Friday, January 22, 2010

Today's Schadenfriday

Schadenfreude [shahd-n-froi-duh]
def: Satisfaction or pleasure felt at someone else's misfortune.
[Origin: 1890–95; G, equiv. to Schaden harm + Freude joy]

I'm feeling a bit masochistic today so I'm going to confess a sickening financial mistake I made.

I just discovered that back in 1999, I consolidated my Federal Student loans into a graduated repayment payment plan at 2.23% APR. Under the graduated plan, I had to pay a minimum amount equal to the amount of interest accrued monthly for up to 30 years. My payments start out low and then increased every two years.

What, in my moment of brilliance did I do in 2006? I re-consolidated the loan to a 5.125% APR extended repayment plan. I chose the fixed monthly payment plan under which I would pay the same amount for up to 25 years.

What's bad about this whole thing is that I'm not sure why I re-consolidated back in 2006 to a higher APR. I suspect that I wanted the assurance of a fixed payment, versus an adjustable plan where my payments will gradually increase every two years.

But seriously, I voluntarily went from a 2.23% APR to 5.125% APR? I didn't have the foresight or intelligence to stick with the original plan and just pay ahead? Sheesh. Give me the bonehead award.

It makes me sick to my stomach that I was so clueless about my financial situation and I made serious, long-term decisions so casually and willy-nilly. I guess the silver-lining to this is that I've changed my ways and hopefully, I won't be making stupid mistakes like this in the near future.

Anyhow, it's been raining cats and dogs here. Too bad it's not raining men. :-D

Have a great weekend!


444 said...

Wow, you are being way too hard on yourself. Of course the point is that you have learned. Don't look back and beat yourself up! Others have made worse mistakes. Look at my blog if you want evidence of that. My blog seems to exist to help others feel better about themselves. At least one person has taken that too seriously lately... but really, give yourself credit. Those percentage rates are small fry compared to others. I just read yesterday about some situations in which people are paying $600 minimum payments on debt jacked up to 30% and they can't do anything about it (elderly people with few or no assets.) Get some perspective and just be glad you have learned and that you've come so far.

Ms. MoneyChat said...

i agree, you are being very hard on yourself. just think of all the great progress you've made, including in your financial intelligence IQ;-). Head up chica.

Revanche said...

Whoops ... I do this to myself occasionally as well, I know how you feel. But it's done and maybe it made sense at the time. Yes? Er, let's just leave it at what's done is done. :} I'll share some boneheaded moves with y'all soon.

Christine W said...

Aaaahhhh... I did the same thing back in my 20's. I had no clue about interest or anything and just waived every financial decision off saying "whatever, I'll pay for it someday"... My interest rate is 9%!!!!!

To make it worse, I deferred my loans, adding on at least $9k in interest. I graduated 14 years ago and only owe $3k less than when I graduated.

Feel better? :(

paranoidasteroid said...

When I consolidated my student loans, I was smart enough not to choose the graduated payment plan (which was probably a negative amortization loan, now that I think about it) because of the interest payments, but I still chose the longest repayment period possible.

The thing is, you can't beat yourself up for this. You didn't know. Now you do, so the best you can do is dig yourself out.

jpkittie said...

oh boy - we all make some mistakes, atleast it won't take it up past that % ;)