Welcome to the Wednesday Debt Discussion at Six Figures Under. I started these Debt Discussions based on my philosophy that when burdens are shared, some heartache is spared. As usual, all are welcome, whether you are debt-free or weighed down heavy with debt, though I’m specifically addressing the latter.
They say that hindsight is 20/20. Looking back at how you got yourself into debt, would you do anything differently? Are there habits you wish you had avoided? Would you have patiently waited and saved instead of spending on credit?
Since this is a positive and encouraging place to discuss debt, I won’t say “regrets,” but I do want to talk about things we would do differently if we knew then what we know now. Discussing debt prevention can not only help us from making the same mistakes again, but it can help others to not make similar mistakes in the first place.
Our Story
My husband and I both had frugal upbringings that carried over to our marriage. We both graduated debt-free with undergraduate degrees. We had a low-maintenance lifestyle and were money-conscious.
After working a couple years at a “real” post-college job, my husband felt like he needed to go back to school for more education. We knew some debt would be necessary, but it turned out being much more than we figured.
(You can get more details in the longer version of our debt story.)
During our law school years, we lived frugally. Still, there are some areas where we could have done better.
Things I would change
Budget More
We tracked our spending, but we didn’t really budget. My excuse was that since we didn’t have a real income, we didn’t need a real budget. To our credit, I did have a goal of $200 per month on food, which we stuck to pretty faithfully. In everything else, I just tried to spend as little as possible.
Since we have been living on even less now, I can really see the benefit of having a budget. The challenge of keeping spending down is empowering. Instead, without a budget I felt powerless to make anything happen.
I was involved in our finances in more of a passive role. I tracked our spending and that’s about it. If I had been actively budgeting, I would have had a better idea of how much we should take out in student loans.
Take out less
We always took out the maximum that we qualified for. Having a family and a house and not knowing what the future held, we felt safer having money on hand.
Near the end of school, we still took out the full amount even though according to our bank account we probably didn’t need it. The job market was looking bleaker than it had in years past. On top of that, we didn’t know when our house would sell. The thought of owning a house while we were trying to build a business across the country was a scary prospect.
We were very blessed to sell our house within a month. My husband did get a job, and though he makes commission, he receives a draw which prevents irregularity in his income. Knowing that everything had a happy ending, it is easy to say that we would have done things differently. However, since we wouldn’t be able to see the future, it would be hard to make the decision to take out less.
Seeing what we’ve been able to accomplish as we’ve set goals and given them our all, I feel like we could have had more faith and worked harder so we wouldn’t have had to take out so much.
It’s Your Turn
- If you could go back it time, what would you do differently to prevent or lessen your current debt burden?
- What hindsight advice would you give to someone else who is now in the position you were?
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I don’t have debt and my husband actually makes fun of me because I look at everything as if I need to make a return on my investment. If I buy x amount of seeds, how much will I save on organic veg? Because heaven forbid i do some things because i enjoy them…
Anyway, my stupid mistake, even with 2 degrees in finance is not investing My cash on hand sooner. Compound interest!! I missed the crash in 2008 by sheer dumb luck but I waited for the “double dip”, waited because there was a flash crash, waited because OMG the Fed is just printing money & what implications will that have on the stock market when they stop? My advice to who ever cares for it, is if you can manage to scrounge together just $500 (which is the least amount I have seen to open a new account), open a Scottrade brokerage account, buy ticker: SPY and NEVER sell.
I’m that way too Kathleen. I always look at the return on investment when I buy things. When I’m shopping at garage sales or thrift stores I always try to buy low so that I could turn around and resell it for more if I wanted. With furniture or bigger purchases, this helps me to allow myself to spend the money, knowing that if it turns out I don’t like it or it doesn’t fit or I just change my mind, I won’t lose any money, but rather come out ahead.
Thanks for the investing tip!
I would have not ignored my debt and left it to my husband to manage. He’s a great man but is a people pleaser and did not have the gumption to sit me down and deal with facts.
