My husband and I are back in the Midwest this week to visit my family and to attend our five year business school reunion. Five years. There are so many things that have happened in my life over the past five years that I’m thrilled about – namely an incredible husband, a great career and a beautiful daughter. I live in a breathtaking part of the country, I married into an awesome family that I get to live near and I have my health.
But damn, I did not think I would be $150K in debt 5 years out of business school.
When we graduated I had about $40K in student loans to pay back and my husband (then boyfriend) had – gosh I don’t know – north of $200K I think (he got two masters degrees)? Anyhow, once we each started working we dutifully began our respective monthly payments and planned to each be done in 10 years. It didn’t really cross either of our minds to accelerate our payments (um and we went to business school – eeks. Embarrassing).
What was killing us though was the interest rate. Student loans coming out in 2012 were at horrible rates – ranging from 6% to 8%. We each re-financed and got better rates a year later and thought we were good. We probably would have continued on that way paying tens of thousands of dollars in interest over 10 years, just accepting that as our fate. But then my husband found an even better student loan consolidation where the fixed rate on a 10 year loan would be 2.75%. The catch – we would have to consolidate our loans together to qualify and the loan would be through a private bank.
My first thought was hell yes to 2.75% fixed! But then it sunk in that I was tying myself to significantly more debt and that by moving to a private loan we would no longer have the security of government loans that let you take hardship periods of time if you end up unexpectedly unemployed. I was nervous, but we both knew the savings on interest was absolutely the right thing to do (phew, some business school education setting in). So in the fall of 2015 we consolidated and re-started the clock on our 10 year loans once again.
I’d love to say that at that moment I nobly decided to split our loan payments with my husband 50/50 because of love! Commitment! A shared future! But I’d be lying. We pro-rated our payments relative to each of our debt because that felt “fair” at the time. But a couple of months later my husband unexpectedly got laid off and started at a new job that paid a lot less. Like – a LOT less. We both knew the job had great potential – a sales job with uncapped commission – but it would take time to build up his client base. We began lumping all our expenses together and just each contributed as much as we could. I think we probably split everything 50/50 generally, but there were likely months that I paid more than half.
And it wasn’t until we went through this experience that it dawned on me that we had to stop thinking about debt and income as mine vs. his. We had taken vows a year earlier in front of friends and family to join our lives – what’s mine is yours, what’s yours is mine. We had shared dreams for our future – why exactly did I think I didn’t have to share in the work to get to those dreams? And so when my husband’s income stabilized, we just kept moving forward with money in one pot and left the pro-rating in the past. It felt great to save so much on interest with our consolidated loans and we definitely felt more like a team financially by the time we welcomed our daughter into the world.
Yet this was STILL not when it occurred to us to pay off our loans faster. We were sittin’ pretty on stable incomes, a great interest rate on our student loans – and hey, we don’t have that ‘bad’ credit card debt, so we’re good, right? Everyone takes at least 10 years to pay back student loans…right…?
Fast forward to this past August to me attending the Lola Retreat with my two sisters-in-law. I was inspired to attend because Mrs. Frugalwoods was speaking and I had been a long-time fan. I also loved the idea of women getting together to talk finance. I thought it would be energizing, inspiring and I would learn some practical saving and investing skills. But what I hadn’t anticipated was meeting a bunch of regular-hey-they-are-just-like-me women talking about achieving financial independence in their 30s. Paying off massive grad school debt in a mere 3 years. Retiring early and living off investments. Talking about their “FI Number.” Say what? You mean that stuff isn’t just for the people who blog about it? What do you mean you paid off your student loans EARLY? Suffice to say I left inspired, but I also left with a fire under my ass and a bit sheepish. We weren’t doing enough.
And THAT is how we got to where we are now. Shared debt. Shared income. Shared goals. Shared vision. We aren’t a finely tuned machine yet, but we are much more motivated than we have been before. I’m impatient and want it all done now, but my husband keeps me in check reminding me it’s still a massive task ahead of us. But we don’t have to be complacent or just accept our student loan fate as “that’s just the way it is.” Let’s hope at our 10 year reunion we’ve got a different debt story to tell.