Why we chose to let debt-free living wait

Update: I just wanted to clarify something. We are currently repaying our student loan debt slowly but surely. Our loans are not in forbearance. We just aren’t focusing our efforts solely on debt repayment. We’re splitting our extra income between debt repayment and savings.

In January 2009, we paid off our credit card debt. Compared to some of the debt horror stories you hear, our amount was relatively low — it was about $4,000 left over from college overspending and car repairs. We paid it off in just over a year while Tony was a graduate student and I was working in retail. Money was very tight at the time, so we’ve always been proud that we were not only able to avoid increasing out debt at that time, but we were able to pay it off.

We’re not debt-free, though. Not even close. Between the two of us, we still have a huge chunk of student loan debt — to the tune of $50,000.

For the past year or so, we’ve continued to pay minimum payments on my loans. We haven’t even begun paying Tony’s debt back because his loans are deferred until he graduates.

So here’s my confession: for right now, paying off our student loan debt is not our #1 priority. And it probably won’t be for another 5 years.

When we were working to pay off our credit card debt, we weren’t using every penny of our extra income for debt-repayment. We knew we had a move coming up in a year, and we wanted to build an emergency fund because we wanted to start a family. We made the decision to split our income between savings and debt repayment.

Right after we finished paying off our credit card debt, our plan was to use that money to pay off our student loans. But when you’re living on a small income, there just isn’t a lot of money to go around. We realized that in order to reach our savings goals, we’d need to divert a lot more money into savings.

Then we started talking about Europe. Believe me, I know that in the frugal community, saving for a vacation like that with as much debt as we have is a no-no. But you know what? We didn’t want to wait until we were debt-free to live our lives. Sure, we could put every penny toward debt and really work to pay down those student loans right now. Even then, we’d be well into our 30s before they were paid off. By then we’ll have children, maybe even a house, and a lot more financial responsibility. We’ll hopefully have more income, too.

Does debt-repayment mean putting everything else on hold when you’re young? In my opinion, no. For some people, the rush they get from sending another huge payment to pay off debt is enough to keep them motivated. Not me. If we were using every penny to pay off debt right now, it would be so depressing for me.

Unless we magically double our income overnight, it’s going to take us years to pay off this debt. For years and years, our only focus would be debt repayment. I’m not going to wait to do and see the things I want to see. I’m not going to wait to start a family or save for a house. That debt is going to be there for a long time. I can’t wait that long to live my life.

That doesn’t mean we don’t have a plan, though. There are just a couple things that are going to come first. When we get settled in Indiana, we’ll be in survival mode until Tony gets settled in a job. Then we’ll replenish our emergency fund. Then we’ll start saving for a house. Once we’re moved into a house, it will finally be time for us to put all of our extra money toward those debts.

This method isn’t for everyone. I’m sure many of you think it’s crazy for us to leave that debt alone for the next 5 years or so, accruing interest. When it’s time to pay it off, though, I plan to do it in about 5 years. Our plan is to buy a very modest starter home, which will help us put more money toward debt. It will be tough, but at least I’ll know that I’m not missing out on experiences in order to do it.

Photo by sgw

18 thoughts on “Why we chose to let debt-free living wait

  1. The Non-Student

    This is one of the things I’m struggling with. I have about the same as you all in student debt, and I’m wondering if it’s worth it to pay extra or invest that money. Psychologically, I want that debt gone, but at the same time, I know it’s a better investment to put it in the stock market.
    .-= The Non-Student´s last blog ..Sassy New Single Life: Kickball Edition =-.

  2. M

    Life is for living. Sometimes, you just have to think of it as investment and it doesn’t sound like the student loan debt was frivolous. Go to Europe, enjoy life. You sound like you’ve got the right balance..

  3. Bobbi

    You have to do what YOU believe is right. You have a PLAN and that is the best step you can take! Just watch out for those ‘wrenches’ that can get thrown in the mix. ;) Good luck! :)

  4. Brittany

    Ah, I struggle with this. Every time I go on a little trip traveling around China, I think, you know, I should really be putting this money toward my credit card/student loans. But then I think, well, I’m probably only going to be here for a few years and I want to see as much as I can while I’m here! I agree, some things you have to enjoy while you can. I don’t think you should feel guilty about your trip to Europe… it’s something you will be able to cherish & remember for the rest of your lives. I mean, sure paying off debt is exciting, but it’s no Paris! xo
    .-= Brittany´s last blog ..Scenes from Everyday Life =-.

