by Amy C
(*Update* I just updated this post with a few more exact balances and interest rates)
First off, I want to thank everyone for the warm welcomes that they have given me! I really do appreciate having someone in my corner cheering me on!
It’s time for the nitty gritty details of our debt and I can honestly say that I am embarrassed about admitting how much debt we have, however, I am even more embarrassed to admit that I had NO idea how much we had until I started adding this up! In fact, I still don’t have an exact amount because I am waiting for a few statements to come in. I am going to include a rough estimate until I get final numbers, just so that we can have an idea of where I am at. I will then update the info!
CC#1 $43.30 (this will be payed off on Friday!)
CC#2 (7.24% interest) $ 2,999.84
CC#3 (27% interest ouch!) $4,833.17
Auto loan (6.99% interest) $5,695.29
Appliance loan (0% until Oct 2017) $2,072.79
Student loans-Amy (5.8% average interest) $34,392.19
Student loans-Hubby (5.7% average Interest) $18,060.61
Student loans-Amy (3.25% Interest) $1,800.00 (estimate)
Student Loans-Hubby (4.725% average Interest) $3,111.46
$73,008.65
Wow. That is a lot of debt. I really had no idea that we were carrying such a high debt load. This doesn’t even include the mortgage! I can’t describe the emotions that I am feeling right now as I look at that number. Overwhelmed, shamed, sadness, frustration…they are all emotions that are fluttering about.
Here are the details on what each debt is about:
CC#1: This is a credit card that I have been working on paying off for the last couple months. I thought about leaving it off the list since it will be paid off on Friday and the balance is so small, but I decided that total honesty was required. If I start fudging numbers..it would be easier to continue doing so, which contributed to me getting here in the first place!
CC#2: This is a credit card through our credit union. I have no idea what we used it for.
CC#3: This is a credit card that we got because “the rewards are so great”…and they would have been if we had used the card responsibly! We used this card for some home improvements and fertility treatments. We have already paid off a ton of this debt.
Auto Loan: This is for an older Prius that the hubby uses to commute.
Appliance Loan: This is the debt that I want to tackle first. Simply because it annoys me! We bought a used fridge a year ago trying to save money….but when it suddenly died we decided to finance a new one so we didn’t end up going through the same hassle.
Student loans: The first two loans with the large balance are federal loans from both hubby and I, while the second two with small balances are state level loans for the both of us. The student loans are lower on my priority list to pay off because we are on income based repayments and have been for a several years. However, we are also paying the most interest on them because the balances are so high, so perhaps I should reconsider that. What do you think?
When you started working on your debt did you know how bad it was, or were you surprised like me?
Welcome, Amy!
It’s been a while since we got out of debt but if I remember correctly I wasn’t too surprised by our total debt. Perhaps similar to you, no single debt was huge enough to feel like a burden on its own but added together it was a lot. It’s all relative too based on your income. Hopefully getting everything out on the table and participating in this community will help provide the additional motivation needed to kick this debt out of your life once and for all.
Also – you knew it was coming but it’s an interesting observation is that your student loans are nearly half of your household debt and you mentioned you have chosen to not work. Not judging, just pointing out an investment made that is not generating an ROI.
I totally agree with and see your point. Part of the reason the student loans are so high is because of the economy crashing in 2008 and hubby laid off. We spent two years unemployed or underemployed and used student loans to bridge the gap. The choice to not work is…complicated. It started because we were undergoing fertility treatments that required doctor visits every other day, precisely timed injections and made me a hormonal wreck. It continued because of the hubby’s crazy work schedule and because I have some moderately severe vision issues that make driving a bad idea for me. Since we live in a mostly rural area with no public transportation, my job options are extremely limited.
Hi Amy!
Welcome! You might be well served to create a table that also lists out the minimum payment for each of these credit cards. There are lots of strategies to pay off debt. You might look at the lowest balance, the highest interest rate, or the highest committed minimum payment.
For my personal comfort level, I like to structure my spending to keep my fixed expenses at the lowest possible level, so I know I can sustain an emergency mostly through curbing my discretionary spending money. For me, it meant I attacked those balances with a huge monthly payment.
I totally understand the desire to have as little going out each month as possible, but I think I might need some quick wins first. I will have to chat with hubby and see what he thinks.
Hi Amy,
Great Job in adding it up and facing The debts straight on. I guess acknowledgement is the First Step towards Change.
