How did you acquire $75000 in debt? What did that debt consist of?
I went through 8 years of college… so it was all student loans. The sad part is that I was in the Army, had my college/tuition paid for via the GI bill, yet I still took out debt.
What did it feel like to have that much debt?
I was oblivious to it until I graduated and started to pay attention to money. When I learned about compounding interest, I felt really dumb for having set myself back so far. I could have invested 10-15 years prior and had a nice nest egg already built up, instead I was 75k in the hole.
How long did it take you to pay it all off?
I worked hard and paid it off in a year.
What resources did you use to help you through this process?
I simply worked as much as I could, lived as cheaply as possible (no kids, no wife yet), and threw everything I had at my loans.
Did you face any challenges along the way?
I faced a crooked “financial advisor” who tried to get me to buy whole life insurance instead of pay off my debt. Fortunately, I had already done enough research to know that 1) I can’t beat a guaranteed 6.8% return that my student loans cost and 2) whole life insurance as an investment is a scam.
How did this affect your marriage?
Working the long hours was a strain on my relationship/fiancée at the time. But we made it through and now don’t have the pressure to work nearly as hard as we’ve set aside a nice retirement nest egg, with no debt.
What were you doing for a living while you were paying off the debt?
Working as a pharmacist.
How did you feel once you paid it all off?
Accomplished. Motivated to invest as much as I can while I’m still in my 30’s and let compounding interest do its thing.
What practical tips do you have for people looking to pay off their debt?
If you can stay motivated by the math instead of by the emotional wins, don’t follow the snowball method. Pay off the highest interest rate debt first, as this will ultimately allow you to pay a lower amount in interest. And do your research on compounding interest/time in market. Realize that the faster you pay off your debt the sooner you can throw all your excess income into investments and the exponentially larger your ending balance will be when you’re in your 50’s and 60’s. Learn about compounding interest and you’ll realize how powerful each dollar invested today really is.