  5. Jaimie

    You posted this at just the right time for me! We are just starting out on the debt repayment journey and I am already feeling a “burnout”. I feel like all of my time is consumed by worrying about what we are spending and where. Thank you for the “permission” I needed from a PF blog to enjoy life a little!

    1. Karen

      Jaimie – I’d say as long as you’ve got a plan to tackle your debt and you’re not increasing your debt, then you should definitely plan to use some of the money you’re saving to do something fun!

  6. Jill

    I think your plan is realistic…and for living life, that’s how you need to be. If you put everything off till things are “just so,” then you’ll never do the things you want to. If you had waited for Europe until your debt was paid down, chances are you wouldn’t have made it, because by then, you’d probably have a child, right? You guys are being smart about this vacation…planning well, saving well, and you’re not going to rack up a ton of debt from it…so I say enjoy it. You don’t have to justify yourself :)
    .-= Jill´s last blog ..Ten on Tuesday (v.10) =-.

  7. Abigail

    This is a very personal choice, and I think you have clearly made the right one for you. It’s something a lot of us struggle with, based on our respective income and debt.

    There are people who can buckle down, maybe get a part-time job in addition to their other one, and pay everything off in a year or so. Most of us, though, will be working on it for awhile. Tim’s and my debt fluctuated over the last four years with various medical bills, as our income waxed and waned, etc.

    We’re closer to the light at the end of the tunnel (which, for once, isn’t an oncoming train) but along the way Tim has saved our sanity more than once by reminding me that we have to have a little fun now and again.

    So I think it’s good that you figured out what matters to you, and that you’re not putting off life until the debt is paid down. I think too many of us get caught up in looking ahead and forget to look at the here and now. Then, once we do arrive at our goal, we have absolutely no idea how to cope with this brand new lifestyle.
    .-= Abigail´s last blog ..Should I get AAA? =-.

  8. Kacie

    I think you guys are doing what works best for you, and that’s what matters! Like other people said, you aren’t taking on new debt.

    Student loans are a special kinda debt, I think. It’s not like a credit card. And, eventually, it WILL be paid off (unlike some credit cards!).

    I don’t think it would be reasonable for you guys to forgo some of these big things, and also to be renters forever or whatnot. Ya know? Happy medium, here.
    .-= Kacie´s last blog ..A Keeper and $100 =-.

  9. Ronnie

    You have to do what’s right for you. My boyfriend and I have a combined student loan debt that’s 10 times yours (yes, you read that right :D). Even with higher incomes, do you have any idea how long it’ll take to pay that off? Seriously, at our current salary, it would take close to 15 years. I’ll be 45 in 15 years. So they’re not primary on our list either. We make extra payments on them twice a year, but we still like to go on vacation, want to get married, start a family, buy a house. We’ll have a few years of serious repayment, but after that the foot has to come off of the pedal. This makes us sleep better at night and reminds us of why we have the intense moments, so that we can better enjoy the more leisurely ones.

  10. Derek

    I think this is absolutely ridiculous and asanine. Everyone has to make their own choice but galavanting around Europe while you have a large sum of debt back home(other than a mortgage) seems to contradict the title of this website. If you need a vacation, go to the lake or coast for a long weekend and then buckle back down on paying off debt. Then again I subscribe more to the Dave Ramsey school of thought. I think everyone that I know would be prouder of paying of a large sum of debt than making a trip to Europe (and probably sleep better at night). Delayed gratification is a concept to consider and apply. Living on Less equates to practicality and reason. Europe equates to delaying the responsibility of paying off debt and is not Living on Less… its Living on Less Later On. Just one man’s thoughts…

    1. Karen

      Derek – My choices in no way contradict the title of my website. I’ve always been clear about the fact that my philosophy is that you have to enjoy the money you save. I’ve been saving for this trip for 3 years by living frugally. How is that not delayed gratification? I’m not increasing my debt; I have spent the last three years spending smart to save for a specific goal.

