made a substantial effort to learn more (and drink less) and scraped through my second year, earning the credits needed to pass the first year and ending the suspension the university had placed on me for failure. But I still had no study habits or methods that I could apply regularly. Financial mistake #2: Not taking full advantage of half a free education.

Then I got married. Hubby and I moved into our first apartment. We both went to school that year and scraped a few credits out between us. Seemed Hubby had the same problems I did, for similar reasons, only he wasn’t draining his savings, he was chewing through student loans. Financial mistake #3: Wasting my own money on an education I wasn’t paying enough attention to, and allowing us to become saddled with more debt than was necessary.

I spent the next two years going to school part-time and working full time in an effort to keep us above water before taking a year off to 'rest' (from school, not work). Hubby went to school and advanced slowly, graduating in computers just in time for the dot.com crash. Suddenly the streets were filled with out-of-work programmers who had way more experience and knowledge than he did. He ended up working at Timmies...not the most lucrative of positions.

I finally went back to school full time where I was fortunate enough to meet two important people. Erica was gregarious and naturally brilliant, and spent every spare moment sucking up spare knowledge and learning everything she could from everyone around her, be they biophysics professor or homeless man, because to do otherwise was a waste of time to her. Penny was not as quick at picking things up and not as brave, but she worked like a pack mule until she understood everything she needed. I learned to love learning for the sake of it from Erica, and I finally learned how to study from Penny. Together they were unstoppable, and after three years I finally graduated with an excellent upper year average.

Hubby went on to take a three year college diploma in computer engineering, which he worked very hard at. Guess he learned to study somewhere along the way too. I eventually landed a research position at a non-profit, and he recently started working for a now-recovered software company.

Financial mistake summary: In total I wasted four years of my life and ended up with a $4000 student loan and an $11,000 line of credit. We also had $22,000 in Hubby’s student loans to pay.

Couple of geniuses, that’s for sure.

Things you could learn:
1) If you’re good at something, you can always become better.
2) Don’t under-appreciate other people’s generosity, be it institutional or familial.
3) Make sure your children value and nurture their gifts as much as is possible, be they academic, artistic, athletic or otherwise. Ensure they’re not bored or coasting through life without effort. It’ll bite them in the end.
4) Watch the spending, particularly when your income is slim to none.

Any lessons in there that I missed?

Student loan issue resolved...at least for now

On the way home from work last night I finally got my husband to open up a bit about how he wants to handle his student loans. Turns out I was mistaken about what issues were driving him in his decisions.

I’m planning on having my student loan paid off by the end of the month. I’m on course to have this done, as I don’t think I’ll have any problem coming up with the roughly $1500 remaining on it out of the four paycheques we still have coming to us this month.

I’d planned on tackling his provincial loan next, which is currently about $4200 and must start to be repaid at the end of this month. I’ve previously written a rant a post about this loan. It has a somewhat lower interest rate than his larger Canada Student Loan (CSL), but it’s less accessible and much more irritating.

I can’t explain exactly why this loan bothers me so much. I think it’s the lack of control. I can’t look it up on the Internet or pull out the last statement to see exactly how much it’s worth at any given time. That drives me nuts. To the point that I want to use some of our emergency fund to pay it back in a lump sum, and then spend several months bringing the fund back up to $5000.

It turns out that my husband’s desire to pay back his larger CSL first was not driven by the larger interest rate, as I’d previously believed, but by the fact that he sees it as an albatross around his neck. The smaller provincial loan doesn’t bother him. He doesn’t see it as a problem or an issue, though he can’t quite explain why. He wanted to use the emergency fund money to make a large inroad into the CSL.

I balked at that. By using the fund to pay off the provincial loan, we’re completely getting rid of a monthly payment which means our absolutely required expenses will go down before I go on parental leave.

Current minimum payments are $50 (my loan) + $58 (provincial loan) + $181 (CSL) = $289. By getting rid of the two small loans, we’ll only be obligated to pay $181 a month.

I had every intention of putting at least $289 a month into the CSL until it’s gone, but I’ll feel much more comfortable if we have the ability to reduce payments if it becomes necessary.

So, we’ve compromised. I think my threat of making him call the Private Bank every month to get his provincial loan’s exact balance tipped the scales. I’m a meanie that way.