Looking Forward to learning more about you
Just wanted to say hi and that I’m very excited to follow your journey.
Amy, thanks for sharing and I am excited to follow your journey. As Walnut pointed out there are a lot of strategies to paying off debt. I have always known how much I owed to the penny, but sometimes mentally you play games with yourself. At one time I had credit card debt, mortgage, car loan, and when I graduated from law school I personally (not including my spouse’s student loan debt) had almost $190,000 in student loan debt. Sadly, the market for 95% of attorneys pays less than a teacher (my first career). Throw in a job relocation in which we took a large 6-figure loss on a house in a move-it was ugly.
Sometimes even knowing the numbers is not enough to induce action. We made enough money to pay more than the minimum and I always have, but 2 years ago I kicked in into high gear. We have paid off all the debt from the house loss, credit card debt, and my husband’s student loans have long been paid off. The infamous “190K” in student loans is close to crossing below the $70,000. It’s sad when you look at a number like $70,000 and think I am in the home stretch. I still have a mortgage and a car payment (but my husband gets a car allowance that covers it in full and loses the allowance if we do not maintain a new car-so this is sort of wash). Our 2nd car is paid in full. I have slowed down our aggressive pay off to meet some long term savings goals. I hope to hit those by early 2nd Q in 2017. Then, the goal is to eradicate the loans. What I learned in this process is that even though it is a mountain to climb in the end the gratification of paying off a credit card or a loan and knowing I’m one step closer to being debt free and able to do what I want with extra money (for me that is retirement/long term savings, travel, and being able to invest in experiences with the ones I love (e.g. a meal out and movie) without a thought to where the money is going to come from. It’s funny though–a proclaimed shop-a-holic, the more debt I pay off the more frugal I become (in moderation of course). If you have followed Ashley on the blog you know her approach has changed over time. I like that approach to debt payment. I am not a big fan of Dave Ramsey, but some people may scoff at my stopping aggressive loan payoff for about 6 months to focus on savings goals, but for me, having come so far, it feels right now to address my need to be more financially secure long term.
A few questions (that you may address at a later time).
1. Do you know what the interest rate on CC#3 is?
2. I an understand the desire to pay off the appliance loan ASAP, but at 0% is it really the best use of your extra funds allotted when you have things at a higher interest rate. My suggestion would be to calculate the repayment of the interest free loan over 9 months (so it’s paid off no later than Sept 2017. I am not sure if Dec. payment has been budgeted or not) and pay that amount consistently each month. Then, you know you are on track to pay it off before the 9% is up, can see incremental progress each month, but then apply the extra income you have to higher interest rates.
3. Do you only have one car? Do you think the car will last until this one is paid off? The balance seems high for an older Prius. Not sure how your credit is, but there are a lot of auto loans out there under 3%. Refinancing this loan if the car will last you for a few more years might make sense.
I look forward to watching your progress and journey!
You have given me a few things to think about! thank you!
Hey Amy!
It hasn’t been that long ago that I first started actually dealing with the reality of my debt. It’s crazy how massive it can get if you’re not careful! When I sat down and wrote it all down, I was blown away like you. It’s awesome of you to be so open and share your story!
I am glad that I am not the only one blown away!
Excited to follow you on here, Amy! Kudos for facing your debt numbers in all their glory–it takes courage to be honest and we are here to support you and cheer you on as you tackle this debt!
Welcome Amy! Good for you for totally all your debt. It must have been sobering. If I were you, I would do as suggested above and make monthly payments to the 0% debt and pay it off 1 month early. I would send extra payments to the 27% interest debt and pay that off ASAP! Then maybe snowball payments to the smallest debt to have an easy “win” to keep you going. Whatever you choose, we will be here rooting you on!
I missed the 27% interest rate on that. You might want to seriously consider a balance transfer to stop the interest clock on that one – YIKES! Can’t wait to see your budget and help you strategize.
Absolutely a balance transfer if you can!
Hello, your story sounds interesting but you can also follow the chart like, make a note of highest interested debt, monthly expenses and subtract your lowest dept. You can use remaining amount of money for saving. I enjoyed your article, It represents so natural content.
I second paying off that 27% card IMMEDIATELY, or at the very least refinancing it because that is an insane amount of interest. I ended up doing a loan through Lending Club to get rid of some of my high interest cards and that ended up being a fantastic option for me.
Welcome and I look forward to reading about your journey!!