debt diary bookIt has been a while since I posted a story in the Debt Diaries, so I want to thank Dee, from Color Me Frugal.  Read on about how their attitude toward debt is changing!

The hubs and I graduated from school at around the same time, in 2006.  We’d been broke as a joke for years in school, like most people.  I recall a conversation we had shortly after getting our first paychecks.  We were in awe of how much money we were making (which wasn’t a lot- especially considering the long hours we were working- but it was much better than what we’d been making while in school, which was nil).  I can’t remember who said what, but the gist was something like, whoa, we’d better get good at managing our money.  If we waste money from here on out, we’re going to be wasting a LOT of money!

Thus began our journey into investing.  We happened to have pretty decent timing, since the market dropped dramatically within a few months of our entry into the world of investing; we were able to put nice amounts into our Roth IRAs and our 401(k) s during the Great Recession.  So we got to pick up many shares of our chosen investments ‘on the cheap’ you could say.  And in the years since then, the market has gone up quite a bit, so we have enjoyed some nice increases in the value of those accounts.

But one thing we’ve neglected somewhat over the years is our debt payoff.  Unfortunately neither of our parents own a money tree, so we had to take out student loans to complete our degrees.  And we made some fairly stupid mistakes while in school, such as indulging expensive whims (like a trip to Mexico) courtesy of our student loans.  We graduated with combined student loan debt in the six figures.  Wait, you’re wondering, if you graduated in 2006 aren’t your loans close to being paid off?  No, because somewhere along the way we consolidated and refinanced them- we actually got killer rates of 2.5% and 3.5%.  But we also somehow managed to get the repayment period extended to 25 years.

Here’s the scariest part- I actually don’t recall having any conversation at all about how long the repayment period would be.  I don’t recall asking about it or considering it.  I do recall hearing the low interest rate I would get on my consolidated loan, which I was told was among the lowest rates in history.

Unfortunately this turned out to be a good thing and a bad thing; it’s great to have such a nice interest rate, and the extended repayment period I’m sure makes our monthly payments lower.  But in the last seven and a half years we have not made much progress in getting that debt paid down, since such a big chunk of the monthly payment goes toward interest.

Because of the low interest rates we pay on our student loans, for much of the time over the last few years we have been really complacent about them.  We have rationalized that we’re better off investing since we could probably make better returns by putting more in our retirement accounts or saving up for a rental property.  This may be true, and we don’t regret the fact that we have done a lot of investing over the last few years.  But in recent weeks and months we have come to realize something.

Our student loan debt bothers us.  We don’t like it.

This fact actually dawned on me several weeks ago when I wrote an article about our desire for me to be a stay-at-home mother after we adopt.  My only hesitation about potentially becoming a stay-at-home mom is the fact that I have student loan debt- and if I stop working, we still have to pay it off.

What a revelation!  Can you believe it took me that long to realize that I don’t like my student loan debt?  I guess I’ve been drinking the “we’re better off investing” Kool-aid for a little too long.  Hubby and I talked about it, thought about it, talked some more, and finally came up with a plan.

Let’s pay it off!

Unfortunately it’s not that easy, since, like our parents, we don’t have a money tree in our backyard either.  But the hubs and I sat down together and came up with a plan.  We’ve created a plan that will tentatively get our student loan debt paid off within two years.  That’s right, TWO YEARS!  Screw this quarter of a century crap that we are currently signed up for.  Now, the huge caveat here is that we are trying to adopt and our plan is that I will become a stay-at-home mom (and blogger chick extraordinaire!) when we do that.  Adoption is expensive.  Raising a child is also expensive.  So there are most definitely a few things on the horizon that may extend the two years somewhat.  But the main point here is that we’ve seen the light, we’ve decided that 25 year payment plans are crazy, and we are now working on getting our student loan debt gone ASAP.  We have altered our thoughts on debt and are excited to now be on the road to debt freedom!

Have you had any “aha” moments that have dramatically changed your attitude on debt?  If so, how did it change things for you and your finances?                   

Author Bio: Dee is a personal finance enthusiast and blogger who is working hard to live a frugal lifestyle, ditch debt, and create multiple streams of income.  She hopes to inspire others to achieve their financial goals by doing the same and writes about the journey on her blog, Color Me Frugal.  Follow her on twitter @ColorMeFrugal, Like Color Me Frugal on Facebook, and be sure to check out her blog over at

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  1. I wouldn’t say I’ve had an “aha” moment, but through our first couple years of marriage both my wife and I have become more and more aware of how much the monthly payments to our student loans hurt us cashflow-wise and actually was the motivation behind starting my blog. I know can offset the loan payments with my “side hustle” income, and it feels great.

    1. That’s us too. The payments are low because of the extended repayment, but we just kind of woke up one day and decided that we don’t want to be paying these stupid loans off for the next 20 years! That’s nuts. Over the long run it will just be better to get out of debt sooner and feel more free to do the things we want to do!

  2. I’m very much in the camp that each person needs to chart their own course, and that the right answer is very much a mix of math, circumstance and personal preference. So if paying off that debt is important to you and helps you live the life that makes you most happy, then great!

    BUT, with those crazy low rates I wouldn’t have ANY regrets about focusing on investing over paying off your debt. Yes, investing involves more risk, but the potential returns are much higher and from a pure probability standpoint you guys did yourselves a big favor.

    1. I’m glad we have focused on investing and saving for retirement up to this point. But I think we have sort of arrived at a place where we just want the debt GONE. Up until this point it hadn’t really bothered us too much- we figured it would get paid off eventually- but it’s just time. Having debt is starting to affect our decisions for the future, so it’s time to make a change and get it gone.

