Hebrews 12:1-2

"..let us run with perseverance the race marked out for us. Let us fix our eyes on Jesus, the author and perfecter of our faith..." - Hebrews 12:1-2

Tuesday, January 26, 2010

Student Loans

Since I graduated from undergraduate school in May of 1999, I have carried a student loan debt that I did a pretty good job of ignoring. There were several periods of time when the loan was put into hardship deferral, and several more months where I simply was unable to make the payment (not the recommended method).

When we got married, I carried this debt into our new family. At the time, it was the only debt we had, but we were not focussed on it at the time and so it lingered on in our lives. Lisa headed back to school and we financed part of that through a family member loan. So, for the past years we have had these two education debts. A couple of years passed and we ended up buying a new(er) car and got a 5 year loan for that. We were doing pretty good financially (or so we thought).

Then two years ago we got pregnant with our daughter and we began to focus on certain things that we knew needed to be taken care of around the house. We saved up and paid cash for a total kitchen remodel that we did most of the work on and paid cash to have our main level hardfwood floor refinished. This left us without about a month of time to spare before Lydia arrived.

It was about this time that I began listening to podcasts of the Dave Ramsey show every day while I was at work. I mentioned it a couple of times to Lisa, who suprised me by being interested in it. So we began listening to the show every night during or after dinner (yes, we are geeks). As time went on we began to look at our finances a little differently. We were never extarvagant or overtly wasteful with our money, but we didn't have a gameplan for what we were going to do with it. Through our conversations about the show and what our goals were, we came to the point where we knew what we wanted to do financially.

And so, last year we began to aggressively attack our debt and stick to a budget. We paid for our home refinance with cash and then turned around the next month and paid off our car almost 3 years early. That leads us to April of last year, when we were left once again with only school loan debt. Since our loan for Lisa is interest free and through family, we decided to go after my Federal Student Loan first. (Yes, this is a slight deviation from the Dave Ramsey plan, as her student loan was smaller than mine, but we were determined to not owe the government anything as soon as possible.).

And that brings us to this past weekend. On Friday morning, the Direct Student Loan Service received our final online payment that officially eliminated my student loan debt. (In fact, there website says we overpaid them by $.66, so I am curious to see if I get a refund check from them. If I do, I think I am going to frame it.)
For the first time in 10 years, I do not have a student loan. I do not have a monthly payment coming out of my account to pay for something I did a decade ago. I get to move on. And what will that extra money be used for? Well, we think we can pay off Lisa's loan this next month using some of that extra money, although it may hang around until March. After that, we will follow the Baby Steps and will use it for building our Emergency fund. We think we will have that filled by May. Beyond that, all this former debt-paying money will go toward Retirement savings as well as College savings for Lydia.

We recognize that we've been blessed in so many ways. We've been given more than a lot of people. In the future, we will have the ability to bless others in ways that we previously were unable to, strictly because we will be debt free (except for the house).

If you are in debt and you want to get out, Dave Ramsey's process works.
Is it tough sometimes? Yes.
Does it take time to accomplish? Yes.
Is it worth it? Definitely.

Got debt? Kill it. Quickly.
You'll be glad you did.

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