Paying off the Student loan early - in 22 months.

I came to the US to get a Masters degree with an I-120 in hand to a nice but very expensive university. The fees there is consistently amongst the highest in the country, even more so when i looked at converting my Rupees(Indian currency - right now a dollar can buy about 45 Rupees, back then it took about 50 Rupees to get ONE US dollar).

I had no Scholarship offers, no in-state tuition option, so i took out a loan to cover my first semester fees plus living  costs from India itself. Now consider going to an absolutely new country to study, with no initial money in the bank, no credit history, no credit card to put any expense on - that can be pretty scary. The money that i got from there combined with everything i could manage to save by working on campus part-time (and living on a very very strict budget) almost covered one semester and a half, with still another 2.5 semesters to take care of, and no tuition assistance from the school, i had to take out a student loan here in the US too.

How tough it can get for an international student to get a loan with absolutely no credit history, and no immediate relative to co-sign will be a subject of another blog post, but i did manage to get the loan, and graduate with a degree, good GPA and a good 2 year experience working on campus in my field of study. I got a job in about 4 months after graduation and the first thing i wanted to do, was get rid of one of the 2 loans i had.
 

The loan from India had a higher rate of interest and was slightly less than the loan here, so it made more sense to get rid of that first - but around the same time my parents were getting close to retirement and were looking for safe investment opportunities, so they paid off my loan and i started paying it back to them (at a rate lower than the bank, but a little higher than what a CD would give them so it worked out for us). With that done, i shifted my attention to the loan here, after about 6 months of graduating, the minimum payments started and my loan balance looked like this -

• Principal - $15,000
• Loan Origination Fee - $980
• Interest accrued - $1530
• Total - $17,510

The initial interest rate was a variable 3.75%, and it increased by 0.25% every other month for some reason, so i started putting $500 a month toward the loan. I could manage to do that because even though i had graduated, and had a full time job - i chose not to inflate my lifestyle for some time. I still lived with my college room-mates, still split grocery and other costs with them like i had for the last couple of years and basically lived like i still made the part time school job salary. This allowed me to put money towards more important things like the student loan, a small fund to buy a used car in the future, as well as start saving for the years to come.

I paid $500 for 6 months(that used to be the first bill out of the bank every month), and once i got used to not seeing those 500 dollars in my account, i increased it to $750. I continued that for another 6 months. It was tough but i managed to scrap through the first year and paid off about $7500 from the student loan balance. Around this time i got a raise of about $2500, instead of looking at it as a $2500 raise , i saw it as a $200 a month increase toward my loan and started paying off $1000 a month and 8 months after that i managed to completely pay off the loan with less than $500 of added interest. It took me a total of 22 months.

It got really tough in the last few months, because i did buy a used 8 year old car and had small payments for that too, plus buying the car helped me move a little away from the city and get a bigger place, i still shared a 2 bedroom apartment with a roommie and my monthly rent and utility charge increased.

I kept focusing on the end goal, and believe me the satisfaction of being free was priceless.Most friends around me had parents who sponsored their education and paid every dollar of it (it is not very uncommon for Indian Parents), so i always felt that i started my professional career on the back foot when it came to having debt - paying of the loan in under 2 years helped me get back on track to save for and focus on other things in life.

Using a virtual card number this cyber monday.

Cyber monday is upon us, and like every year almost everyone is getting ready to buy a lot of stuff at great discounts online. While that seems more convenient than standing in long lines in the cold on black friday, it does come with a downside - security of your credit card used online.
There have been tons of cases where credit card numbers have been used by hackers or billed for recurring subscriptions. One good way of getting the best of both worlds is by getting a free virtual account number for your current credit card and using that number instead of the actual number.
I already did that with my Citi credit card, it is very simple and takes less than 5 minutes

• Log on to your citi credit card account
• Go to Tools and Services -> Get a Virtual Account Number
• Choose one of 2 options - the downloadable version for PC, or the online version for Macs or if you will use Virtual Account Numbers at work or from multiple computers.

Follow through the next couple of steps and within no time you have a virtual number for your credit card to use without any worry at any of the online stores (even the ones which seem to give awesome deals but seem shady enough to not give your actual account numbers :))

Citi cards, Bank of America and discover currently offer this free benefit. Happy and Safe online shopping to all this cyber monday.