  3. Like Matt, I think each person is going to have their own unique solution in situations like this. I would generally lean towards paying off debt, but what you’ve been able to see in the market the past few years is hard to not partake it. That said, I think it’s a balance and can totally relate to that feeling of wanting debt gone altogether. We’ve been through that ourselves and it’s a pretty good feeling to start seriously knocking it out and get it out of the way.

    1. Yeah, now that we have made the decision to get rid of the debt we are pretty excited about it and looking forward to the day we’ll be able to say we are debt-free! That must be a pretty awesome feeling.

  4. Interested to know what your plan is for paying off your loans in 2 years. I’m on the 25 year repayment plan too and am throwing whatever money I make at my private student loans to pay them off early…but with only part time and side income, it’s still looking like it won’t be gone for another 7-10 years. Then I’ll have my federal student loans to worry about. Not sure I’ll be too worried about them because they are under Income Based Repayment.

    I’m waiting for my husband to have an “aha” moment when it comes to debt as he’s still not quite on board with cutting expenses to get rid of it faster.

    1. We decreased our expenses last year when we moved to a smaller house in a low cost of living area. So that freed up extra cash. However, until recently we have been in the “we’re better off investing” frame of mind- so we’ve been putting money in a savings account to save up for a rental property. Now we’ve decided that’s not a priority and we want to ditch the debt instead. So we’re going to re-channel that money toward debt, plus a little extra from some things we’ve been cutting lately such as eating out.

      See if you can find one of those debt amortization calculators online that shows how much money you owe versus how much you will pay over the life of the loan if you stick to the standard repayment plan (and then show it to your hubby)- the numbers can be pretty frightening, even for people who aren’t complete debt-haters.

  5. Yeah, we definitely had an “aha” moment years ago. We finally realized that we needed to pay our debt off if we wanted it to go away. No one else could (or would) do it for us.

  6. For me it’s always better to pay your loans as soon as possible no matter how low the rate is. It really adds up pretty easily and you end up paying much more in the long run so it’s a good thing that you have a plan to pay off your student loan in 2 years…

  7. I had my “aha” moment years ago and realized that I would be dead and still have debt. Not a position I wanted to be in. I changed my situation and am happy that I did. The journey was tough, but worth it!

    1. Yeah, we didn’t want to keep these loans around for another two decades! I just picture myself in two decades, and I want to be wearing the smile of someone who has no debt!

  8. I’ve always been debt averse. When we bought our house it really rattled me when I realized the repayment period! 30 years is a long time!

    I did what I should do. Started paying a little extra every month to cut down the number of years. Still a long way to go, but at least that is a start!

    Great job on how you guys are dealing with debt! Very inspirational!

  9. I’ve been debating this too. I have a student loan rate of 1.75%. So at that rate it has been hard for me to focus on paying it off. For now I’ve been focusing on the cc debt but I think I’ll come back to this one once I knock off the other and re-evaluate at that point.

    1. Wow, that’s an awesome rate too. I totally hear you that it’s hard to focus on paying it off at that low rate- that’s why we let it go for seven and a half years! I would definitely focus on ditching the cc debt first, as you are doing.

  10. We went and did something similar. We knocked out our student loan debt last year and it felt great. Our loan rates were higher, so it may have been a slightly easier decision, but if you want to be debt free, go for it. Sure, you may miss out in the market climbing, or you may see it drop 50% in 2014. Who knows…

    1. Awesome! Good for you guys!! At this point we are feeling good about the investing we’ve done over the past few years. In a way it feels “mathematically” hard to make this decision (I’m sure loads of people would argue we should just keep investing), but for the place we are at right now it is absolutely the right decision.

  11. I’m glad you and your husband had your a-ha moment. There is nothing wrong with paying off debt and investing at the same time. Both are important but accelerating your debt repayments is a great decision. When I got married my husband made me promise beyond a house that we would pay cash for everything, including cars. I agreed and it was the second best decision I ever made. 🙂

    1. We’ll still be contributing to our retirement accounts while we do this, so we are not totally sacrificing one for the other. I love that you and your hubby promised each other that! You’re right, that is an awesome decision!

  12. It happened kind of similarly for my boyfriend and I. We were out on a walk one day, and I suddenly realized how long it would take us to pay off our student loans if we kept making the minimum payment. I didn’t want this following me around for the next 10 years, so I decided to increase the amount I paid toward them. At least you chose to invest the money, that’s not a bad alternative to paying off debt! I need to work on making a payoff plan, though.

    1. We feel exactly the same way- I picture us 20 years from now- and I soooo don’t want student loan debt in the picture. In 20 years I want the student loans to be a distant memory!

  13. When I first got out of college I had student debt but was saving in my 401K. Only problem was paying the minimum, saving a little and spending the rest. Took me three years to figure it all out.

    1. I know what you mean. It was easy for us to live below our means right after we finished school because were used to being broke and going without extras. As the years went by we let lifestyle inflation creep in a bit- but when we moved in 2012 we sort of downsized in order to cut expenses. We knew we’d need to live well below our means in order to be able to do all the things we want to do financially, like adopt.

  14. Consolidating last decade also let me lock in an incredibly low APR for my grad school loans.

    However, even with the low rate, I still don’t want to be paying it off forever. At the time, it was a great deal, I could easily make more money investing than the loan rate. In today’s economy with the Fed’s ZIRP, it’s less obvious, and I’m much more interested in early repayment.

    One tactic under discussion is to repurpose all raises and bonuses towards prepayment, but we haven’t decided on a plan yet.