Debts of our Lives (Part 2): Paying off $130K debt in 6 months was good for our marriage
Going into our marriage, we were a great set up for divorce… statistically speaking anyway. It’s common knowledge that the number one reason for divorce in America is money issues. We had accrued more than $800K in debt coming into the marriage. While we both knew how much combined debt we had, there was no clear pre-marital conversation on how we would address it once we said “I do”. In Part 1 of this post, we talked about realizing that we hadn’t made a solid plan to pay off our debt or save money. A few months later, it was time to go Janet Jackson mode and take “controoool”! (Get those shoulders movin’!)
Starting October 2014, we made our first detailed budget. Then we went all slash and burn on our debt and expenses. With the help of our financial advisor, we cashed out our SUPER expensive whole life insurance policies from a company that will remain unnamed. Nii’s cash out paid off our car. That freed up the $400 monthly car payment to now go towards student loans. We decided to pay off our eight private loans first ($130,000) and then attack the much larger federal loans ($532,300) later. So, Renée’s insurance cash out paid off one of the large private loans.
Cashed out our life insurance and paying our debt… and we didn’t even have to kill each other like they do on the ID channel! We do have new more affordable insurance policies now, so, ya’ never know… stay tuned!
The original plan was to pay the private loans off in 3 years. I (Renée) looked at our written plan, adjusted the numbers, and said to Nii, “We can pay off our private loans in a year.” Nii was very skeptical, since the original 3-year plan already sounded challenging, but he was game! The one thing I can say about my husband is that he is one of the hardest working men I’ve ever met. He hustles! We both picked up extra work doing locum tenens work and extra hours at the job, but Nii was working like he owed the mob! We also used the budget to spend less – forgoing cable, switching to a cheaper phone plan, bringing lunch to work, getting less expensive car insurance, etc… You’d be surprised at the amount of money you spend on things you think you need.
All of that extra money we made and saved went to loan payments . As Dave Ramsey says, we were gazelle intense! Our budget meetings became more consistent. We started trash talkin’ the debt, “It’s about to go down, Sallie Mae!” We would high-five or do our secret hand shake whenever we knocked off a big chunk of the debt. It definitely fostered a stronger feeling of team work between us.
We made a payment every pay period, every two weeks, to expedite our progress. We didn’t want most of our money going towards interest payments. We wanted to pay what we owed and not too much more. Four months into our plan, we were about 75% done with the private loans. We would joke that Sallie Mae was getting upset that we were paying off our loans too quickly. “Hello, Darkos! I see what you’re up to! Stop paying so much! What about my interest money?!?” Sallie Mae’s cries fell on deaf ears.
By March 2015, 6 months before our deadline, our private student loans were paid off! We had paid $130,000 of which only $1200 went to interest. By working more, budgeting, and getting rid of expensive payments, we had done it! That was a great feeling, and best of all, it was a great bonding experience for our marriage. We took on a project together and worked as a team to achieve success. It’s not so much the burden of the debt. It’s that not having debt allows us to better plan for our future. With money being the number one reason for divorce, our money issues had brought us even closer together. Go Team Darko!
Stay tuned as we chronicle paying off our federal loan debt of $532,300 in 3.5 years. Will we hit our deadline, fall short, or pay it off faster? Only time will tell!
We’d also like to hear your stories about paying down debt! Leave us a comment below. Thanks for keeping up with us and hope to see you again soon!