That’s a tough one. It’s definitely better to attack as a team. Do you work together at it now?
I could have paid off my debt right after school. I have no idea why I didn’t. I only had $7,000 in student loans after college in 2011 and I’m making the final payment this month – almost 60% of which I paid in just the last 6 months by getting serious. I can only imagine how much I could have saved right now if all of my debt payments went straight to savings instead. Urrrrg. But it’s a learning experience right?
That would be frustrating! Great job cracking down and congrats on making your final payment! That’s awesome Taylor!!
Oh goodness….what would I do differently? I’d save up the money for college instead of taking out loans. I’m fortunate enough that we only had to take loans out for 2 of my 3 years of college because I qualified for a grant the first year. Also, by me taking 4 or more classes a semester (and still working a full time job as a project manager) I was able to graduate in 3 years versus 4 which saved us a lot of money. However, I’d still love to not have those stinkin’ loans!
That’s great that you were able to save by doing college faster and with scholarships and with working too! Even though you still have loans, it sounds like it’s a lot better than it could have been! 🙂
I wish that we had learned to live within our means early on in our marriage! We had a “budget” but it wasn’t really geared towards savings, just making sure we had enough money to cover the bills and such. We would try to pay off our debt, but never quite became totally debt free. Thinking back on all the money we wasted…I cringe!! Live & learn, live & learn.
I know what you mean Mona! It’s amazing how money just disappears when you don’t tell it where to go. Sometimes you can’t even put your finger on where it went. I cringe thinking about when we were like that too!
I wish I got my hands on Dave Ramsey’s book ealier! After graduating college and doing the smart thing of living with my parents for a year in order to pay off student loans prior to interest rates kicking in, I spent four years prior to getting married accumulating debt. My parents paid it off prior to our wedding, but I still felt like it was a complete WASTE of money. I spent it on decorating my apartments (which I switched up once every lease ended because I was bored), and clothes. Once I got married my husband felt like we should be starting from scratch as a “we,” and didn’t like my wardrobe. So literally everything I went into debt for went to Goodwill. EVERY SINGLE THING. Curtains. Furniture. Clothes. Knick Knacks. In retrospect, I could’ve saved up enough to cover our wedding (I got Dave Ramsey’s book a couple months before we got engaged and managed to save up $1000 in that short time. Imagine if I had a plan from the get-go!)
Wow! That is quite a debt story! That’s great that it has a happy ending now that you’ve got things in order.
It’s so hard to look back and see how you could have changed things. We bought our house right before the crash, and took a 30% hit in the first year. It seems easy to say we should have waited to buy, but then other factors mean that so much else would be different. We probably wouldn’t have gotten as nice a house because the inventory was terrible the following summer. Not only that, but then we probably wouldn’t have qualified for a house, because prices were still astronomical in our area. The most disturbing thought is that we probably wouldn’t have the same kids we do now. And that’s when I simply appreciate the fact that even though we bought high, we only did what we knew we could afford long term. So we’re staying put and finding other ways to save.
It’s hard to know when the right time to buy is. There are so many factors involved and we can’t predict the future, so don’t beat yourself up over it. 🙂 I’m glad you’ve got the kids you’ve got. Since you bought something you could afford long term and you’re planning on staying put, you should be fine.
Firstly, I’d consider taking a year off to earn money before going to university. While I saved a reasonable amount of money working part time before leaving school, I could have earned a lot more and ended up with far less student debt.
Secondly, I’d have faced my problems sooner and got started – rather than burying my head in the sand and ignoring it for so many years while the problem slowly worsened.
We considered working a couple of years before going to law school, but ltimately decided that the longer we waited to do it, the harder it would be to do it and the longer it would be until my husband got into a law career.
When it comes to facing problems with debt, sooner is always better! I totally agree Rich!
