First, I want to thank Adam for giving me the opportunity to share our financial struggles with you. As many of you obviously know, it’s hard being in debt. You don’t know where to start and you can feel overwhelmed with all of the options that you have. I hope to use this blog to detail our journey to becoming debt free. Obviously, with $150,679 in debt, it’s going to take quite awhile. I recommend that you subscribe to the blog via RSS so you do not miss a beat. You can also subscribe to the blog via email. You will not only get our story but also the great tips that Adam has that I have found very valuable over the past few months. Now on to our story…..
Let me introduce myself. My name is Chris and I am a twenty-something male married to an amazing woman. I work in the health care industry and my wife works in education. Over the past few years, we have racked up an astonishing amount of debt. Granted, most of the debt is in student loans but that is no excuse for our lack of sound financial discipline. Here is how our debt breaks down:
His Car Loan: $7,279.19
Her Car Loan: $8,673.10
His Student Loan: $66,070.88
Her Student Loan: $48,763.88
Best Buy Credit Card: $1,468.90 (0% until August 2010)
Family Loan: $16,500 (used to pay off credit cards)
Personal Loan: $1,922.68
GRAND TOTAL: $150,679
The car loans are at pretty low rates because they are at our credit union. If I had to guess, I would say that our cars are worth a little bit more than we owe on them. The student loans are also at very good rates. About $40,000 of the loans are private loans. Since general interest rates are low right now, they are too. The personal loan is also at our credit union and it is at 12.9%. That is our highest interest rate on our debt.
The loan that bothers us the most is the family loan. A family member offered to pay off our credit cards as long as we agreed to pay them back. It just makes us feel bad that we owe them this money and we cannot wait to pay it off.
So, there you have it. Our debt story is unique but I can imagine that there are people out there in the same type of position we are. Over the next few years, we hope to share with you almost every aspect of our debt problems. Every month we will also share with you our net worth and you can see firsthand how our debt is shrinking.
In the coming weeks we will be looking at different ways to get out of debt. We will probably look at Dave Ramsey’s program (I usually listen to him) the most. I am glad that you will all be here to witness out journey. Hopefully, we can encourage you to become debt free.
Nice to meet you Chris.
We all appreciate the transparency. It is great for the readers and it will be great for you in the long run. My wife and I had about 70k in debt when we got married, so we are in similar boats although we had less student loan debt and no credit card debt. Here is our get out of debt success story, hopefully it will give you some encouragement.
Two questions, no mortgage? And what kind of income are we talking, because that will drastically effect the nature and course of the plan.
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It’s great to meet you too! Hopefully, you can help keep us on track. We do have a lot of student loans and the credit card debt was just me being stupid.
We are currently renting and plan on keeping it that way until we are completely out of debt including the student loans. Our income is right around $90,000 between the both of us. It will help a lot but we are also in a high cost-of-living area (NJ). Thanks for the encouragement and the link to your site. It will definitely help!
Thanks for sharing your story. I’d highly recommend Dave Ramsey’s program. We took the class last year, and our group alone (5 couples) paid off well over 100 grand during the class alone. Amazing how much debt you can pay off when you’re motivated.
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That’s a lot of debt for a small amount of people. In how many weeks? Isn’t it something like 10?
We are really thinking hard about the program. After reading several blog posts on Ramsey (including yours), we feel that there are some things that we will keep doing regardless of his advice. For one, I receive a generous match in my 401(k) and since I am still young, I want to keep that up. We do want to pay off some of the smaller loans first too even though they have lower interest rates. We just want them gone! We will look into the class and maybe even blog on it some like you did.
I think I’d want to subscribe to your blog and see what happens to this debt.
All I can say is, good luck!
Thanks for sharing your story Chris. I am about 95K in debt – mostly student loans and I beat myself up thinking about them. They are with various companies. One is differed and soon I will have to pay the other ones.
By the time I decided to get rid of them – I had a mortgage (still do) and as a single parent – making about 65k\year – I am in over my head. I can’t quite see the light at the end of the tunnel.
Your story gives me hope.
Well, we can make this tough journey together. Some people say that student loans are “good” debt but we do not see ours that way. We want them gone. Plain and simple.
I’m glad our story gives you hope and I hope to see you back again with some comments about how you are getting out of debt.
Hi Chris – $150K is a lot of debt, but given it’s mostly student loans, I’m assuming you guys have some pretty nifty degrees? 🙂 Can you elaborate more on your income levels?
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If you look at the second comment above, I give our income levels.
.-= Chris´s lastest post ..Good Debt vs. Bad Debt: Isn’t It All Bad? =-.
Reading your story and the comments so far I would say you are a good candidate for a “Debt Tsunami” (http://manvsdebt.com/debt-tsunami-the-ultimate-method-for-paying-off-debt/) where you pay off the debts based on their emotional value rather than the interest charges.
Keep in mind that “0%” Best Buy card probably isn’t really 0% and is accruing interest; if not paid in full by Aug ’10 you’ll be hit with all that interest.
