Wee, it’s Saturday (one of the best words in the English language) and I wanted to share a quick update of our financial journey.
We started our Saturday morning the same as we have since February, leading Dave Ramsey’s most popular class, Financial Peace University. This is the 2nd year our church has hosted the class and it is worth every dollar. If you have never heard of Dave Ramsey, I encourage you to check out his site and his teaching products. He gives grandma’s smart advice but it’s up to you to make the changes. As he says, it’s 20% knowledge, 80% behavior.
Today’s class focused on retirement planning and paying for college, two areas that most everyone will deal with at some point. I chose to focus on college planning–one, for folks still facing student loan debt and two, for folks who are parents and preparing their children for college.
I graduated from a 4-year state university–Go Gamecocks! And while I loved every moment of college, I paid for using college work-study, credit cards, small scholarships and grants and lots of student loans.
When I graduated, I had four years of student loan debt! I did not realize how this would impact my future until I began working with other college graduates who had $0 student loan debt.
How was this possible?
Right after college, I bought (financed) a new car which costs over $22,000. Yes. I. Was. Smart.
As a result, before my first full-time gig, I was over $58,000 in debt! What was I thinking?!
But I had to get a plan and I had to get one quickly. My plan helped because I can proudly say I no longer have any student loan debt!Through many tough decisions, doubling of payments, and $5, $10, and $50 extra payments, my student loan debt was paid in full in 2007. I keep a folder in my office which contains my last two student loan account statements and my final payoff letter.
Then I began to think about what I could have done with 10 years of payments at $300-$400/a month into a mutual fund instead of student loans.
Here is what my student loan payments could have looked like growing in a mutual fund instead of paying off debt.
6% rate of return: $57,645 in value
8% rate of return: $64,458 in value
10% rate of return: $72,293 in value
I can barely breathe. If you are always paying out your income, when will you ever get ahead? It brings new meaning to the phrase, it’s not what you make, it’s what you keep.
No matter what type of debt you have today, make a plan and get a plan to PAY IT OFF. Not only because what it is costing you but also because what it’s keeping you from.
We are living and working our debt snowball. Killing all outstanding debt (except for the mortgage) with as much income and extra income as we can. If we stay on the path, our debt will be eliminated in a year. In fact, one of our debts died this week. YIPPEE!
What do you need to do today to get out of debt?
I hope above everything you will get busy doing it.