      I’m not going to Europe to make myself “proud.” I’m going to Europe because it’s a life-long dream, and I’d like to do it before I have children. That debt will be waiting for me when I get home, and I’m not losing any sleep over it. We’ll pay it down on our own schedule.

      If paying down debt is your priority, then great. It’s not my top priority right now. Frankly I don’t see how my decision to delay paying down our debt for a few years affects you at all. You go ahead and do what works for you. Trust me, I’m doing fine.

  11. Kacie

    Derek, I think Karen is really good with her money. It’s either go to Europe now, or wait 20 years. Seriously. There is no middle ground. Why is that a bad thing, to go travel when you have saved up the money and won’t be taking on new debt?

    The money spent on the Europe trip would make a small dent in her debt, but not a lot.

    Cuz for real, a trip to a lake does not = London, Paris and Amsterdam. Never never.

    We all have different financial priorities. Don’t be turdy.
    .-= Kacie´s last blog ..A Keeper and $100 =-.

  12. joanna

    Responsible personal finance isn’t about following a formula- it’s about doing what works for you and letting your spending and saving match your priorities in a sustainable, living-within-your-means sort of way. You guys are doing with your money what works for you, you have a plan to pay off debt, and you’re being very, very responsible. Saving for a vacation while keeping up with other payments and planning for Real Life is totally acceptable, if it’s what’s most important to you.

    For us, we saved for a down payment for a house before we had our student loans paid off. It’s not what Dave Ramsey would have wanted, but it’s what lined up with our priorities in our stage of life. After buying the house, we focused on finishing off the debt. Then we- gasp- saved for a vacation to Hawaii, rather than paying down the mortgage to get rid of PMI. Our priorities, within our means, dictate how we spend and save.

    It can be done, and you’re on the right road. Keep it up- and I’m excited you’re moving to Indiana!
    .-= joanna´s last blog ..What’s growing =-.

  13. Derek

    Its kind of like Richard Simmons… he has to decide if he wants to prance around in his short shorts doing aerobics OR go stuff his face. Its a matter or prioritizing. Look I could have a blog titled ‘Living Well While Dieting’ but right now I am going to eat fast food BUT later I am going to start dieting… I mean seriously buckle down on a diet… but would that mean my blog title is representative of my lifestyle? Come on…

    All joking aside, we all have to make our own decisions that fit us and kudos to you for doing that… I hope that you can get that debt paid down eventually (as I hope that for everyone carrying debt!!!) and truly experience a new freedom. Sorry for the rant but there is another blog that I have read off and on for yours (like I have of yours) and I just decided to get my soapbox out. If you saved $10,000 for a Europe trip but INSTEAD chose to put it to debt reduction, that would payoff 20% of your student loan debt… wow! that is a big dent…

    I guess for my family, we really buckled down to payoff a similar amount of debt. For a period of several years we lived very tight but we still lived well. We visited with friends, took local trips, learned to cook new things, etc. We postponed things that were ‘dreams’ or things ‘we deserved’ and realized that we were living very well (on less) while accomplishing OUR financial goals.

    http://www.daveramsey.com/ For those not familiar with it, check it out, apply it, experience freedom.

  14. patty

    I was surpised reading this post to hear about your remaining student loan debt. When I first started following your blog, I loved/envied watching your savings goal categories grow and grow.

    I am definitely one of those people who gets a thrill out of sending big checks to pay down student loan debt. I only had about $17K and the idea of paying an extra $5K in interest (I know not a lot in the grand scheme) by paying the minimum bothered me, so I paid it down in a little over a year by seriously cutting back on my love of shopping (i’m a sucker for online promos/sales). I only ended up paying about $500 in interest and that makes me smile!

    We all have different thought processes when it comes to paying down debt, and I think a trip to Europe for 3 years of living frugally is totally cool. Thanks for your honesty and sharing your thoughts on student loan debt, priorities, and being young and living life.

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