We’ll pay off my loan this month. We’ll pay off the provincial loan in full rather than signing up for monthly payments, and we’ll sign the CSL consolidation forms for $400 a month. Once the fund is back up to $5000, I’ll sock any extra money into the CSL.

My most loathed loan will be gone, he’ll see significant decreases in his most loathed loan, and the emergency fund will never drop below $1000. If we have income problems in the future, we can call the Private Bank and have them reduce withdrawals back down to $181.

It’s not perfect, but we can both live with it, and that’s what’s important.

Anyone else discover that they were looking at their debt issues in a completely different way than their partner? Did you resolve it? And if you did, how?

How much is it worth to keep giving money to a bank you hate?

My husband’s student loan consolidation forms came in the mail on Friday. He has two loans. A Canada Student Loan (CSL) of $17,800 which is at Prime + 2.5% (currently 8.75%), and a Provincial Student Loan (PSL) of $4,200 at Prime + 1% (currently 7.25%). To add to the confusion, the interest on the student loans is tax deductible, which at my husband’s tax rate would make the true interest rate approximately 6.02% and 4.99% respectively.

This doesn’t look too confusing yet. We could either take Dave Ramsey’s advice and pay down the smaller PSL first to get rid of it as part of a debt snowball, or we could pay down the CSL first, since it has the largest interest rate.

The true issue is annoyance factor. My husband first took out these loans before the government set up the National Student Loan Service Centre (NSLSC) to administer them. Unlike more recent student loans (like mine) which are held through a subsidiary run by the government, my husband’s are held by the one Private Bank that was allowed to administer student loans before the de-privatization. The two loans were mandated at two different levels of government, and thus have different rules. The Private Bank will only follow these rules to the lowest effort legally required.

The CSL is legally required to have statements mailed monthly. This allows us to easily see how much we owe, and what we’re paying in interest each month. The PSL does not have this requirement, and thus the Private Bank refuses to send statements. Nor has the Private Bank enabled any way for the PSL balance to be seen online. The only way to know how much the loan is currently worth is to call their 800 number, or to go into a branch. Since the even the most convenient branches are only open until 5, realistically it means my husband would have to call them and wait up to an hour on hold each time, unless he wants to take time off work.

Because they are no longer in charge of any new student loans, the Private Bank has no reason to switch their policies. The customers affected dwindle each year and are not replaced by new ones. There’s no payback for them to switch over to a less draconian policy.

Nor can my husband switch the loan to another bank without penalty. They are the only Private Bank able to cover student loans. The moment he switches, the loan loses student loan status and thus loses tax deductibility on the interest.

This is the point in time where I thank my lucky stars that I took out my loan after the government had taken over. My loan is accessible online. I can send them electronic payments and know exactly how much I owe any time of the day or night. I see a daily tally of how much interest I’m paying and what part of my payments went to the principal.

Now comes the decision. My original plan was to finish paying my loan (on track to be done by the end of the month), then to start on my husband’s PSL and finally to tackle his CSL. This would follow the ‘debt snowball’ plan and get rid of the lowest balance loans first.

My husband would rather get rid of the higher interest rate loans first, and I’m willing to do that since it is more financially optimal. I think the psychological aspect will still work for me as long as the total number in the NetWorthIQ student loan section is going down significantly each month.

But how do we measure the annoyance factor? By paying the CSL off first, we would be minimizing the interest we pay, but we’d also be maximizing the profit the Private Bank is making off its poorest service account. Every time I want to calculate our net worth, my husband will have to spend an hour of his time on the phone waiting to speak to a Private Bank “customer service representative” (insert eye-roll here). That’ll be once a month.

Personally, I’m leaning towards using our $5,500 emergency fund to pay off the $4,200 loan in one shot to save ourselves the headache of dealing with it, and then spending the next couple of months pouring our money back into the fund. The emergency fund will never drop below $1000, and the interest rate its earning is 4.25%, lower than either of the loans.

Since they are my husband’s student loans, ultimately it’ll be his decision on exactly how we want to repay them. I just want to present the options and my viewpoint.

Does anybody out there have any other solutions or thoughts on the issue? Anything I’m not taking into account? I’d be very interested in another perspective.