This morning, my wife and I sent in the final payment on her student loans, which was our primary personal finance goal for 2008 and our highest interest outstanding debt. It felt good. Really good.
Our next personal finance goal is to pay off my remaining student loan, which has an outstanding balance of $14,800 or so. This was the goal we had penciled in as our primary goal for 2009, intending to pay it off by the end of that year. Paying off that debt will leave us with only our mortgage as debt.
Rolling back the clock just twenty seven months really puts this financial turnaround in perspective. My wife had roughly $24K in student loans, all told (now paid off). I had $10K in one student loan (already paid off) and about $25K in another loan (now below $15K). We also both had significant amounts remaining on our separate car loans – I owed at least $5K on my truck at that point (now paid off), and she owed at least $2K on her car (also paid off). We also had a combined $17K (approximately) in credit card debt.
Adding that up means we’ve paid off a stunning $68K in debt in a little over two years. For comparison’s sake, our debt repayment is roughly equal to our 2006 income and not too much lower than our 2007 income, which should give a good idea of how hard we’ve pushed the pedal to the floor since our meltdown.
Now, we just have the remainders of my single remaining student loan and a mortgage to pay off. That’s all.
How did we do it? I’ve written about this a number of times, but it’s just as true now as it was then. We took a hard look at our financial situation, realized we were simply spending far more than we earned, and pushed ourselves – and each other individually – to turn that ship around. We sold off mountains of video games and DVDs and trading cards. We adopted much less expensive hobbies. I began to look seriously at alternative avenues for raising money in my spare time – at first, it was repairing computers, and then I began to have some success as a writer as well. We started preparing food at home instead of eating out most of the time. We made a debt repayment plan and started snowballing our payments, meaning as soon as one debt was paid off, we transferred that whole payment as an extra payment on the next debt.
The most important thing of all, though, was realizing that we needed to turn things around for each other and for our children. Spending far more than we earned was creating a dangerous path for our future, one that simply couldn’t continue.
We use each other as inspiration to push ourselves harder to save money. If my spouse has the financial strength to do it, so do I. If our children have a life of rich and full experiences and they’re emotionally centered, then we’re doing our jobs as parents, even if they don’t have the latest and greatest of everything.
But, for now, it’s time for us to celebrate a little in the way we’ve become accustomed to. A pair of steaks from the freezer are thawing and soon I’m going to go harvest some lettuce from the garden and maybe a fresh tomato or two, plus there’s a bottle of homemade blackberry wine that will be opened up and poured as a dessert drink. An amazing dinner, not much different than what we would have spent a lot of cash on a few years ago, but instead prepared and eaten at home, together, as a family.