Thursday, August 4, 2011

Guest Post: How I saved over $18K in 2011

Meet Randy, author of the lifestyle blog YoungNEducated.  Covering  everything from fitness and finances to relationships and careers, his blog is the perfect blend of intelligence, wit, and cultural commentary.   He's here to share how, in a matter of weeks, he found simple ways to save himself over $18,000 this year!

One year ago my mind was set on three major things: graduate with a master's degree, find a career, and get a new apartment -mission complete. My three major goals for 2011 were to obtain SAS certification's, get a job promotion, and develop a business idea to pursue. In the midst of these goals, I realized that my monthly bills were becoming annoying and there had to be some better financial alternatives. After looking at my bills I realized a couple of things; the interest rates on my new car payment and car insurance were much higher than what they could be,  and my student loans were completely over what I was willing to pay a monthly basis.   From that point, I did what any YoungNEducated person would do: I took action!

Anybody that has student loans can attest to the headaches these payments may bring, but there are solutions. After talking with the federal loans manager, I was informed that as a government employee, I could apply for the public service forgiveness program, which states that after making 120 (10 years) consecutive payments under the guidelines given, I would be exempted from making any further payments on the federal loans, THE END. Also, I could  apply for the Income-Based Repayment Plan  (IBR) if my debt exceeds my total income by a certain percentage.  This plan lowers the amount you have to pay per month, but the payments still count towards the 120 needed for the public service forgiveness program.  From personal experience, your payment plan will vary by who you talk to, and how you talk when you go to apply; I was originally told I'd have to pay as much as $1,200 a month! When I asked about the IBR plan they lowered it to $700,  and when asked about the ratio and the payment limits set forth in the IBR (they started stuttering) and lowered it again to $343 a month without extending my payment terms (another benefit of the public service forgiveness program) ! At this point, I decided to talk with the manager and we figured since I had multiple loans to pay, it was smarter to consolidate the loans all into one so that I become eligible for the IBR plan, now I pay much lower than the $343.00 a month while complying within the forgiveness program guidelines! Total amount saved for the year $12,120. Go figure?lol  

My next step was to evaluate the car payments. After hours of researching and calculating what my bills and life could be, I decided to seek professional financial advice. I went to my bank and began asking questions and quickly found 1) I should have got the car loan from my bank directly when I purchased the car, and 2) The seller at the dealership where I bought my car lied saying that he "consulted with my bank and it didn't go through" whereas another bank that they were affiliated with had approved me. Back at my bank, I was told their car loan rates were 3x times cheaper than what I was currently paying. My credit ratings were in good standing, my debt/income ratio was good, and my car was valued +$6,000 dollars more the loan needed, so all that was left for me to do was to re-finance the loan. I went to the bank where my car loan remained high and asked for a 30-day payoff and took it back to my bank; 20 minutes later I was approved. Total amount saved $4,000.00.

Now i'm thinking... if I could find a way to save on my car then I know saving on my car insurance will be a breeze. I'm 25, I've never been in an accident, I have no tickets, and I've always paid my car insurance on time.  Unfortunately, my car insurance bill read $1200.00 (for 6 months). I gave my insurance agency a call and the representative immediately acknowledge everything mentioned above and even informed me that as a loyal client to them for over 6 years, I should have seen a decrease earlier! She promised to run a re-quote and get back with me asap. Two weeks later she called back and cheerfully said "I found a new offer from another company within our network and it's a really great quote." The offer fully insured not only my new vehicle, but included my 1997' Mitsubishi all for a one time payment of $943.00 annually! Total Savings $2057.00.
As I enter into the 4th quarter of 2011, my budget are drastically different than at the start of the year. One thing I've learned is that by investing in a few hours of research and seeking professional financial advice when needed, you can dramatically reduce your debt and reclaim what's rightfully yours! 

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