Shriveling debt and reset priorities

This month marks a pretty big occasion on our path toward being debt free: we will have more in emergency savings than in debt. We started with about $52k in student loan debt between the two of us, and this month it is down to under $10k. If you haven’t been following along since the beginning, we began aggressively paying down the debt in early 2010. I am very hopeful that we can now pay it off completely by the end of October 2013, or only three months from now! Even if it is a couple months later, like in December, that’s only five months from now.

It’s kind of surreal, but it’s really only going to be about four years of rather large extra payments. In that time, we have also (all in cash) replaced two vehicles, took at least one vacation each year, gotten some nicer long-term furniture, a new laptop, and saved a good chunk toward retirement.

So, what’s next after becoming debt free?

We will be getting out of debt basically just in time to start paying my husband’s tuition for grad school without taking on more loans. This is great, because as I previously mentioned, we were going to allow ourselves to do some things without worrying about the debt hanging around a little longer (update: she had a perfectly healthy baby boy but she is still not 100% out of the woods). We took that wonderful trip to Seattle in May, husband did register for two classes this fall, I went to Chicago mainly for work in June with one day of fun tacked on, and we are working on plans to visit Europe next summer. We’ve even gotten a couple of invitations to stay with people if we visit Germany and Denmark, so those may be added to the list along with seeing Paris.

Debt #2 is gone

At the end of September, we were able to pay off the second to the last student loan. I think the beginning total was something like $9k. I’ll just go ahead and overshare with actual rough totals:

Debt #1 – $6k, paid off in August 2010
Debt #2 – $9k, paid off in September 2011
Debt #3 – $38k, to be paid off in 2013

It doesn’t seem all that long ago that I wrote that we’d paid off Debt #1, and it really wasn’t. How did we pay off $15k in less than 2 years? And how will we pay off $32k by 2014? By being very lucky with our jobs and living well below our means. We’re fairly average according to Dave Ramsey, with being able to get through the Debt Snowball in three years–$53k in three years doesn’t sound too shabby.

I recently heard that students shouldn’t borrow more than they will make in their first year working. After I thought, “that’s impossible,” I realized that this holds true for both my spouse and I. He made more than $15k his first year after he finished with school, and I made more than $38k. And, with not changing our lifestyles from being students to part of the full-time workforce, quickly paying off the debt and saving over $25k in interest payments has been marvelous.