Free Ebook.

Enter your email address:

Delivered by FeedBurner

« A Great Example of How to Make Big Money with Credit Cards | Main | Top 10 Free Money Finance Excerpts of 2011 »

January 10, 2012


Feed You can follow this conversation by subscribing to the comment feed for this post.

Will you retain your six figure salary after moving to Florida?

Also, have you considered a Roth IRA for retirement contributions above and beyond employer match?

Looks like you are on the right track. Also, are you splitting the rent or is your girlfriend blowing through $2k a month on other stuff?

I agree 100% with your mission to pay down debts. You've got excellent income, so my thought is you're main aim should be to restrain spending and resist urges to take on more fixed expense so you can devote as much cash as possible to debt.

A specific suggestion: Carsharing. You sound like a perfect candidate: Live in an urban area well-served by carsharing, and you have relatively good transit in DC and already bike and walk a lot. Would save you a lot to defer adding that second car--perhaps indefinitely--and use carsharing to supplement your girlfriend's car.

Other than that, you might consider putting together an easy budget with your goals for monthly payments on the loans. This will help you plan and then control your spending in other areas, boosting the likelihood that you'll stick to a debt payoff plan. Start with a top-level goal: "I want this loan to be paid off in X months", and work backwards. What monthly payment does that then translate to? Negotiate with yourself spending in other areas until you reach a debt payoff timetable/lifestyle equilibrium with which you're comfortable.

Good luck!

~$100K a year for a Federal Employee with less than 3 years experience on the job and eligible to retire in 2 years? No wonder this country is going bankrupt.

Meant to say 20 years.

Still could rreduce expenses: Public Transit, lower cell phone bill, cut the cable tv, look at higher ins deductibles. Etc.,Reduce the food/entertainment a bit too. TIME, can you stand to contiue a lower standard of living for YEARS? You gotta do just that!

Holy Smoke on the college loans. New Reader beware, look at a CC, state U and don't even go close to piling up such debt ffor an education unless you really have guaranteed employment or perhaps a shot at some type of program that will erase/forgive most of the debt!

@Joe: Depends on his job. Maybe he's underpaid?

There are specific technical fields (e.g. petroleum engineering) in which the STARTING salary (22 years old, zero experience) can be $100K.

@ Mark - Agreed. As a Chemical Engineer I can accept that. Perhaps JJ can tell us what he does for the Federal Government.

He said he was an agent. He probably can't tell us more without killing us.

Back to your original comment, Joe, regarding the pay scale and retirement plan, I think a bigger problem is the 2 "automatic pay increases" - merit not required. (JJ we're not singling you out here).

Not to pick on you guys here but – who cares about his “automatic pay increases” or how his salary is calculated? I don’t much care if he is a janitor or the president. You might head JJs advice to “worry about your own situation” here :-) Many government jobs have automatic pay increases (but start at lower salaries than what could be had in the private sector for the same position if there is one). My wife is a teacher in the public school system and she knows several teachers in their 60s that have “retired” (with the full pension etc.) and then rejoined the school with their old (high) salary back while of course maintaining their newly minted retirement benefits. If they stay in long enough they can retire again with another pension etc. They make 80K+ in an environment where a starting teacher with a Master’s degree makes 32K. None of that is based on merit. EVERY starting teacher with a Master’s degree at this school/district starts at that salary (it is a scheduled list of salaries based on experience, education etc.) – and there are automatic pay increases. It is a part of the job – you may even look at it as a benefit. That’s just the way it is – and if it messes with your mind then vote, vote, vote (especially locally). Alternately I am 26 years old and chose to work in IT – I make a six figure income based SOLEY on performance (no paid time off/vacation, few benefits etc.) – it’s a choice.

@Ted: I agree with you to some extent. I am all for anyone making the most of whatever "the system" offers, whether that is automatic pay increases (in his case) or working without paid vacation for the highest possible income (in your case).

I was not arguing about his salary so much as saying how do we even know if he is well-paid or badly-paid for his skill or experience level?

