A Story About Paying Off Debt and the Obstacles Along the Way

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And I ask myself, How did we get here?

Our debt story started 15 years ago when Fortysomething and I started graduate school. It's not that we had to pay tuition. In fact, we didn't. As science students, we had the luxury of having our tuition and health insurance covered by our department, and we even earned a small but respectable salary by teaching science labs.

Looking back, we could have made it work. We should have made it work. Rent in that area was reasonable, the transportation system was cheap, and there were plenty of things to do that didn't cost a cent.

The problem was, we didn't want to move to our new town and rent. No. We wanted to buy. We'd heard our parents and their peers and some of our wealthier friends wax poetic about the glories of investing: "Why rent when you can get a monthly mortgage for the same price?" was a common argument. It made sense. In fact, it sounded like the right thing to do, the responsible choice.

We had no down payment, true, but our credit was good, and in the days of subprime mortgages, that was enough to get us what we wanted. Within a matter of weeks, we were making an offer on a small two-story condo in a nice part of town. A few weeks after that, we were homeowners. We felt like we'd achieved adulthood.

But the back-of-the-envelope number-crunching we'd done before making our big purchase didn't take into account things like PMI (again, we'd had no down payment, so PMI was built into our monthly payment), condo association fees, and the kinds of repairs that everyone who's ever owned a house is familiar with. We soon realized that our monthly mortgage far exceeded average rent in our town... and moreover, we realized we were having trouble making payments.

So we did what many of our grad school friends were doing: we took out student loans and used them to bridge the gap between what we owed and what we could actually pay. The loans gave us a false sense of security. In reality, by the time I earned my Master's degree, we were tens of thousands of dollars in debt - all because we'd felt the need to buy instead of rent.

More than a decade later, the debt remains. The interest rates are relatively low on these loans - 7% for mine, 7.25% for Fortysomething's - but the paydown is incremental because a) our monthly payments are relatively small and b) the balances are so high (as we discussed in a previous post, our student loans make up 70% of our debt).  Sometimes I feel like the student loans are going to be a part of my life for the entirety of my existence.

I don't have many regrets in life, and to some extent, that includes somewhat frivolous financial decisions. Those two months of backpacking in Europe in 2004? Unforgettable. That trip we took to St. Lucia in 2005? Once in a lifetime. The move to rural Montana in 2006 on a whim? An experience we'll always remember.

But the student loan debt and, by extension, the first house? Major regret. If I could transport myself back to 2002, I would storm into that lender's office and put my foot down. I would snatch the pen out of younger me's hands. I would explain that when you're 23 years old and you have not a penny to your name, you don't need to be jumping into homeownership - and that had 23-year-old me been willing to rent, 38-year-old me would have far more financial security.

So yes, I regret it. But I also realize that the past is the past. Now is the time to fix all of this. We've put it off for long enough. When I look back in 10 years, I want to be proud of us for making this sea change, not frustrated that I was unwilling to do better.


  1. Wow, do I know the pain of regret! I thought I was so clever, saving and working 2 jobs through grad school to save up 2 grand... and blow it on a cruise! WTH was younger me thinking... moving cross-country not once, but THREE times in 5 years... sucks up a lotta cash! But, live and learn, and make smarter choices now. You have earned wisdom, and the chance to make your future brighter starting today. Keep on keepin on!

  2. You know, I feel your pain. I never purchased a home - but I came so close to it. What a nightmare it would have been, and it was definitely WAY out of my price range. I think it was a last ditch effort to save my marriage. Thank heavens it all fell through when the appraisal came back all wrong (Denver housing market is insane!). I ended up getting a divorce 5 months later and am moving to Florida in a month. This all happened in the course of 1.5 years. I can't imagine how I would have coped with all the stress of having a home I couldn't afford.

    Blogging is a great way to start the journey to debt freedom. It has definitely changed my life! Just keep moving forward!