My Current Net Worth

I forced myself to sit down and write down all of my debts. How much I owe, to whom, and the interest rates. I had a pretty good idea of my credit card debt situation (it's not pretty), but I had no idea about my student loan debt. It turns out I have nine different student loans serviced by two different lenders, at three different interest rates. Here's what I found:

Assets:

• 401(k) plan: $1,846.84
• Savings: $1,000
• Total Assets: $2,846.84

Liabilities:

• Student Loan One (8.5%): $1,383.44
• Student Loan Two (8.5%): $15,788.42
• Student Loan Three (6.8%): $1,664.51
• Student Loan Four (6.8%): $1,834.00
• Student Loan Five (6.54%): $2,014.88
• Student Loan Six (6.54%): $3,482.00
• Student Loan Seven (7.14%): $3,143.28
• Student Loan Eight (7.14%): $391.51
• Student Loan Nine (7.14%): $2,347.07
• Student Loan Subtotal: $32,049.11
  
• Credit Card One (17.99%): $2,287.35
• Credit Card Two (30.19%): $3,860.01
• Credit Card Three (29.99%): $5,165.00
• Credit Car Subtotal: $11,312.36
  
• Total Liabilities: $43,361.47

Total Net Worth: -$40,514.63

My thoughts on this:

1) I'm glad that I forced myself to start 401(k) contributions when I started my new job, I've learned to live a little smaller in order to keep funding it.

2) I need to address the credit card situation sooner, rather than later. I have a relatively good credit score, and I should be able to get a 0% interest for twelve months, no balance transfer fee card for about somewhere between $4,000 and $7,500. I'm seriously considering an HSBC mastercard and moving all of my Credit Card Two debt onto it as well as as much of the balance of my Credit Card Three debt as I can. I'll re-evaluate in one month to decide whether it makes sense to apply for a second 0% 12-month offer to service the remaining debt. My goal here is to have all of my credit card debt on 0% interest within the next three months.

3) I plan on using the snowballing method to pay off highest credit cards first. I've used this method before, and actually I had Credit Card Three paid off, but then I graduated from school and got a job right away, but incurred extensive expenses to moving to a new city (note to self: moving to a new city immediately after Thanksgiving and balancing holiday travel and gift giving with no income) and holding myself over for the first month until my paychecks started coming through.

4) Now that I'm finally out of school, I need to consolidate my student loans. I've asked for information from AES regarding consolidation. Right now most of my loans are in deferment for six months (coming due on June 2007); I'm only currently paying on Loans One and Eight currently. Hopefully, with consolidation I can get the monthly payment down to $375 per month over ten years. Also, my mother has offered to split my college loan costs with me by paying every other month. I'm not sure how I feel about this, because I'm not sure that my parent's financial situation is that solid and I'd rather have them save for their retirement. However, my mother was adamant about really wanting to help with them (I'm the first person in my family to graduate from college and it's a really important milestone for my mom). I think she regrets that she couldn't just pay for college outright or take enough loans to allow me to go to the expensive liberal arts college which was my first choice, but to my mind having the kind of savings necessary to pay for college flat out isn't reasonable for a midle-class family and there isn't anything wrong with taking out loans to finance higher education.

5) Once I have my credit card debt moved to 0% interest, I'd like to begin funding a Roth IRA. I need to determine how much I can afford to put aside and set up an automatic withdrawl from my checking account.

6) I'd also like to start moving money into an online savings bank, to try to get a safety net of three months of bare-bones expenditures (approximately $5,000) built up.

7) I need to decide what the next step in my long-term plan will be. Once I have my credit card payments under control, my student loans consolidated, a Roth IRA being funded, and a small safety net built up; what's my next move? Do I continue paying extra money towards my credit card balance (even though I reasonably believe that I can keep that debt financed on 0% interest indefinately? Or do I pay off my student loans early? Or do I begin saving towards a down payment on a home? I'm not quite sure what to do once I get my net worth into the positive....I've never had a positive net worth.