One reason it COULD matter is that it may affect his other decisions. For example, if he is riding the gravy train maybe he shouldn't quit and move to Florida, but onthe other hand, if he is underpaid, he should go look for another job as soon as possible.

I don't think JJ is sitting on a nuclear, chemical, or petroleum engineering degree. I think he made it pretty clear that he went to a private school in FL to become a pilot.

Perhaps he works for the FAA at which point his salary seems fine to me, and his stress level would be substantially higher than any of us can imagine.

JJ is doing well. He's keeping his spending relatively low and has managed to get a 6 figure salary just a few years after graduating college. The student debt level is still pretty high but you're focused on paying that down and you haven't had much time at higher pay rate.

I too am curious what the job in question is. 6 figure pay for just 2-3 years is pretty high. I'm guessing that being a pilot has a major impact on the pay rate.
I would wager he's probably a special agent with the DEA who is a pilot for them.

I agree theres no need to mock his situation, we all should look @ improving upon us inc. no matter how it's done except for any fraud. Clearly what he is doing is legal and allowed, why complain just do what you can for your own lives. Also maybe he enjoys the florida weather since he is an active and outdoors type of person, aka Biking. Great cash flow you will have as soon as your done with all debt. Keep it up!

I would see about consolidating your loans for a lower rate. I would tighten budget even more so, transfer the car fund and put more towards a savings account (cd or mmkt) for student loan payoff.

Definitely max out a Roth and forego investing 401k beyond the match.

Didn't Obama enact a Federal pay freeze back in 2010? If so, does this merit increase that JJ receive for his job supersede the pay freeze on all Federal employees?

Still if I was to milk "the system", I would have to choose the Federal Government also.

@Joe: Obama kinda-sorta enacted a pay freeze:

Washington Post version:
"President Obama instituted a two-year salary freeze for civilian federal employees in late 2010 that keeps salary levels in place, but permits raises for step increases or promotions."

Fox News version:
"About two-thirds of the 2.2 million federal workers affected will get pay increases each year ... the freeze only applies to cost-of-living increases ... Most federal employees will still receive automatic seniority-based pay increases, called “step-pay” increases ...

So JJ is one of the 1.5 million who DID get a raise.

@ Mark - Hahahaha... I just love caveats.

"Here's a pay freeze, oh by the way it wouldn't affect 2/3 of you guys."

Still, a step increase or promotion after a year of working is amazing.


I think it was a great thing that you took on the PLUS loan to help your parents- that shows a lot of character. Now that you are earning a real wage I'm sure you will be able to get rid of that debt and save for the future.

If I was in your shoes I would keep paying the 3.25% loan as scheduled - it is low enough interest rate that you have more pressing uses for the money- such as saving more for retirement or emergencies. Interest rates will rise eventually and I could easily see a CD beating 3.25%.

As long as you work for the government make use of the loan forgiveness to get rid of that $7,000 loan. Why pay extra if the loan will be forgiven?

As for the plus loan at 5.75 that is a high enough interest rate that it is worth paying off early, but it isn't so high that I would forgo retirement contributions or funding an emergency fund to do so. However, it IS worth making lifestyle sacrifices to get rid of it, moving to a lower cost area is certainly an option- it may also mean waiting on buying a house.

-Rick Francis

Dang those student loans. Was it really worth $110K?

Keep hammering away at them.

@JP- I will retain a similar salary. In DC, govt employees receive about 24% added to base salary for locality pay (included in my salary numbers I described) and in the part of Florida I'm considering, its about 21%. So I will take a 3% pay cut there but I will no longer pay state taxes so it should amount to a pay increase ultimately.

I am going to try and make 2012 the first year I take advantage of a Roth. I hope to contribute at least 1/2 of the $5000 max.

We do not split the rent. She contributes some by way of food and she does most of the cooking and cleaning and all of the grocery shopping. My goal is to let her pay down her high interest consumer debt as soon as possible.