Thanks Jerry. I have read about the Debt Tsunami and it is definitely something we will look into. We want to pay off the small ones first including the Best Buy card because like you said, it is still accruing interest.
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Good luck Chris! It’s great that you are doing this in your twenties, I wish I would have read Dave Ramsey in my twenties, but I did in my thirties.
It is also great that you and your wife are on the same page. that is so important.
You can do it!
Thanks Tara. Actually, I have never read his book but I think I get the idea from listening to him on the radio and reading about the program on blogs.
Hi, Chris! Great post. I think one major thing that has helped me and my husband reduce our debt is being honest about how much we actually owe – honest to ourselves, and honest to those around us. We no longer try to hide it.
My husband and I also have large student loans. At the time, taking them out seemed like a really good idea, but now I wish I’d paid for grad school by working a part-time job. Even if we devoted every extra cent to school loan debt reduction, we’d be working on it for about four years.
Anyway, you are not alone! I look forward to reading about your progress.
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It makes me feel good that there are others out there in my position who are fighting their debt. Like you, we thought it was a good idea taking the student loans out because it would help us make more money. However, looking back, I think we wish we would have worked more in college to help pay for it. It would have reduced our debt immensely. Hope to see you in the comments again!
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Thank you for your honesty! I definitely understand how you feel about the private loans. We have some of those and are trying to get on our feet so we can pay ’em bck.
It looks like we are on a similiar mission although we have a few years on you. Looks like you have a good handle on things and I look forward to keeping up on your progress.
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Have a question for you guys, that hopefully you can share your opinion with.
First of all, this is a great blog entry. Thanks Chris.
I have $34,000 in student loans at an interest cost of only 2.6%. At the time (3 yrs ago), I locked that rate in, and I extended the repayment plan to 20 years. Hence, it only costs $220/month. I figure, why not since the rate is so low.
Even after rates have come down, i’ve got about 90% of my CASH locked up in a 4.1% yielding CD, and about $52,000 in a 1.5% savings account and brokerage account to trade the market.
My question is, What would you guys do if you were me? The $34,000 Student Loan is my LOWEST debt compared to my home mortgage at 4.6%, rental property mortgage at 5.25% (cash flow positive) and vacation home mortgage at 5.875% (which i don’t want to throw money at anymore since the market is so bad).
Would you guys try and payoff the 2.6% student loan using the snowball/flake method? Or, pay off the rental property mortgage of 5.25% (2nd smallest loan)? Or, any other suggestions ie don’t pay the student loan off b/c it is so cheap?
I should say that my student loan is not only my lowest debt level at $34,000, but also my lowest rate at 2.6%.
You absolutely don’t pay the student loan down.
Fund your emergency account. Fund your retirement account. Then, decide whether the stock market is right for you. You make no mention of your current portfolio, Now is a great time to dollar cost average into the market. If you are so risk averse, that you shy away from stocks, the 5.875% loan should be paid first, as even after taxes, it’s higher than that student loan. Make sense?
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Hi. Cant wait to follow along with you. Like you, me and my hopefully soon to be wife are in huge debt. we owe about 50000 in credit cards and about 350000 (yes 350,000) in student loans!! fortunatly we are in well compensated fields (shes an optometrist and im an anesthesiologist) but we are just starting off. Anyway good luck and wish us luck too!
Good luck on your quest to get out of debt. Hopefully, your story will be an inspiration to many people with debt problems.
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The great thing is that none of your debt seems to be high interest. That means you’ll make progress on your payments. You have a little bit in a lot of places. I think you’ll like seeing this dwindle and the number of accounts go down! Good for you! Best of luck in your progress.
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I think I graduated university (went back to school when my oldest was 4 months old) with $25k in student loans in 1992. I worked part-time as well my last two years. When I graduated, I was making $23k/year as an articling student. It took about 2 1/2 years to pay off my student loans. I fell into debt again after that, so don’t stop being vigilant – it sounds like you’re a step ahead of where I was in that respect. But with time, it’s definitely possible.
Good luck to you both!
My advise to you is for you to prioritize those debts with high interest rates. It can help you trim down your interest expenses to your loans. So come to think of it, most of your money will surely pay your principal than the one that will shoulder all the interests. I totally understand the feeling of worrying too many small amount of loans than one big loan. However, you need to be practical or think more wisely in this case.
I would recommend reading Mr Money Mustache. he has real world advice to kick yourself into high gear towards being financially independent. Live within walking distance of work and ditch both cars ideally. Buy a bike off craigslist and use it. Best Buy CC– refrain from all spending here starting today. If possible return what you bought. Look at your eating out budget and cut where possible. Ditch cell phone plans and get a tracfone or use republic wireless. Ditch cable if you have it. Find a way to make more money– either get a better job or do side jobs. You should read the article your debt is an emergency. Try to get your entertainment budget down to zero– do free stuff like hiking, going to the lake, using the library, museums on their free days. I have been reading this for close to a year now and have learned quite a bit.