Aftermath of Student Loan Debt
In my last post, I shared how I got into so much debt during college. Now I'd like to let you know how that is affecting me currently, and I am quite a few years out of college.
That $40k in debt between student loans and college credit cards is still with me in one form or another. For years after school I didn't make enough money to pay my living expenses and service my debt. So while I was making minimum payments on my student loan and credit cards, I was having to by stuff on new, not maxed out credit cards.
Even though I managed to pay down some of my college debt, I was acquiring new debt at an equally fast pace, if not faster. Making minimum payments will take 30+ years to pay off a debt. As your debt goes down, the credit card companies adjust your minimum payment down which means each month you only pay roughly the same small amount against the balance. Most of your payment goes to interest.
Fast forward a dozen years or so, and I still have most of my student loan to pay for, as well as debt from college credit cards that has been reborn into different cards or debts. Now I have a wife and two small children. We are convicted that my wife needs to stay home with them and raise them. To do that has involved no small amount of sacrifice.
If it weren't for the $1300 or so a month I spend to make minimum payments, it would be a lot easier on her. Right now we buy most things second hand and shop the sales at the grocery store. We also do without a lot of fairly basic things.
Two incomes would make things easier, but not that much. My wife was a teacher. By the time you take out taxes, lunches, clothing, gas, and car expenses she would bring home less than 1500 a month. And that is before the 850-1200 a month it would take to put two kids in daycare. So basically she would be working to put the kids in daycare and have a few hundred dollars more than we do now. But then we would have the added hassle of juggling daycare schedules with our work schedules and the whole someone else raising our kids factor thrown in.
If I had just stuck with my plans to work my way through college, I wouldn't be in this predicament. But I fell for the lure of "Free Money" and believed that I deserved to have a lifestyle in college that I often don't achieve now.
We don't take vacation, I work a lot, we do without a lot of things, we never go out to eat, we don't have cable, we scrimp, save, and borrow everything we can, and we are still one bad month away from financial meltdown. Our savings are basically zero and we have no safety net other than borrowing more money on credit cards.
Take that 1300 a month and multiply it by 12 months and that is a whopping 15,600 we spend each year on debt. That money could provide a savings account and allow us to live a little more easily without having to count every penny. I could have opted to take jobs that would be more fulfilling that paid less, but since I have all of that debt, I couldn't. But because I was young and stupid and fell for all the hype, we are stuck in this position for the next several years.
One more thing about my wife, she entered our marriage with no debt of any kind. Imagine how hard it would be for us if she had debt? That is the reality for many couples out there. The combined debt forces them into apartments and rentals for years, as well as causing many to put off plans for children.
Next time I will share with you what we are trying to do to accelerate paying off the debt so that we can reclaim our lives.