Debt is a pretty big topic at Six Figures Under. Dealing with debt can be a long and rough road. Combine that with the fact that debt isn’t often discussed openly, and you’ve got a recipe for discouragement.
I love being able to discuss debt together here each Wednesday. Hearing your progress is encouraging. I like helping to brainstorm solutions to your challenges. I also appreciate the support of so many readers we’ve never met! It’s nice to know we’re not alone. Thank you for sharing your stories, advice, ideas, and encouragement.
Today’s Debt Discussion is a simple question that I’m just curious about:
How long did you wait to get serious about your debt?
You can take “getting serious about your debt” to mean what you like. For me, it meant setting a debt-free date and having that goal be our primary financial focus.
I’ll go first:
Measuring from when our debt first started (my husband entering law school), it took about four and a half years for us to get serious about debt repayment. While I was very involved in finances throughout law school, I closed my eyes for anything loan-related. I figured there was nothing I could do about it, so it was better not to know.
We lived frugally and tried to keep in mind that everything we bought with borrowed money had interest attached. Still, I could have been more serious about our growing debt situation.
For student loan debt, most people would probably not consider getting serious until after you’re done with school. Debt repayment options are pretty limited until you’re out of school and have a job! We decided to get serious about paying off debt a year after my husband graduated. That was six months after he was officially sworn in as an attorney, the event which firmly secured his job.
If you’ve read our story, you know that our original plan was to save for a down payment on a house first. It was hard to give that up, but we are glad to be getting these student loans off our backs. Even my kids know that the sooner we pay them off, the less they will cost us!
It’s Your Turn!
- Have you decided to get serious about your debt?
- How long did it take you to decide to get serious about debt repayment?
Linked to Thrifty Thursday
For myself, anytime my credit cards get to be over $2000 I get serious about repaying it as soon as possible… Currently a single mom and I just don’t like the idea of my choices (or lack of planning) preventing us from doing things in the future. So far the two years of schooling I’ve done I was able to save for in advance. But I haven’t completed either ticket… With debt, I grew up in a family that was deeply in debt, my Mama declared bankruptcy and since then (I was 8) she had always talked to me about finances and planning and budgeting and that sort of thing… It’s something I’ve always been painfully aware of and try to be mindful of. However, I continuously rack up my credit cards.. Poor impulse control and shopping for happiness haha. It’s coming slowly though! Thankfully my kids are only 2 and 4 so I’m hoping I can sort my s**t out before it affects the quality of life I can provide them with.
Hey Bridget, best of luck getting everything sorted out. It can be tough to rein in the spending, but it will be totally worth it to be done with debt once and for all!
I got serious when I graduated law school and got married at the same time in 2011. My impetus: I realized I HATED being a lawyer. At the same time, although my husband was financially stable, I felt terribly guilty bringing debt in to the marriage and essentially (though NOT intentionally) pulling a bait-and-switch on him with the news that I didn’t want to be a lawyer. So my personal financial goals were 1) live as frugally as possible; 2) look for the best-paying job I could find, whether as a lawyer or not (I did work as a lawyer at first, but soon my prayers were answered with a non-lawyer job that I loved and paid me better than I had been earning; 3) pay off my loan of over $100k as quickly as possible, in chunks as large as I can possibly afford. I felt like as soon as that debt was gone, I would in a way have earned my freedom to pursue career paths that would likely start as less lucrative, but were much more fulfilling. Well, fast forward 3 years, and I have just finished paying off my debt as of June 2014. And just in time too! I was 7 months pregnant and my doctor ordered me to stop working due to contractions. My very last full paycheck went to finish off those loans. Now, at home waiting for baby to arrive, I know that I can be open to fun, creative, entrepreneurial career paths when I am ready and feel inspired!
That’s a wonderful story Rachel! Congratulations on getting your law school loans paid off and with impeccable timing! That’s great that you found a non-lawyer job that paid even more than your lawyer job. I am so happy for you, both for getting rid of the debt and for your baby! It sounds like you reach your important milestones in twos! Thanks for sharing!
WAY too long. We would definitely be debt free if we had been serious sooner. We just kind of played with the idea, and then lost motivation pretty quickly, and put that on repeat for a few years. I remember when I first heard of ol’ ramsey, my debt snowball was projected (with minimums only) to be done by feb of 2014. I remember being horrified at this and giving up. Heh. With that date coming and going and still having debt, I feel really really silly 😉
That’s rough to know that if you just kept up you’d be done by now! Just let that motivate (instead of discourage) you! This time around you’ll make it!
