If we got out of college with no debt, we would have our house paid off. Or, we would have at least taken many more trips. However, that’s not what happened and it doesn’t help thinking about what-ifs. That’s what I have to keep telling myself anyway because it’s hard not to think like that.
How We Got Here…
We’re not doctors or lawyers. We just both independently decided to to get Masters degrees at our local private university. Have our graduate degrees helped us make more money? No. Does that make it not worth pursuing a Masters degree? I’m not ready to say “no” yet. If we retired tomorrow, the answer would be “no”, but we have many more working years ahead of us unfortunately.
And, of course, then we had kids. We would feel quite rich if we didn’t have kids, but that’s a whole other topic 🙂
How we racked up our debt is irrelevant at this point. Over the past 9 years we’ve had to figure out how to balance our expenses (aka travel schedule) vs debt payments. We’ve been very fortunate that we both started engineering jobs that paid industry norms. This gave us some flexibility to do some amount of travel.
Why It’s Taken So Long to Repay
On average, we take about 5 trips per year. Every time we are discussing the next travel, the only thing going through my head is dollar signs. I know that every couple of hundred dollars we spend on each trip lengthens the amount of time we’ll be in debt by a couple of months.
Jessica is clearly the travel planner in our family. She was born with the travel bug. She chose her major, computer engineering, because she knew that she would have a high likelihood of having a work-from-home job in that field.
I started off just along for the ride. I forced myself to see past the dollar signs and enjoy the journey. It wasn’t easy at first.
Then, Travel Became Easier
The moment that the pendulum began to swing the other way was when we accidentally got the Southwest Companion Pass. On New Year’s Eve, we randomly got a letter from Southwest saying that we qualified for it. Upon reading through the accompanying literature we thought it was a scam. It was too good to be true! Your companion flies for nearly free for over a year!
That was the first way that we found to make travel cheaper for us. I wrote about some more ways that we make travel more affordable.
We’ve also found some tricks to shave a few dollars here and a hundred dollars there on our expenses.
If Travel is Important, Then Your Expenses Should Reflect That
The only way to do this without feeling like you are missing something is by recognizing that Travel is a priority. If it’s not, then pinching pennies is going to feel like a chore.
I get a thrill out of doing bills and applying the leftovers to a worthwhile cause: for us that’s student loan debt. Of course, when there’s not much leftover or if we’ve spent more than we made that month, it’s not much of a thrill. This is what I try to keep in mind as I go through life. I just try to look forward to the end of the month to see how we did.
By keeping travel as a priority and the end of the month bills in the back of my mind, the best way we’ve streamlined our expenses is by keeping our mortgage and car payments relatively low.
Buy an Affordable House
We bought a house in desperate need of a full remodel. It took 2 years at a rate of about 20 hr/week to finish (or nearly complete). Taking into account the increase in home equity, that comes out to about $13/hr. That’s not the best way to make some money on the side, but it worked for us. I do love working with my hands, and I gained a ton of skills along the way. In the end, we ended up with a house with a low mortgage. This gives us the flexibility to be able to afford some trips here and there.
I’m not trying to say that rehabbing a house is the best way to lower your housing costs. It’s one way. I have a co-worker who watched the housing market carefully prior to purchasing. They ended up buying a foreclosed home in a small town about 20 min away from St Louis (where we live). Their house ended up being about the same price as ours after our costs of rehabbing. They just needed to put a coat of paint up in a few rooms and some minor repairs.
There are many ways to lower your house payment. It’s just so easy to get sucked into thinking an extra $10k, $20k, $30k in the house price is acceptable in order to get those extra few hundred square feet, the garage, the more polished look, etc. I did some quick math.
For every $10k in house price, you’ll pay an extra $49/month (assuming 4.125% and 30 years). If you let yourself get sucked into a $30k more expensive house (like we almost did), that’s $1764/year. That’s just about two vacations if you play your cards right!!
Buy Affordable Cars
We also save some cash every month by buying affordable cars. Jessica’s Mazda CX-6 was 2 years old and had about 20k miles. My Nissan Frontier (small pickup truck) was 6 years old with 25k miles. The pickup was a bit of a splurge given that most people with trucks don’t end up using them all that often. With the remodel, I figured the pickup would come in handy. And it did! I was loading it up at Lowe’s about twice a month for many months in a row.
Our car purchases weren’t a flawless execution in that we both bought our cars within 6 months of each other and with $0 down. The cars we were trading in were both worth less than $5k. We actually used the cash from the trade-in to pay down our student loans. We were borrowing for our cars at about 2.25% while our student loans were %5-%6. It was an easy way to decrease our overall borrowing rate. Of course, having the cash saved up ahead of time would be a much better strategy. Hopefully, next time!
Here’s a list of other ways that we’ve found to decrease our cost of living.
Refinance Your Loans!
I can’t resist mentioning this again even though it’s in the previously mentioned post! When we first graduated college, student loan refinancing wasn’t an option (circa 2008).
Recently, SoFi and Earnest have found a new way to estimate risk not just based on your income. Essentially, they count your college degree as an asset that will pay dividends in the future. Makes sense to me! And their rates were just way lower than what we were paying. We chose variable rates that were at about 2.2%. We chose variable because we were expecting to pay them off in the next 2-3 years. Even the fixed rates were at about 3.5% compared to the 5% – 6% that we were previously paying.
Light at the End of the Tunnel
Finally, we are on track to pay off our student loans by Fall 2017! Could it have been done faster if we didn’t like to travel? Yes. But, honestly, the majority of the memories that I have are of us on an adventure. 90% of our photos are from travels. I remember what milestones are kids were at on which trip. I remember some of the main topics of conversation Jessica and I had by vacation. If I think way back, I even remember when I didn’t want to travel.
At the end of the day I don’t have any regrets that we took so long to pay down our student loan debt. I talk about it like it’s already paid off… but we’re so close!! The point is, though, that the investment we’ve made in making memories has been worth it, and this is a time that I am very happy to say that I was wrong 🙂