Using rewards cards smartly

We usually do all our grocery shopping at the Giant's store nearby. There are a lot of grocery stores like safeway, trader joe's, whole foods very close by too, but we stick to one store as it maximizes our savings.

Giants has a promotion where you earn a point for every dollar spent, and sometimes additional points for buying certain items. 100 points save you 10¢/gallon on gas at any Shell gas station, 200 saves you 20¢/gallon and so on (http://www.giantfood.com/savings/shell_program.htm). On an average we spend around $200-$300 on groceries, so we make sure to go to the giants store every time. Gas prices are about 10 - 15 ¢ cheaper around where i work than near the apartment, so by going to a shell gas station near work and using the giants card savings, we save about 30-45 ¢ per gallon on gas, that is 12 - 18% discount on every gallon of gas used, which is pretty sweet in my opinion.

Plus i have a chase credit card which gives 3% cash back on gas, and currently the chase freedom card gives a 5% cash back on groceries. Add these cash back offers in, and we save a good deal on groceries and gas every month just by being a little smart and keeping a mental tab of where to buy things which is not very difficult to do.

15% off on select restaurants using the Macy's Amex card.

Macy's recently sent out the new American express cards, replacing the old mastercard ones. If you received one of those, you can register at the amex network and get a 15% statement credit at select restaurants using that card in 3 simple steps.

1. Register your new card at www.amexnetwork.com/macys
2. Pay for your meals at any of the locations shown there with your registered Macy’s American Express Card
3. Receive an automatic statement credit of 15% off of your total dining bill (including taxes and tips) until you reach a maximum credit of $25

Its a great way to save some money if you plan to dine at any of those locations.

Buying stuff just after rather than just before ?

Its the basic rule of selling - demand determines pricing. That is fair enough, but another thing that affects pricing of products is timing.
Take the case of Halloween costumes, have you ever got a bargain on costumes the weekend before halloween, its fascinating to see how normal costumes which would cost no more than $10, end up being sold for more than $40 a piece. It is all about timing.

This year i ended up buying mine and desi girl's costumes on craigslist, although the idea of wearing used costumes wasn't really sold on her, i did manage to save over $50 on two costumes. To avoid this same scenario for next year, i kept a close eye on costume prices after halloween, and rightly so - i ended up getting new costumes at over 60% discount for next year. So by being a little proactive (and at the risk of not being able to buy latest stuff for next year) i saved us some money as well as avoided wearing used costumes.

Now only if i could find a way to keep roses fresh for a year, because for some reason roses seem to become as rare as diamonds in the second week of February, and start costing almost as much as diamonds do :)

Google gives 10% raise across the board ! The facebook effect ?

I just heard that Google is giving ALL its employees a 10% raise for next year, yes all 22000 plus employees. WOW. Apparently it is to prevent employees from venturing into greener pastures nearby (read Facebook - who are dangling stock options as a way to lure good talent from other companies).

That got me thinking - what does a 10% raise really mean? Suppose Random Guy makes 4000 a month after taxes and has the following rough basic budget.

Fixed costs -
Mortgage/Rent - 1500
Utilities/Cable/phone bills etc - 450
Rx/Co-pays - 100
Car & Home insurance - 150
Total - $2200

Variable costs -
Groceries/Eat outs - 600
Car/Gas - 200
Travel & trips - 250
Miscellaneous - 200
Retirement/Savings - 550
Total - $1800

Now a 10% increase for him would be $400 more every month, but the fixed costs wont change(unless of course he randomly decides to change his living situation or goes out and buys a new car etc). So in effect he is making $400 more for all variable costs including saving and retirement contributions. He now has $2200 instead of $1800 for those - which makes it a 22% increase instead of the original 10%.
He can off course put all of it in the savings/retirement category and increase it to $950 from the original $550 - making it a cool 72% increase :)

Sometimes for me it makes more sense to break down the numbers and look at them in percentages to inspire me to be smart about my finances.

Desi - What does that really mean ?

The word "Desi" actually refers to people from the Indian subcontinent. It includes countries like India, Pakistan, Sri Lanka, Bangladesh etc. It is more of an inside term, hence not so common outside of desi circles.

For more information check out the wiki link - Definition of Desi

Hello World :)

This is my first post on my very own PF blog. After having read and followed a lot of PF blogs on the web, i decided to start one of my own, mostly to log my personal and financial journey and share it with everyone else.