Wednesday, April 13, 2016

Goodbye, Student Loans: Where we've been

The past 3.5 years in planner form.  These hold where we've been, and I love that I have them.
I'm going to start this post by throwing it back to marriage prep and say that, in my opinion, some of these marriage prep exercises could use a serious face lift.  Here's why:

When Tim and I were going through our marriage prep, our instructors told us we "passed with flying colors" that we had "clearly talked about things" and because of their assessment, they weren't thorough.  When it came to the finances part, I felt less like a wife-to-be learning about my partner's outlook on money and more like a kindergartner learning how to purchase some plastic lemons from little Jimmy's produce stand.  If you had 10 extra dollars, what would you do with it? was the nature of most of the questions.  And maybe that's because the people who formed the prep are older and are unaware of the potential amount of debt a young person can bring into a marriage these days. Regardless, with the level of vagueness these questions held, it was hard to walk away with a solid foundation upon which we would build our newlywed budget.

(I should note the only reason why I brought marriage prep into this post and why I write with such conviction on the topic is because finances have been consistently labeled as one of the top leading reasons for divorce.  And because of that, any sort of pre-marriage counsel should involve more thought-provoking, grittier questions and exercises.)

So we said "I do" with little knowledge of our financial future, and we got away with it because we both had jobs.  We clearly weren't going to get married without some sort of financial certainty.  And with combined salaries, we'd surely have no problem paying our bills, right?

Oh, student loans.

Before getting married, Tim and I sat down and made a mock budget.  A ballpark for rent, our car payment, and credit cards gave us what we thought would be the numbers we'd be working with in the near future.  But student loan payments hadn't kicked in yet as we were just out of school, so for whatever reason, we simply forgot about them (yes, insert a thousand shocked emojis).

Luckily, with both of our jobs, the student loan payments were manageable but only barely as we were trying to keep up with Southern California cost of living.  A month into our marriage, we found out we were expecting.  And this is where I became a bit of a finance and budgeting junkie.  Already having so much debt, adding hospital bills to the mix was not an option, so we budgeted like crazy.  I researched down to how many onesies (literally) a newborn needs, looked which baby soap would get us the most for our money (Dr. Bronner's), and found out which off brand diaper was the best (Up & Up) and with each paycheck, bought a little bit of what we needed (I quickly learned babies don't need half of what the baby industry tells us they need).  This took work.  We meal planned down to the amount of lettuce we needed for meals and bought from the bulk section only what we needed. We adopted Dave Ramsey's cash system, we didn't have anything in our apartment beyond what we needed, I bought the absolute minimum of maternity clothes I could get away with, and we had to turn down offers to go out with friends.  But the hard work paid off.  Ella was born, and we were able to pay our hospital bills in full (thank God for insurance).

But the work didn't stop there.

Prior to having Ella, both Tim and I worked, but after learning the cost of childcare for an infant in Southern California and not living around loved ones who'd be willing to watch her for a lower rate, we were faced with another what are we going to do?  We realized my salary would basically be going to childcare and the lifestyle accommodating two working parents (i.e. extra gas, more lenient grocery budget to incorporate easier meals, etc., etc.)  So I opted to stay at home and take on the role of stay-at-home mom and learn how to maintain a family on a budget.  When I made that call, Tim's current salary wasn't enough to meet cost of living, student loans, and family living (shout out to California taxes!), so it was quite literally a little miracle that his company review was right around when Ella was born.  He asked for a raise that he needed to provide for a family under our circumstances and he got it.

Since then, we've made paying off our student loans (and our car) before we're 30 our goal.  And it's a lofty one.  We started at $106,000 and nearly three years later we're around $76,000.  Just this week we reached the goal of paying off our car, two years ahead of schedule.  We've gone from nine debts compromised of credit cards and the car to three debts which leaves only our student loans.  Any bonuses we chuck at debt, any money from raises goes to bigger payments toward debt and we still maintain a lifestyle of buying what we need (though we've learned we need to find a balance -- more on that later). We try to put ourselves in a situation where we can crush debt the fastest which is why we left SoCal and which is why we're trying to move to Michigan.

This is the first part of our story.  You may think it's part irresponsibility with a dose of naivete.  And, yeah - to a certain extent, it is.  What did we know?  I was barely over the legal drinking age when we got engaged.  We were young and a little unaware.  But to be a little fair to us, I don't think anyone goes into a marriage with a 100% hold on finances.  There's an adjustment period that consists of learning each other's spending habits, mindset towards money, and how to best financially approach a situation together.  The beauty in our situation was when we were faced with our oh shit moment, we did not divide.  Though it was (and is) hard, any other course of action except getting through it together no matter what was out of the question.  And because of that, my God have we grown.  I'm now excellent with money. We do not take the opportunities we do have to go out for granted and we've learned what sacrifice - nitty, gritty, newlywed sacrifice - means. We've skipped on celebrating holidays, birthdays, and anniversaries.  And I can't count how many times I cried in Tim's arms because we had no idea when we'd be able to afford a plane ticket home. But that's okay.  Because I'm proud of our path.  I'm proud of where we've been and where we are.  I look back on the last three years and just want to straight up cry thinking about how hard we've worked. But the tears lessen knowing that our hard work is paying off and will ultimately get us to our goals. And we'll re-book the honeymoon, that in an effort to save money, we had to cancel.

1 comment:

  1. We're right there with you...although we started with about $180k in student loans with 9-12% interest rates and no other debt. We're finally down under $115k and with much more reasonable interest rates, and things are finally looking up--but our goal is pretty much to manage paying it off in another 7-10 years.

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