There are a LOT of things I would have done differently! My biggest regret (and something I will admit right now to anyone who is reading) is that for the past maybe 5 years, I’ve bought a brand new car every year and traded it in for another brand new car every year after only having had it for one year. This wasn’t intentional, but I just couldn’t find a vehicle I loved. (Thought I needed a van but it was too big for us and I hated it, then got a vehicle that was new on the market and turned out it wasn’t safe at all and was rated one of the most unsafe vehicles of the year, then traded that for a car that was too small for us, then got a larger car, etc…) What I’ve learned is that you don’t have to “love” your vehicle like I thought I did. It just needs to fit your family and that’s all. I know I have wasted THOUSANDS of dollars over the year trying to find the perfect vehicle. I really wish I was still driving my car I had right after I got married that I drove for 5 years and loved…thought it was too small for my 2 kids (hence starting the car fiasco with a van) but now I’m realizing I could have made it work. I also wasted so much more money since I also bought snow tires (and wheels) for some of these vehicles. Sigh. But, you live and learn!
Thanks for your honesty Liz. It’s true- “you live and learn!” It’s amazing how much money contentment can save. It takes some people a lifetime to realize what you realized in 5 years.
If I could turn back time I would rid myself of the ‘I want it now’ attitude. Because of being so impatient and not saving the money, I often shoved things on the credit card. This contributed to my debt problem. I also wish I saved at least a little every month because then I would have some money for emergencies.
Right on! The I-want-it-now attitude is dangerous! Having the discipline to save is tough, but so rewarding.
I wish we would have have worked more and had lowered our savings. I think we were a little too conservative and kept too much cash in our savings account. In hindsight we could have cut down on our debt a little faster and saved ourselves some interest.
I know what you mean! Some of the money that we used when we paid off $36,000 in 2013 was money that was just sitting around in savings accounts and CDs. It made me sick when I realized how fast interest on our student loans was growing. All of that nearly-idle money could have cut down on so much of that interest. And like I said above, we shouldn’t have taken out as much as we did.
I must admit that I still don’t have a real budget. So history will repeat itself if I don’t get on the ball (on my Unlazy Days of Summer To Do List for sure). But the one thing I would do differently if I had it to do over is I would not have bought a house above my means and knock it down and build a new one. Yes, the money was in the bank, but had we stayed where we were or bought something that we could have renovated rather than gut to the studs, that money would still be in the bank. We have since sold the house and bought something that’s within our means, but the bank account is nowhere near where it once was. Oh well, time to put on my big girl pants, learn from my past and move on in a positive direction. Thanks for always being honest.
That would be hard Beth! And it sound like a lot of work too! It sounds like you have the right attitude about it, but some days it is hard to put on those “big girl pants”! 🙂
I had an great aunt that saved 10 cents on every dollar made. She died a millionaire. And that is old time money! If I had it to go back I would save at least ten percent from the day we married. Then it would have been a habit like our tithing that would have been part of decision making when we bought houses. Now we are in our fifties with no debt but our mortgage and that is scheduled to be paid off in two years BUT we have hardly any cash.
What an inspiring story! That is some serious dedication that really adds up over time!
Congrats on being so close on your mortgage and being totally debt-free Marty! Now you can start stocking away the cash! 🙂
I think I would have worked more during college. I tried during my first two years, but there were a lot of scheduling conflicts that were tiring to deal with. My manager kept scheduling me when I told her I had class! I attempted to find summer jobs to no avail. I kept my spending very low, but having more in the bank upon graduation would have helped to pay a good chunk of my student loans.
I totally agree. Though I didn’t have any debt when I was in school, I didn’t have much cash either. I worked every semester, but just enough to get by. I pretty much lived paycheck-to-paycheck, then in the summer I worked full-time to save up for the next year’s tuition. I wish I would have done more entrepreneurial endeavors back then. I had a friend who bought Doc Marten shoes at the thrift store and sold them on ebay (this was 10 years ago). I thought that was a cool side business, but I never tried anything myself back then.