@Kurt- The one car has worked out well for us over the last 4 months that we've been a 1 car household. One thing I failed to mention is that my job pays the cost of my commute on the mass transit system so that is not an expense I have. Occasionally when it's too early for the train and our 1 car is in use I have needed to take a taxi and the job pays about 80% of that cost.

I agree with you about that system. I wrote this post over a month ago and I have since increased my student loan payments from $1283 to $1500. I felt like I could still save comfortably for my short term goals with that increased payment. I use the calculator "" to see what different payments will do to the interest I pay over time just as you suggested. Thank you for your feedback.

@Joe- 25 years for retirement.

@Jeffinwesternwa- I did not mention in the write up but the job pays for mass transit so thats not an expense I incur. I've reduced my cell phone about as far as I can with an iPhone. It is $83- lowest minute plan, and gov't discount. I could do away with the cable @ $96 I agree and I am considering switching to Netflix but I am a real sports junkie and love SportsCenter so not 100% sure.

I will definitely look into the higher insurance deductibles. Haven't given that any thought but its a good idea.

I agree with your call about education debt. If I could do it again, I would do it differently. However, my parents knew no better and neither did I at 18. I was thinking about the salary that airline pilots make after 20 years but didn't realize the hole I was digging for myself.

@Ted R- Thanks! You're right- there's nothing I can do about the automatic pay increases. What often happens is people transfer here from other agencies and are offered a 5% increase for leaving the other place. Well instead of getting it from day 1, they pay you $20-30k less and guarantee you that after 24 months you'll make 5% more than you did at your previous employer.

@Rich Uncle EL- You're exactly right. I moved here from Florida for this job and they make it known that if openings are available in the state you relocate from, you may be able to go back after a few years. I miss the sunshine state and being that the money will not change much, I figure I might as well take advantage of the opportunity to move to a place where the cost of living is significantly lower.

@Luis- Interesting point about the Roth over 401k beyond match. Something I will definitely look into. I've never heard that before.

As far as tightening budget more goes- I still save at least $1500/month. Some months when I get an extra paycheck (biweekly pay) I save more like $4000 and often in between the two. Once I tackle a few short term savings goals I plan to throw even more than the current $1500 towards student loans and rid of that debt even sooner.


@ Mark- Step pay is exactly what I received.

@Rick Francis- I used the site "" to help me make the decision to "snowball" my payments. Over the 7.5 years I have left at the current pay plan, I will pay an extra $1200. I chose this route over the "avalanche" because I will have the smaller loan paid off by February 2013 and that's worth its weight in gold to me psychologically as strange as it may sound to some. So my smallest loan will be paid off by the gov't public service employee plan by the end of 2013, the medium loan will be gone by february 2013 at the very latest (I plan to make it go away sooner) and then all I will have left is the large PLUS loan and although it's at a high interest rate, I will have options to do things like pay $8000 off on a 0% CC balance transfer and such which will help with that interest.

The more I think about it, if kids come into the picture and I do relocate to where a house is more affordable, it may be hard to put that purchase off. But I am trying to live as far below my means as I comfortably can in order to reach my goal of being student loan debt free sooner.

Any additional thoughts to add?

Any and all additional ideas are welcomed. I appreciate the feedback from the FMF community as I am continuing to look for ways to rid of my debt.


@JJ -- I would contribute to 401k just enough to get the match, then max out the Roth. You can still contribute to 2011 until April (so you could put away $10k this year, potentially).

If she's not contributing to the rent or other shared expenses, a large part of that $2k should be going to pay down her debt. I would be very concerned if I was you and she was spending it away on anything else. After all, your expenses (other than debt repayment) don't total too much more than $2k and you're paying the rent and utilities. Also, 2 degrees for only $55k/year? Hopefully there is some future growth into her $40k investment...

Good for you! You've got a good head on your shoulders and a good plan. Continue doing what you are doing and look for ways to maximize your earning potential (in the long run). You'll do better than 99% of Americans!

