How did you get the debt?
The major part of my debt was a bunch of student loans. I had gone back to school for a part-time MBA at a top 15 university. The total tuition was around $80,000 which was almost all financed via a private student loan. Since I was in the country on a work visa, I wasn’t eligible for a cheaper federal loan.
A slightly smaller one was the $10,000 car loan that I had taken out to buy a used Toyota – again not preferred but just didn’t have the cash to pay for it upfront given that I’d only been in the country less than 6 months.
What made you want to get rid of the debt?
Growing up in a third-world country meant that we were always taught to avoid debt at all costs and live within (or below) our means. However, in this case the debt was necessary as there was no way I could have afford any education or a vehicle here on my salary, especially as my wife wasn’t allowed to work at that time.
How long did it take you to pay it all off?
I paid both the car loan and the student loan debt off in about 4 years, with the student loan being a priority. I got a pay bump at my job which helped, and towards the end my wife was able to find work as well.
Most of the student loans were @ 6.75-7% except for a few that were co-signed by a relative and were 0.5% lower. We attacked the higher interest ones off first, and looking at the $$$ I was paying in interest each month didn’t make us happy.
What resources did you use to help pay off the debt?
No external resources were needed, and hadn’t even heard of Dave Ramsey :). I wasn’t as savvy with personal finance then as I am now, and the only celebrity I knew was Suze Orman from TV. The impetus to pay it off was just a desire to get rid of the debt.
What were the challenges that you faced?
- We were new to the country and didn’t have much savings except what we had managed to put aside after expenses each month.
- In addition to tuition, everything else cost money as well – books, hanging out with the study group for projects etc. This further ate into our budget slightly.
- My wife wasn’t allowed to work for the first few years until she found a visa sponsor, even though she had a Masters and was quite capable.
How did this affect your marriage/family?
We were newlyweds when I started going to school. Working a full-time job for 40+ hrs a week and then nights and weekends in school meant I didn’t have a lot of time for her. It was tough, to say the least as she was new to the country as well. We persevered and took driving vacations to wherever we could to spend some quality time together whenever possible.
I like to think it has made us stronger as once you’ve been through the lean times and come out on the other side, you can pretty much deal with anything else.
What were you doing for a living?
I was working in IT as a software engineer.
How did it feel once it was paid off?
Like freakin’ awesome, and a weight had been lifted off my shoulders. I was grateful to the relative who’d co-signed and was finally glad to tell him that it was all paid off and he didn’t have to worry about it any more (not that he was).
What are some practical tips you can share with people looking to pay off their debt?
It’s doable, a baby step at a time. Today, there are lots of forums and Facebook groups and people are really helpful and guide you through the best approach for you.
Focus on the higher-interest debt first, and nothing is more important – not even that $500 toy you wanted to buy your 5-year old for Christmas. I’m sorry, but it’s true. Buy him/her something much cheaper and spend a quality day together instead.