I’ll just start this off with the big one: I have about $43,000 in student loan debt.
It doesn’t do a whole lot of good to moan and groan now about how I wish I hadn’t taken out student loans. They were necessary for my undergraduate degree. Unfortunately, I think about half of that total was for a graduate degree I never finished. #stupidtax
Even so, if that was all we owed, I wouldn’t feel too bad. But we have an additional amount of credit card debt (I’m embarrassed to say the amount, but I will just say it’s significantly less than the student loan debt), plus a car loan and some other random debt.
Much of our debt was a combination of bad decisions, bad habits and bad luck. When we first got married, the economy wasn’t doing so hot, which meant Bobby had a tough time finding full-time employment in a new town. We opted to push forward with buying a house, thinking he would surely find something soon, but it took longer than we thought, and Murphy’s Law was in full force.
I can’t blame it all on Murphy, though, because we have made our share of poor decisions in the past six-and-a-half years since we got married.
Our finances have been an ongoing struggle, but we both recently accepted new jobs (I posted about mine, and he has since been offered and accepted a telecommute position with a company out of Denver). For the first time, we are in a position where we can actually make an impact on our debt rather than just plodding along with minimum payments.
We’ve also set a big financial goal: Save up a 20% down payment for a new house (in the town where my new job is) in the next three years.
I’m the budget nerd in our family, and I’ve given a lot of thought to how we proceed. I listen to the Dave Ramsey podcast on my commute to work, and I really think his debt snowball method works. I also read a Forbes article (I think it was Forbes…) recently about the fact that the psychology behind it is solid.
On the other hand, in order to meet our house goal, we will have to be saving (which Dave says to put off until all debt is paid and a 3- to 6-month emergency fund is saved), and we really need to pay off credit card debt in order to help our credit scores and get a good interest rate. This also ensures we are paying off high-interest debt first, meaning we will pay less in the long run if we stick to it.
In the midst of this, we will also be moving into a rental and (hopefully) selling our current home.
There are a lot of moving parts, but I think the biggest thing for us will be having a plan that we can both live with and stick to. I’m planning to keep a running tally of what we’ve paid off and will likely share it here monthly. I may also start doing a weekly finances post. I don’t know, I guess it will just depend what I feel like doing, but I think even that amount of accountability to myself would be helpful.