How I Got Out of Debt February 3, 2008Posted by pf in Expenses and Savings.
Tags: 401k, Credit Card, debt, financial history, net worth, Retirement, roth ira, student loan
Ever since I started writing here, it’s always been about my finances now or in the future. As far as I can recall, I don’t think I’ve ever really talked about my financial past. For the most part, I suspect it’s because it is not terribly exciting. Often, many of the blogs I read have some kind of story about being on the brink of financial ruin and how they had an epiphany and turned things around. For myself, while I absolutely remember having some debt, I don’t recall it ever being a big drag on my finances or particularly upsetting. If anything, it was just very annoying.
During college, I had loaded up student loan debt in excess of $10K and credit card debt of about $7K. The great thing about the student loan was that it was on a graduated repayment schedule of about 10 years and wasn’t a huge monthly payment when I first started repayment. The remaining debt was built up on the typical stuff you would expect. I didn’t work a whole lot during my senior year and so relied quite a bit on credit to bridge the gap. As for as the amount of debt itself, well, it was what it was. The minimum payments were easily made and I had a solid job with enough money left over each month to slowly chip away at it.
During this time, I never really felt that I had to deny myself. Of course, I wasn’t really “living it up”, but generally I went where I wanted to go, spent on entertainment such as movies, eating out, etc. However, I always had a very reasonable rent and drove an economical car (both which really helped). I have some difficulty recalling my mindset in regard to the debt at the time. Generally, I was just focused on my job and the credit card was just another item on my checklist. However, my my main motivation has always been retirement and securing my financial future. Although I was putting enough in my 401(k) to get the match, I wanted to do so much more…and that credit card was in the way.
About 18 to 24 months after graduation, I had paid of my credit card. The student loan, however, continued…essentially almost all the way through the 10 year repayment period. Interest rates were ridiculously low and it did get to about $250 a month (not chump change), so I let it ride. Once that was finished, it was a nice feeling to be almost debt free except for our cars and our mortgage.
Since then, I have never really looked back. It seems like you can never save enough, so I always had a new goal that I was trying to achieve. In particular, I have been trying to get to the point where I could both fully fund my 401(k) and Roth IRAs for both me and my wife. As the sole earner in our family, let me tell you…it’s not easy. Fortunately, within the past couple of years, I’ve finally accomplished it. As for the future, I’m still chasing the elusive “brass ring” and hope to retire comfortably (not extravagantly) in 2033.
So, there it is. I’m not sure it’s particularly captivating or has much drama, but it’s my story.