Paying off debt

mysteed

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My wife and I thankfully got our heads together years ago and agreed that we needed to get out of debit ASAP. We've gone from numerous credit cards down to two that we have for "emergency use only". We sold her first Mustang years ago to get out of that payment and bought her another with cash so no car payments for us. We aggressively started paying down her remaining student debt two years ago. That really just leave us with our mortgage payment which we're in the middle of a refi process so hopefully that goes well.
 

nickf2005

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My wife and I thankfully got our heads together years ago and agreed that we needed to get out of debit ASAP. We've gone from numerous credit cards down to two that we have for "emergency use only". We sold her first Mustang years ago to get out of that payment and bought her another with cash so no car payments for us. We aggressively started paying down her remaining student debt two years ago. That really just leave us with our mortgage payment which we're in the middle of a refi process so hopefully that goes well.
Student loans are often, wrongly, overlooked. They are a blood sucking leach, and should be plucked as soon as possible. It absolutely amazes me when I hear people taking 10-15 years to pay them off. Zero collateral for them and you could royally screw yourself if you get behind. Especially if they were government loans.

We need to teach kids looking at college what student loans really mean and the responsibilities they come with. At 18, all I knew was mom and dad couldn't pay, and the government and Sallie Mae was willing to loan me money, so why not take it?

Luckily for me, I got a CoOp that helped pay some tuition, and I went to a cheaper school for the same degree Purdue was offering. Saved me over $40,000 for the 4 years. Still came out owing $30,000 though.

Wife went to Butler, hers was a bit more.... However, at least she had great income potential graduating there. How someone pays $40,000/year for an education degree is mind boggling. Teachers deserve the appreciation and probably a raise, but how do you justify that tuition for a $35-40k/year job? Mommy amd Daddy I suppose.

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aaron97

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Congrats. I paid off my house last spring. It was a great feeling, to have paid off the 30 year loan in just 10 years. We also paid off the Shelby and the wife's Lincoln last year too. Managed to do all that while packing away the maximum contribution to the company 401k and started a personal IRA 6 years ago too. The nice thing about having so much extra cash on hand from a lack of monthly debt is that it has made it easy to take advantage of the stock market fall earlier this year, so I've been trying to buy up as mush random stocks as I can right now for the long-term payout. This way I'll have 3 avenues for retirement income when the time comes.

I guess I am just thankful that my parents were very adamant that I join the military out of high school. After I served two-terms I got out and the GI Bill covered my BS and 2/3s of a MBA, so I have been fortunate enough to not have school debt.

The only downside to paying off a house is the realization that you still have to pay on the house... My mortgage was $1,700/mo. and now that I own the house, it still costs me $700/mo. in property tax & insurance. But I cant complain about having an extra $1k in my pocket each month.
 

nxhappy

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Student loans are often, wrongly, overlooked. They are a blood sucking leach, and should be plucked as soon as possible. It absolutely amazes me when I hear people taking 10-15 years to pay them off. Zero collateral for them and you could royally screw yourself if you get behind. Especially if they were government loans.

We need to teach kids looking at college what student loans really mean and the responsibilities they come with. At 18, all I knew was mom and dad couldn't pay, and the government and Sallie Mae was willing to loan me money, so why not take it?

Luckily for me, I got a CoOp that helped pay some tuition, and I went to a cheaper school for the same degree Purdue was offering. Saved me over $40,000 for the 4 years. Still came out owing $30,000 though.

Wife went to Butler, hers was a bit more.... However, at least she had great income potential graduating there. How someone pays $40,000/year for an education degree is mind boggling. Teachers deserve the appreciation and probably a raise, but how do you justify that tuition for a $35-40k/year job? Mommy amd Daddy I suppose.

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College is bullshit. The "American way" is college, but it is NOT necessary. Most US debt is from credit cards and college. And yet they FORCE it down kids throats. Hell, even the ****ing Air Force is a better idea. I spent 5 years in college. Tons of ****ing money, and I regret it. High schools need to teach other avenues of revenue, ie business start up, real estate, stock investing. None of this 8 to 5 bullshit "with a college degree". I wish I had started real estate when I was 18. That's my opinion.
 

nickf2005

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College is bullshit. The "American way" is college, but it is NOT necessary. Most US debt is from credit cards and college. And yet they FORCE it down kids throats. Hell, even the ****ing Air Force is a better idea. I spent 5 years in college. Tons of ****ing money, and I regret it. High schools need to teach other avenues of revenue, ie business start up, real estate, stock investing. None of this 8 to 5 bullshit "with a college degree". I wish I had started real estate when I was 18. That's my opinion.
I agree for the most part. College is right for some, others not so much. You're right that it shouldn't be shoved down the throats of HS students that it's the only means to a high income or good quality of life.