Although probably not as high of a loan balance because I didn’t go to law school, but I got a wake up call immediately after graduation when I realized that if I save every dollar I made (which obviously was impossible), it would take me almost 2 years to pay off my student loans. Needless to say, I lived as a college student for several years after I had graduated. Glad I did because being debt free (aside from our home) allows us with the flexibility to save and invest. AFFJ
Way to buckle down right away! Good for you! I can imagine that being debt-free is wonderful!!
I’ve gotten serious several times in the past! While I was in grad school, at one point I had $9000 in credit card debt. I did a balance transfer to a 0% card and paid it down before the year was up. At other points I’ve had a few thousand and decided it was time to buckle down. And last year, when I graduated with my PhD, I knew I wanted to pay off my $19K of grad school loans in a year. I even made moves in that direction, sending lots of income towards them in the fall and early winter, but I was definitely not on track for that goal.
Then in February/March several things happened that made me panic a bit — I did my taxes and owed money so I couldn’t pay anything more than the minimum on my loans for Feb, which was depressing. In March, I had a big wakeup moment about my total lack of a retirement fund, and accepted a new job at a lower salary (long story). I realized that if I was going to meet my goal I had to put *everything* towards the loan. I’m paying it off next week, with my last paycheck from my old job. I do still have not quite $2500 in credit card debt though. (I could pay that off instead of the student loan…but psychologically, there’s something about that student loan. I want it gone more than I want the CC paid down!)
My husband and I were both fortunate enough that our parents took hostage of our college debt. BUT, not my husband’s med school debt! 🙂 So when we got married in 2005, we owed OVER 200K in med school debt. We also both had brand new cars (and loans for the full amount), and just for fun we always kept a 5K balance on our credit card. I also just remembered we also owed around 2K to a furniture store. After getting ahold of the book The Total Money Makeover by Dave Ramsey at the end of 2008, we got very serious. We now had a desire/passion to get out of debt. We paid off the credit card, furniture store loan, both cars and saved up a little cash. Then we began paying down one of our two home mortgages (back then you could take out an 80 and a 20 to avoid PMI, but the 20 had a very high interest rate, so we were trying to pay that one off). Fast forward to 2013-we sold our condo for just about 50K LESS than we bought it for 7 years prior, and if we had not been working so hard to pay off the smaller home mortgage, we would have been very underwater on our mortgage and would have been stuck living there. Also, during that time frame of paying down our smaller mortgage, we also increased my husband’s retirement, opened Roth IRA’s for both of us even though I’m a stay-at-home mom (didn’t know I could open one also) that we contributed to monthly, and opened future (not college, but can be used for anything) accounts for both of our children that we also contributed to monthly. It’s AMAZING when you are focused, how far your money can stretch and just how much good it can do!!!
I should also add that we thought NOTHING of all our debt back in the day. After all, that was the NORM. It wasn’t until Dave Ramsey opened our eyes and showed us that we don’t have to be like everyone else, that we were enlightened. Back then, when I was pregnant with my first child and after he was born, I was bored and lonely, so we would go to Walmart almost every day and fill up the cart. I would have 3-5 of EVERYTHING at home, and a credit card bill to match. Once I got excited about paying off debt, I used that “bored” time to cut coupons and price match and to make an adventure out of how little we could possibly buy. Talk about a 180! 🙂
Wow Liz, you have come a long way! That is a total 180! You have made huge strides and changed a lot. Thanks for sharing your story!
Debt has always made me nervous and we work hard to stay out of it. This month though might be a little challenging to recover from. I love reading blogs like yours to keep us on track!
Good for you Jayleen! Not being up to your eyeballs in debt makes the hard months easier to handle.
It took a couple years to get serious about my law school debt — I don’t think it really hit me until I sat down and figured out HOW MUCH I would be paying in compound interest over ten years!
The ever-growing interest is what got me too! It is unbelievable!
I personally was always very serious about debt. I went to school on scholarships and grants and only took out one small loan ($1500) that I paid off before I graduated. My husband always considered certain debts a part of life- such as student loans and car notes. When we moved across the country we decided that I would be in charge of finance and budgeting, mostly because I love it! Once we were married I became privy to some financial info I didn’t know before. My husband had a LARGE chunk of change in the bank and debt! So I used a bulk of money to pay everything down. I would say that we truly got serious (as a couple) about debt 2 months after our wedding or about 16 months ago. In that time we have paid off his car note, two credit cards, all but $6000 in student loans (from $16000), bought a new car, and paid off medical bills!
