Getting out of debt in two years? That sounds amazing! When Adam told me about his plan I thought it sounded great. Then, as usual, I thought a little about all that money. For some reason, thinking about the numbers gets me riled up every time. Even when it was just a hundred dollars more than the minimum payment of $1,100, it felt so unreasonably high to me. Every time that monthly debt repayment number increases my blood pressure goes up.
Am I crazy? I know we don’t need the extra income for anything, it’s just the thought of putting $3,400 a month towards debt repayment that makes me feel nutty. It’s just so much money! Gone! Never to get back again!
After I fight with myself about this for a few days and argue about how much money that is, I always end up leaving it up to Adam because I trust his strategic mind and business savvy. He has a plan and he’s good at sticking to plans. On the other hand, I want so many different things. I’d rather diversify, I’d rather have more in our savings, I’d rather chase our dreams now and pay the debt off slowly as we go… But I know the sooner we are out of the debt the better. It’s just sometimes hard for me to wrap my mind around the numbers when they feel so ridiculously big.
On a totally unrelated note, I’m turning 30 in a month. This is another one of those things that feels hard to fathom. I see that I have gray hair and wrinkles and sagginess but I feel as youthful as my 20 year old self. Anything I should do before I turn 30? Anyone do anything crazy for their 30th birthday?
We were Korie & Willie Robertson from Duck Dynasty for Halloween. No one really got it, but heck. It was cheap fun.
If you heard about the floods in Austin, here’s some proof. We volunteered for half a day and were shocked.
Adan’s between jobs beard. 🙂 I miss it.
Willie Robertson before the party
May I suggest you have Adam show you how much you’ll save in interest if you accelerate the payments? That may help the anxiety of putting in so much now. At least, it helps me!
great suggestion. i will see about doing this
And I would give some thought to what you would do with that extra $3,600/month in 2 years and one month. 🙂
While you do need to strike a balance between spending, saving, and paying off debt, think about it this way: that money is *already* gone. You already spent it, your bank account just doesn’t know it yet.
It’s not easy, but as someone else commented, just think how great it will feel when that monthly money is really, truly yours again.
This exactly. The money isn’t yours. It belongs to your debt issuers.
I may be reading into the title of this blog post too much, but you both should be deciding what is the best way to get out of debt not just Adam. From some of your posts and comments, it seems like maybe you do not personally participate in paying the bills or maybe you don’t see what comes in and what goes out. I know Adam has the higher paying job, but that shouldn’t minimize the role you play in household finances. btw, this is not an attack against Adam or you, Emily, I just think it seems like you are not on the same page because one is more involved in the finances than the other. Finances should not be run by one person in a marriage, both people need to be present at the table.
Like Rachel said, it would be helpful if you can see how much money would be saved if these loans were paid off early instead of taking a few extra years. The amount can be shocking and inspiring. Whatever approach you decide, I hope you both decide on what works best for your needs. Good luck!
It probably does seem like I don’t participate in much of the financial planning. I am what Dave Ramsay calls the “free spirit” in the marriage, which means I don’t like to be too involved. I do see everything that goes in and out, and I’m the one that writes down and blogs all of our monthly expenses. It’s a painstaking process (i do it by hand with pen and paper) but i like knowing where the money went. In the end, though, I just think it’s better if we talk things through and then I let Adam have the final say.
My husband has a similar “free spirit” mentality. I used to balance the “checkbook” and manage the household budget. When I’d ask if he wanted to double check all my work, he would always say he trusted I knew what I was doing; for a while I was fine with being the CFO . . . But then I started worrying something bad would happen to me and my husband would be lost trying to figure out what my system was. Now we actively sit down together to balance the checkbook, update our budget, clip coupons and make shopping lists.
You guys are so cute together and work very well together! i need to make my s.o. read these blog posts to indirectly show him that this is how i want us to be, lol!
As for turning 30, I celebrated my 30th birthday at an 80s (love that era) live act club done at a friend’s huge house. Our friends pitched in for the booze. We hired a bartender (who was a practicing newbie so she charged only $20 for night for her service! not including tips from drinkers of course) and a DJ who was $50 for the entire night!! Craigslist!
The DJ was also nice enough and brought a pacman videogame that he projected onto a white wall so that was a fun distraction during the dancing and brought all the nightclubby-looking lights, a smoke machine, and the whole shabang. The house turned into a nightclub basically. Except the little kids/nephews can also be on the “dance floor” since it’s at home. It’s something 20 year old version of me would do which is exactly why I decided do it for my 30th…one last big party!
It was by far the cheapest and most fun birthday bash I have had.
I like the idea of accelerated debt payback. But the question of how exactly to do it is quite difficult to assess without, as I commented on a few posts back, knowing how much money is being “lost” to interest in the debt repayment.
That’s the key. As Tamara so concisely and precisely put it, the money is already gone. You and Adam are just trying to make decisions about how much money _in addition to your debt which is money you have already spent_ you are going to throw away.
By going slower on your debt, you throw more money away. By making bigger debt payments, you are saving money. So, exactly the opposite of how the debt payments are making you feel. (don’t get me wrong, I can I certainly sympathize with why you feel that way).