In our household, it worked. Two college grads, one B of S and one PharmD. I'll be teaching my boy as many life skills as possible and support any positive direction he'd like to take. If that means little secondary education, I'm ok with that. Just means that fat 529 can come back to Mom and Dad.

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Crimson2v

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College is bullshit. The "American way" is college, but it is NOT necessary. Most US debt is from credit cards and college. And yet they FORCE it down kids throats. Hell, even the ****ing Air Force is a better idea. I spent 5 years in college. Tons of ****ing money, and I regret it. High schools need to teach other avenues of revenue, ie business start up, real estate, stock investing. None of this 8 to 5 bullshit "with a college degree". I wish I had started real estate when I was 18. That's my opinion.
You couldn’t be more accurate IMO. I have been a mechanic since 04, quit college to pursue this field. Six years later I went back to school to finish my degree and get my bachelors because I thought it would help me one day when I decided to move to the management side of the field. I couldn’t have been more wrong, I would have been better off not spending the money on the degree and pursuing a different field that paid better from the get go. There was not one class that I took that spoke of wealth creation like starting business and investing. They were just classes to get you into a 9-5 job.
 

rborden

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Debt free is the only way to be.

My wife and I paid off all our debt years ago. Being in quality financial shape before the pandemic allowed us to purchase a much larger house than we were originally looking at due to the lower interest rates. Just under 3%. All of this after losing my job october 2019 and taking a 10k a year pay cut.

Also saving for the future is key. I'm pretty close to maxing the retirement out for yearly allowed amount. I would also recommend the dave Ramsey idea of having 3 to 6 months of your salary in cash savings. I like most of his principals but as someone else said theres more than one way to skin a cat on some of these things.

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Honestly with Covid and potential Democrat takeover of the White House, I’d feel better with 12-18 months in an emergency fund right now.



Our debt payoff process is highest interest loans first and work your way down. While you have a point, "highest interest" approach saves most money long term. We organized our debt payoff spreadsheet a couple of different ways. My loans are all private so it's bussiness as usual for paying them off during the virus, where my wife's are federal which they allowed interest free until December I believe.

Scenarios were as follows:
-Highest to lowest interest
-Highest to lowest monthly payment
-Pay off as many loans as we can with the cash out money regardless of monthly payment or interest.

We made different "scenarios" and looked at what made sense for us and what we were able to feel comfortable with.

It so happens my Corvette was one of the highest interest loans AND highest monthly payment so that worked out well to free up money and roll it into the next loan.

The refi was THE game changer. Without that, we wouldn't have been able to take out equity as a cash out option to then pay off other debt to then roll it into other loans and really speed up the payoff period.

With all this, we are still taking about $5k out for her to buy a horse trailer (we currently don't own one and is wise to have in case of emergency). As well as looking into redoing the flooring/windows in the house. It slightly delays the payoff period, but also weighing resale value when the time comes is a factor too as this won't be our "forever home".

Good to see there are other out there our age taking advantage. People around me don't appear to be as "in tune" with this as financials are not something typically discussed. I'm 50/50 making it a conversation. On one hand I'm happy and proud of the progress, but OTOH I wonder if people look at us and think we are rubbing it in or showing off? Money conversations seem to be a fickle beast because you don't know someone else's story. I try to be respectful of it.

Always better to start with the lowest debt first and do the Debt Snowball Method.

Reason being, you’re more likely to succeed. You pay your smallest one off and you get an emotional charge off it. You feel good, you’re like ok cool on to the next one. The more you knock out, the better your confidence and determination grows.

If you do it the highest interest first, you have less and less to look forward to and you dont get that emotional high and you don’t feel motivated to build upon it. In fact, you’re at a higher risk to relapse into debt spending. The goal is to break the cycle. Had you done the debt snowball, you wouldn’t have had to do the cashout refi (which Dave strongly recommends against).

Debt Snowball vs. Debt Avalanche
 

smitty2919

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Well, we didn't see this coming. Wife was just laid off from her job..."position elimination" BS.

Good thing is her severance is to end of December. That gives us time to find her another job. If still no job January 1st, with all the extra money we throw at debt plus the refinancing savings and some cash laying around (horse trailer fund and new C5 wheels fund) we can cover her expenses for a little while.