That’s nice that he had money to go with his debt! 🙂 That’s great that you enjoy finances and could really turn things around CeCee!
I got serious about debt in 2003. It was a rude shock that caused me to rethink lots of things, ultimately leading to a divorce and a complete shift in life style. I am glad to say that today I am completely debt free and working towards financial independence.
I love the approach here. It seems to me that one of the keys to getting to zero is being open about your situation (at least in a constructive place such as this)!
Kudos to all of you!
I will share this with the Real Money Community.
Alan
I’m glad that you’re debt-free now. It sounds like it was a pretty rough road to get there. I really think being open and sharing your goals (not just about debt, but anything that you want to improve) really helps you stay motivated and accountable.
For our car loan, i started mentioning the idea only 14 months after we got it (we never should have done it!) but it took a year for my husband to come on board. By selling the car we paid off the loan, and hospital bills from our third child (which we were going to pay off right away in full with a discount but although we had been paying the ob monthly installments, the hospital got to the insurance first and the ob took too long returning the money for the cash in full payment so we just did monthly payments but no interest!). So glad we finally did it!!! We were convicted reaing Randy Alcorn’s book “money, possessions and eternity” and that is what got the ball rolling on that.
That’s great that you took care of the car loan and the hospital bills by selling the car!! Good for you Jerilyn!
It took me about a year after graduating college to get serious about paying back my student loans. I fell into the trap that having student loan debt was normal, and was therefore in no rush to pay them off. I had already accepted they would be part of my post-college life. What a mistake! I let my grace period go by, taking full advantage, and made minimum payments for about seven months after that. Then I discovered the PF community and was inspired by everyone who was making extra payments. So glad I did!
We were pretty close to falling into that trap of student debt being normal, which is why we had planned to get a house first. I’m so glad we changed our plans. We thought we were motivated to save, but we’re even more motivated to pay off debt.
We got serious about paying off our debt once my husband landed a job that was secure and well-paying and our marriage stabilized a bit.
About 2 years into our marriage we had racked up about $20k in debt and then he got laid off. I think that was the eye-opener and we started to get serious about getting rid of the debt. We’ve now paid off all our credit cards, hospital and medical bills and have just a bit left on our car payment.
Of course, we’re in the process of preparing to take on a mortgage, so… we’ll see how that goes 🙂
Good for you Sarah! It’s nice to have a clean slate going into the mortgage/construction loan. We’ll be in the same situation when we pay off our student loans. We’ll be debt-free, then be saving up for a down payment on a house.
I’ve gone through debt ups and downs. In my 20s I was horrible with money, but I saw the writing on the wall and put myself into credit counseling to repay it before I got in too deep or started getting calls from collections agencies. When I sold my condo, I paid off the balance of my credit card debt and was free… or so I thought.
While in credit counseling I went back to school, first for my masters, then my ed leadership certification. I took the full loan amount every semester and ended up with just over $45k in student loans, a good percentage of which I didn’t use on school expenses because the loans were always more than my tuition, but I kept the money and spent it anyway.
When I was done with school a consolidation company called me. The total amount of my loans, which I’d never seen as a single number before, shocked me. I did the consolidation, and started paying off my loans. But I was paying the minimum. Ugh. When I sat down and read my bill I saw that it would be 30 years before I payed everything off and almost double the loan amount in interest. I started paying $100 a week – $240/ month more than my minimum payment. I applied for a teacher loan forgiveness program and shaved $5200 off my loan. That was 4 years ago and I’ve paid off (including the forgiveness) more than $30k. When I saw I was below $15k remaining I doubled my weekly payments.
I will be out of student loan debt by August 2015 and I can’t wait! It will be such a load off my shoulders and a benefit to my family. I’ve always felt guilty about my debt because with the changes in education I don’t see myself pursuing administration jobs, so I feel like I wasted that money (though I did get a raise for each degree).
You’re so close Stacey! That’s next year! That will be so exciting to be done (and never go back).
We always took the full loan amount, just in case, and I wish we hadn’t.
We got serious as soon as I got my job, about 9 months after graduation. We also tried to only take out loans for tuition, which was still 169k, yay T-14. Since then, we’ve been plugging away and my biggest loan which was 24% of my overall total is now down to 16k. I can’t wait for it to be gone and I’m still looking for side work to help chip away more quickly!
Good for you for keeping the loans just for tuition. Getting loans to fund your lifestyle is dangerous. Great job on your work so far!!