So, easy, you just pay back faster and save money, right? Well, not so fast. As others stated in the last post, you need to properly balance your overall financial security, your lifestyle, and your debt. That’s why the question of how much interest you are paying, e.g. how much money is being thrown away, is so important. Imagine a few scenarios:
1. You have another job loss to deal with, but this time it takes you 6 months to find a new job.
2. You have a job loss, and you have to take a job with less pay.
3. You are trying to start or grow a business, and need additional funds for investment.
4. You have a baby.
5. #4 combined with any of #1-#3.
If you go all out on the debt payment right away, you end up putting yourself more at risk in the case of #1-#2. This may very well be a perfectly sound decision, and I would tend to agree with that with the very general sense of what kind of work that Adam might do (just making guesses).
For #3, imagine if you were paying an average of 20% interest (as in credit card debt) vs. an average of 5% (perhaps typical of student loans). Instantly, that changes your risk assessment of the business decision. Because, if you stand pat and just pay back your credit card debt, that’s an instant 20% return. But if you only are paying 5%, you may decide it’s worth the risk to try to make a bolder business investment.
For #4-#5, at least this is something that you have at least some control over. But I will say that having a child changes many people’s financial risk appetite dramatically (it certainly did for me).
Anyway, apologies for the long rambling post. My point is simply that while simple math plays a significant role in debt payment decisions, I would encourage you to keep thinking about the bigger picture exactly as it sounds like you guys are doing through these last two contemplative posts.
p.s. Great pics. Adam with a beard seems to be a ringer for Andrew Luck!
I think so too!
One of the great things about personal finance is that you can choose to address your debt in whatever way works for you. So long as you are within your contractual terms, there is no “wrong”. It’s very possible that for the next few months, you’ll throw tons of money toward your debt. But then life will happen and perhaps you’ll choose to only pay the minimums for a month or two and bolster your savings account instead. Just make sure that both of you are comfortable with the amount of savings in your emergency fund. A couple more months of interest on the student loans is NOT WORTH losing sleep at night.
It’s interesting that you think that it’s money you’ll never get back again when in reality, it’s money that’s already been spent so it’s essentially too late to get it back. Instead, I’d think of the interest on the debt as money that is gone, money that is spent with nothing to show for it. Sometimes thinking about it differently helps. Instead of focusing on the debt repayment, I’d focus on the amount of the debt; that would be stressing me out and making my blood pressure go up, but that’s just me. I also agree with the other poster about imagining the different scenarios…having a child could blow your current budget and then there are so many house things. I could go on but I think you get the idea. I also think if it’s not a pressing matter now (meaning it’s upsetting to you to put more towards debt repayment), it probably won’t be a pressing matter later, when the kids come along, etc. I think the real issue is that you guys aren’t really ready to pay off your debt. I do believe you want to, but it’s another matter to really dig deep, put all the numbers out there and then really work at the changes to pay it off. That does not make it wrong in any way, it just means you aren’t ready now. I liken it to the analogy of someone wanting to lose weight but not really wanting to diet or to give up eating the way they normally do. Change is hard:)
I like the poster from the last blog post that suggested a January 2016 deadline. In the end, it’s up to both of you.
I really think if you each set aside a little throw away money for yourselves each week then it would make all this debt payoff stuff almost non existent. I struggle with debt payoff on low interest rates.
Either you take that $3,400 and build an emergency savings or you put it on debt repayment or some combination of the two, but to blow that amount of money monthly when you’ve already identified it as “extra” is not going to get you where you want to be. Might buy you some really fun toys and such, but once kids come along you’ll really wish you didn’t have $1,100 tied up in monthly payments on student loan debt.
Really think you need to adjust how you view money. If your blood pressure goes up when you think about socking $3,400 per month on the debt, then perhaps what’s really going on is you feel you don’t have enough saved.
Regardless, until you stop spending it and apply it to something that builds your future, it’s not a benefit to you so therefore, it’s already “gone”.
The beauty of planning like this is the hope that’s built by having a light at the end of the tunnel. As a couple it is really important for this to be a decision you both share so there isn’t an opportunity for regrets or resentment. Debt stinks, but getting out of it and then making your plans for how you see your lives after it’s gone is the hope that will keep you going when the process gets old or frustrating. 30? You’re a baby if you don’t mind my perspective, and you have a lot of years to enjoy being debt free and the ability to really make the most of your blessings during this process and in years to come. Having this plan is wonderful, and if a real blip comes up you have the flexibility to modify your plan, then get back with it. I’m thrilled to see you two have so many options – that puts you way ahead of so many others trying to eliminate their debt. Being consumer debt free now ourselves makes life feel lighter somehow (smile).
All the best to you.
Good luck on your journey! Hopefully you can clear it sooner than your expected date. I’m on a similar journey to yours which I’ve only just started so it feels like the finishing line is miles away.
I’d definitely say you’re doing the right thing, paying off debt however big the monthly amount will improve your finances because you have no leaks in terms of interest. Essentially what you are doing is fixing all the leaks to your finances which means that you’ll have the rosiest future ever! I’m glad you’ve left it to Adam, you are a very intelligent women.
You’re definitely doing the right thing and I know exactly what you’re going through. For years I saved money rather than paying off the debt quickly, when I realized that I was losing money I changed tactics immediately and now that I’ve paid off my debt I have so much more freedom. Nice post, good of you to share.