@Anonymous wrote:
Thank you all - can you tell me more about signature loans? Is that the same as a personal loan? As soon as I take out a signature loan, do the payments begin right away - since it is not a student loan, I assume I cannot defer it - right? How much does somebody with pretty good credit get offered? Do you have to tell them what it is for -- in other words, if I tell them to finance a sabattical they are going to know that I have little income during that time. Thanks to all for all of your help.
Hi ace...I've read this thread along the way, and your situation is somewhat similar to ours. I gave up a good paycheck to finish my last year of grad school. The clinical requirements of my last year made full-time work impossible. I pick up a few hours a week, but that's more to keep my toe in the professional door. My husband is self-employed, and his income has stayed stable (we've been lucky...he's a real estate appraiser, and we didn't know what was going to happen there). But, as with most Americans, our lifestyle was based on two incomes.
I believe we're a generation older than you, so we came into this with some resources behind us. My husband and I would have lived Dave Ramsey's famous "beans and rice, rice and beans" lifestyle to get through this (and, of course we've done some of that...), but we have our youngest of five children still at home. She's 16, and we didn't want life as she knew it to come crashing down because of my decision to get an advanced degree. This was a temporary change for us...and we have handled it with temporary fixes. We have investments, but with this past year's investment climate, it was not the time to sell those.
I get some regular school loans, but not enough to replace an income. We looked into private school loans, but the interest rates would have been high. What we did that was cheaper was a HELOC on our home. We didn't have an underlying mortgage. The rate on the HELOC is currently around 3.5%. On the HELOC, we pay monthly interest, and whether or not we pay anything on principle is up to us. I assume you don't own a home with equity, or you would have looked that direction. We were careful to put financing in place for this year before I quit my job.
Another avenue for us was paid-for vehicles. PenFed, for example, gave 3.99% as an online interest rate on new and used vehicles. We haven't had a car payment in years but thought it might give us some peace of mind in the bank, so we took out a loan on one of our present vehicles. Those payments also start while I'm still in school, but it's a much better rate than most credit cards, and there were no upfront fees or percentages to pay.
We also have a zero interest for purchases offer for about 6 mos. on my new Discover with a pretty decent credit line. The timeframe would get us through graduation. We are using the Discover, but we still paid it in full this month. Until I have to, I don't like showing utilization.
Another avenue that would be available to us is a margin loan on equity investments. I think that would be about 8%, so haven't wanted to do that. We also have rental property with equity, but we didn't touch that. And, again...not a good time to try to sell long-held equities or real estate.
I didn't know whether to bring any of these options forward because I know we're in a different place in our lives. Our goal was to get through this year while still fully funding retirement (Roths, 401ks, etc.). We've been able to do that. We knew it was a good year to keep investing, and we were able to work that into the budget.
It's been interesting to learn what you can easily give up in life if you can't or don't want to afford it anymore. We'll take my first year's paychecks to get everything paid down again. It's been an interesting journey. I don't know if anything I've said can help. We've had a lot of years to build up to this point. But, it makes you think....this was a choice for us. What if it hadn't been a choice? It could have been an illness or death that caused this. It could have been the sudden loss of a job. You never know when you have to be ready to live on half of what you're used to.
Good luck in your journey. It will be worth it.