Maybe he's an air marshall ;) But in all seriousness, you don't and shouldn't answer... I think it's great that you have studied for and qualified for and are earning such a high salary.

@JP- After hearing all of the great feedback, I realize that a Roth needs to be a part of my 2012 financial plan.

For the most part, my girlfriend and I are transparent with our finances. So I am able to see what she spends and vice versa. Of the $2700 she bought home last month, about $1300 went to savings, Roth, student loans and credit card debt. So I have no problems with that. Another $500 was for food. She's overall pretty receptive to the sacrifices involved in achieving a debt free lifestyle.

As for the degree, the first one turned out to be somewhat useless as far as she was concerned so she worked for a few years and now is earning a second degree in order to get a decent salary position. No, there isn't a ton of growth potential (~$70k max) but I'm on board with her decision because this second round is a minimal additional expense and will keep her away from the commission based career she's in now.

@craig- Thanks!


>I will have the smaller loan paid off by February 2013 and that's worth its weight in gold to
>me psychologically as strange as it may sound to some.

This is a real effect and one of the reasons a debt snowball works well for some people- they get a sense of accomplishment paying off a small loan that they don't get from paying down the same amount of a larger loan.

In your case the spread in interest rates isn't so large that it would be a huge difference, but I have an alternate suggestion:

Instead of thinking about the debt as big loan, small loan why not make your own divisions? You could divide your debt by what it paid for- say each of your classes and text books, or each month of dorm rent. I think this is a more meaningful division the PLUS loan.

Then snowball the smallest items from the highest interest loan. You should feel the accomplishment of paying off something while you pay off the higher interest, but larger balance loan first.

Ultimately the number of loans doesn't matter- the amount and interest rates do. Mathematically there is no difference between 1 $83,000 loan at 5.75% and 10 loans of $8,300 at 5.75%. So why not make the divisions yourself, if it will improve your sense of accomplishment?

>Any additional thoughts to add?

If you plan to do a CC balance transfer read the fine print several times- be aware of any transfer fees, and be aware of what the interest rate will be after the 0% introductory offer. I wouldn't do a transfer unless I was 100% certain I could pay it off while it was 0% interest.

If you do get a home your mortgage rate is likely to be more than 3.25%, so any amount you don't pay off on the small loan would be better spent as a down payment.

One last thing- you may want to look into getting some term life insurance coverage- I suspect you can get some coverage very inexpensively through your work. As an agent the bad guys might shoot at you and I'm sure you wouldn't want to burden your parents with your debt so enough coverage to pay off the debts might give you some peace of mind.

-Rick Francis

@ Rick Francis-

I appreciate the feedback.

I definitely like your thinking on the debt repayment. I gave it some more thought and spoke with a friend about it. In addition to the psychological value of paying the smaller loan off and having one less on the plate, there is another, more important reason for me paying off the smaller one and only having one loan left. The cash flow. The smaller loan is a minimum $179.16 (my current contribution to that is actually $969.20/month). When it is paid off, my mandatory outflow of cash will go down $179.16 so if I were to lose my job or come across another emergency, thats less money I need to worry about coming up with monthly.

Thank you for your thoughts on the CC balance transfer. The more I think about it, I will likely not do that. Again, if I were to lose my job or have an emergency I can't put a CC into deferment like I can a student loan so probably will not do this.

As for the term life insurance- I understand the value of this type of insurance. However, student loans work a little differently. If I were to pass away, the student loan in my name would disappear. If my mother were to pass away, that PLUS loan she took out for me will disappear. So that is the built in safety net for student loans.

Thanks again for your help and I still welcome additional feedback.

The comments to this entry are closed.

Start a Blog


  • Any information shared on Free Money Finance does not constitute financial advice. The Website is intended to provide general information only and does not attempt to give you advice that relates to your specific circumstances. You are advised to discuss your specific requirements with an independent financial adviser. Per FTC guidelines, this website may be compensated by companies mentioned through advertising, affiliate programs or otherwise. All posts are © 2005-2012, Free Money Finance.