Paying off debt requires a ton of discipline, willpower, and the right mindset. It’s not always easy, but the results are often rewarding.
Last fall I made the final payment on the student loan debt totaling about $35k+ of debt paid off since 2015. It was exciting and I felt accomplished. But it wasn’t the end of my debt repayment journey.
My husband and I still have some debt left, but I decided to take a break for the past 6 months.
When I Say “Break”…
This isn’t to stay that I stopped paying off debt completely, but I have stepped off the pedal quite a bit and am not currently aggressively paying down debt.
For the past 6 months, we’ve just been paying the minimum on everything. I haven’t provided any updates because to me it’s pretty boring to just pay the minimum. However, I still want to continue sharing my story because that’s how this blog started.
Taking a break from aggressive debt payoff has made me feel really good. But now I want to share the reasons why I did it and what I’m looking forward to for the future.
#1 – Financial Burnout
People don’t talk about it much, but paying off debt aggressively can lead to severe financial burnout.For over two years I woke up each day thinking about my debt. It made me feel good to see progress, but I became obsessed with it.
It’s like pulling a bunch of all-nighters. Eventually, your body is going to give out. With aggressive debt payoff, your motivation, energy, and willpower will all drain and need refueling.
This is why I actually recommend a break for anyone who’s on a debt repayment journey that will last longer than 2-3 years. If you have a ton of willpower and motivation, you may be able to last 4-5 years going non-stop.
But the thing is, so much can change during that time and you may not have the same outlook and determination that you had in the beginning.
#2 Wanting to Save
During the past few years, I’ve been able to save some money despite throwing lots of money toward debt. I’d been holding onto that money for dear life because I felt guilty saving money while still having debt. I knew that if I spent anything from my savings, I probably wouldn’t be able to replace it.
Since taking a break from aggressive debt payoff, I’ve been able to increase my emergency fund, invest more, and set aside money for our house.
My delayed gratification with my current living situation had run its course and my husband and I decided we wanted to find an affordable starter home some time last year. As I’m writing this, the deal isn’t closed but it’s looking like there’s an 80% chance we will become homeowners by June.
#3 Enjoying the Moment
The 3rd big reason why I decided to take a debt payoff break was because I wanted to really wanted to enjoy the present and acknowledge such a huge milestone. Most of my life has been about planning for the future and reaching goals.
I’ve been chasing after something ever since I was in grade school. I’m a go-getter and very Type A. I have a bad habit of loading my schedule up as I go after the next big thing.
For me, becoming debt free is only the beginning of my financial journey and it doesn’t have to consume my life. I still want to be able to enjoy my current state in life and appreciate all the progress I’ve been making.
So I’ve loosened up my budget a bit and haven’t been so strict on my myself.
Getting Back on Track
Given the type of person I am, I don’t see myself going at this slow pace forever. I finally feel recovered and restored (from financial burnout) and I’m ready to knock out the rest of this debt in the next year or two so that all we’ll have left is a mortgage.
Step 1 is assessing where we currently are and lining up all our debts. Aside from my husband’s student loan debt, we have some small 0% debt that includes a loan for our Tempurpedic bed (was taken out almost 5 YEARS AGO and I’m so ready to be done with it), some medical bills, and my Mac Book which was essential in order to keep running my business. Without a quality computer, I can’t make any money.
Debt I Started With in 2015:
Car Loan: $9,705.71
Credit Card Debt: $0
Student Loan: $20,845
Debt Added in 2016 After Getting Married:
Husband’s Student Loans: $16,120.62
Husband’s Credit Card Debt: $2,776.11
Husband’s Auto Loan: $4,603.04
Our Current Debt in 2018
Husband’s Student Loans: $14,342.8
My Computer: $924.61
So far, we’ve paid off around $36,988.71 of our debt not counting random medical bills that we probably paid on for a few months that I didn’t track. It feel so great to see that process but we still have more to do.
Switching It Up With the Debt Snowball
As you can see, we still have some progress to make. What I’m changing this time around is my debt repayment method. For years, I’ve praised the debt avalanche method and I still love it but this time, I’m doing a debt snowball.
All of this debt is low interest or no interest since only the student loans carry an interest rate. However, paying off all the other smaller debts first will give me more peace of mind.
Plus, once I get them out of the way, that will free up at least $300+ in minimum payment money that can be directed toward the student loans.
Our plan is to pay off all the smaller debts by the end of this year and top off our emergency fund. Then, get rid of the student loans completely in 2019.
It’s an 18-month plan that is totally doable. Having a mortgage may make things a little tricky, but we’re making sure that we don’t go into this situation becoming house poor and I’ll probably write another post about that in the near future.
For now, I’m going to jump back into action, avoid lifestyle inflation and put this plan in motion. Oh, and I’m bringing back monthly budget reports and debt payoff updates. Remember those?!
Have you ever taken a debt payoff break, or did you just power through until you paid everything off?
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