I'm not happy, but happier this lay-off was now vs during early stages of COVID or before our refinance...

New goal realized...make so much money we can live off ONE salary OR get rid of debt faster to not NEED to make so much money....or how about BOTH LOL.
 

5.0 Hatch

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New goal realized...make so much money we can live off ONE salary OR get rid of debt faster to not NEED to make so much money....or how about BOTH LOL.

Sorry to hear about your wife. Living off one salary is great advice and one that I strongly recommend for married couples(I realize this isn't always possible). My wife had to spend 4 years away from work when our child was born with medical issues. We immediately adjusted finances so that we could get by on just my salary. After she went back to work, we continued to live the same way and 6 years later, totally debt free as we put everything she made on debt.
 

smitty2919

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Sorry to hear about your wife. Living off one salary is great advice and one that I strongly recommend for married couples(I realize this isn't always possible). My wife had to spend 4 years away from work when our child was born with medical issues. We immediately adjusted finances so that we could get by on just my salary. After she went back to work, we continued to live the same way and 6 years later, totally debt free as we put everything she made on debt.

Thanks. It sucks and slightly stressful but very happy we did things we did when we did them to be in a better position now. The lay off goes from a panic "OH SH!T" moment to "Ok we should be OK for a little while".

I'm one to go overboard when it comes to finances. Nothing makes couples fight or get stresses more than money situation. I just paid off my C5Z with the equity cash payout from refinancing the house and I'm willing to sell it if needed. REALLY like the car, but at the end of the day it's "just a car" that I can build another one. Doubt it will get to that point but still.
 

ford fanatic

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I'm one to go overboard when it comes to finances. Nothing makes couples fight or get stresses more than money situation. I just paid off my C5Z with the equity cash payout from refinancing the house and I'm willing to sell it if needed. REALLY like the car, but at the end of the day it's "just a car" that I can build another one. Doubt it will get to that point but still.

Truth for sure.

My wife took over the finances a few years ago, we were just finishing up a lot of very expensive home improvements so that's where all of our money was going. I love that she comes to me now and asks, "where should we put all of this extra money?"
 

BlckBox04

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OP, My girlfriend and I have two dogs, five cats, one goat and 20 horses
 

Adower

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Sorry to hear about your wife. You can look on the bright side and really figure out your wants vs needs and trim back. Once she gets a job again you know that you can live without the things you cut out.
 

smitty2919

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For me, this will happen when hell freezes over LOL. That's why I love her. I don't know how or WHY you guys can do that. Just my 02 ...

Well, not all women are terrible with money on a regular basis or goes crazy with CC :). My wife isn't into purses or clothes/shoes. She spends $3000 on a show saddle lol. Which I'm fine with because god knows I spend enough on coilovers/wheels/tires etc.

My wife handles all bills for us...mortgage, water/sewer/internet you name it. We determined how much each of us need to contribute to "our checking" account which we pay all our bills from. Once you set the ground work, there is no "figuring it out". Money goes in/money goes out.

Sorry to hear about your wife. You can look on the bright side and really figure out your wants vs needs and trim back. Once she gets a job again you know that you can live without the things you cut out.

Yep. It's been somewhat eye opening for many reasons. Our plan is for her to get a job ASAP, then any money she is getting as a severance (current salary) will be stashed then used to pay off more debt in a big chunk.

We are both 100% on the same page when it comes to this stuff which makes this SO easy to do. If I was with dating a girl/woman that was terrible with money or did not see the value of the dollar...that relationship would not last long.
 

rborden

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Well, we didn't see this coming. Wife was just laid off from her job..."position elimination" BS.

Good thing is her severance is to end of December. That gives us time to find her another job. If still no job January 1st, with all the extra money we throw at debt plus the refinancing savings and some cash laying around (horse trailer fund and new C5 wheels fund) we can cover her expenses for a little while.

I'm not happy, but happier this lay-off was now vs during early stages of COVID or before our refinance...

New goal realized...make so much money we can live off ONE salary OR get rid of debt faster to not NEED to make so much money....or how about BOTH LOL.

Sorry to hear that.

Dave Ramsey’s system gets you out of debt as fast as possible.
 

nxhappy

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Sorry to hear that.

Dave Ramsey’s system gets you out of debt as fast as possible.
IMO Ramsey is full of horse shit. He had to file BK on bad decisions. Therefore, I won't listen to his dumb ass.
 

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