Buy the Finer Things in Life, or Pay Off the Debt?

This inspiring article was written by Derek Sall. His article made me want to stop spending on all the frivolous things I like to indulge myself with and start being really serious about paying off our debt. Derek is a recent Finance graduate from Grand Valley State University and posts regular articles just like this one on his website, http://www.lifeandmyfinances.com.

I found my eyes lost in hers while I gently held her soft hands, and she smiled back as if I were the only man in the world at that moment. “I introduce to you, Mr. and Mrs. Sall.” We were married, and it was time to start our fabulous life together; one filled with trips to the beach and hardly a care in the world.

We moved into our apartment and within a couple of weeks, the mail parcels from “Direct Loans” began coming in. Suddenly, we realized that we had college loans to pay; they hadn’t seemed real before this moment, but now they hit us like a sack of bricks. My wife had not found a job yet, and my income was barely covering our necessary expenses. We were in trouble – and my wife needed to find a job fast.

Well, the glorious day did arrive when we found out that she had work. Soon after we received that first paycheck, we were able to pay only the interest that had been building on our deferred loans. At that moment we sat down and decided that we needed to get rid of these pesky bills.

What are the Benefits of Living Debt Free?

  • No extra interest payments over time (which can sometime be equal to the loan amount!)
  • Receive discounts with cash purchases instead of getting suckered on the payment plan
  • Have the ability to invest for your future
  • Live worry free with no debts!

After we made the decision to tackle our debt head on, we designed our first budget and began making loan payments of $200, $1,000, and at one point, $3,200. It’s amazing what can be done when we have a common focus!

Since January 2010, my wife and I have paid over $9,000 toward those student loans. One of them is completely paid and the other should be paid in full by April of 2011! It feels great!

It is completely worth it to give up a few luxuries in order to feel the freedoms that we are currently experiencing. I encourage you to start by taking a close look at your expenses – are they all necessary? If not, cut them out and put the money toward those debts! You’ll be glad you did.

Do you have a great debt story? Leave a comment and let me know how you handled it. Did you tackle it head on, or did you mistakenly allow it to build with interest?

17 thoughts on “Buy the Finer Things in Life, or Pay Off the Debt?

  1. MoneyCone

    That is indeed awesome – making a plan and more importantly executing it!

    I think it is definitely worth ‘postponing’ a few luxuries in life for a better future.

    Reply
    1. LifeAndMyFinances

      We are certainly excited about paying off our debts! After we do, we’re planning on taking a celebretory cruise.

      Reply
  2. retirebyforty

    I completely agree with paying off debt first. Once you’re debt free, it’s ok to spend a bit on luxuries. Don’t build any new debt though.

    Reply
    1. LifeAndMyFinances

      Once we are out of debt, we plan on building our savings and investing in our future. It sure is going to be great!

      Reply
  3. Invest It Wisely

    Give up the finer things at least until you get out of the debt. Realize just how expensive that “finer thing” really is… multiply its price by 20… visualize working to pay that off… visualize the interest charges! Is it still worth it? Fine, go for it. But chances are, it probably isn’t!

    Reply
    1. LifeAndMyFinances

      I agree with you 100%. My friend always thought that same way – what if instead of purchasing that item, you decided to invest the money. What would that be worth 40 years from now? It really makes you think twice about those finer things!

      Reply
  4. The Passive Income Earner

    My story was that we did renovations knowing I had money to pay from the stock options. Turns out the market dropped and now I am paying it the old fashion way. We use our line of credit to pay for the reno as we went along which is fine, but I had not setup a plan to sell my options appropriately. That was a mistake. The bigger mistake was not to treat the company I work for as an investment with due diligence. The silver lining is that they converted some options to restricted stock unit so I still got some money but I had to wait a year to get it and pay interest in the mean time while paying it down. Such is life …

    Reply
    1. LifeAndMyFinances

      That is an unfortunate story. It really makes me want to pay off my debt and sock away some savings! Thanks for the story!

      Reply
  5. Buck

    Great story. Refreshing to see people take charge of their debt and do something about it. If more people did something positive rather than run from it or spend on frivilous items, the country would be better off. Congratulations on your new married, near debt-free life!

    Reply
    1. LifeAndMyFinances

      Thanks Buck! We are very excited about getting out of debt, and we are even more excited about investing in our future!

      Reply
  6. Aloysa

    You really wrote a very inspiring post. I am pretty good with paying off debt but sometimes I slip and… well… go and spend money frivolously. Then I regret, and start saving and paying off and then again… I slip. It is a bad circle. I hope I will be able to break it one day.

    Reply
    1. LifeAndMyFinances

      Ha, don’t be so hard on yourself; we slip up too! But when we do, we find a way to make it up and get back on track (mainly this involves selling something). It all works out.

      Reply
  7. Melissa

    Great story! You are smart to pay off the debts before kids come along. Once my husband graduates, we will be paying off his student loan debts while paying for private school tuition and saving for a house. Yikes!!

    Reply
    1. LifeAndMyFinances

      Yikes is right! I can’t imagine paying for tuition along with other debts. Hopefully we’ll get rid of these loans soon!

      Reply
  8. Kevin @ Thousandaire.com

    The existence of debt doesn’t have the same psychological effect on me as it does on other people. I’m happy to carry student loans at 2.4-6.8% and only make minimum payments, because I know I’m getting over 10% in the stock market with the money I would have used to pay off the loans.

    I’ll be happy to carry those student loans (especially the ones at the lower rates) for at least another year or two, and end up with more money because of it.

    With that being said, congratulations on your peace of mind.

    Reply
    1. LifeAndMyFinances

      What happened to you when the market plummetted in March 2009? At that point, much of your money was lost, and you were making those interest payments on your student loans?

      I still feel like the market is unstable and could take another drop at any moment. With no debts and some backup cash, I would really be in a great position to get ahead financially!

      I do understand your points…I was taught all of that mumbo jumbo in school too, but the uncertainty right now makes those theories paper thin. Good luck to you though. I don’t wish negatives on anyone. I hope you do well with your decisions.

      Reply
  9. First Gen American

    I have paid off LOADS of debt recently (all mortgage). What I realized is that mindful spending isn’t all that painful. I used to spend a lot more money on the weekends and now I do things that are free. We still do the paid excursions, but that’s a sometimes thing. Instead of going bowling, we’ll go to the museum or pool. It also made a big difference just asking myself “do I really need that?” before mindlessly throwing something into a shopping cart.

    There were times where I just had to throw money at problems (Like my mom’s rental) due to it’s potential impact on my day job. For things that are big money suckers, you have to ask yourself if owning something is really worth the hassle and cost. We ended up selling that property and it was such a weight off my back.

    I can’t imagine anything being such a once in a lifetime thing that the experience or item can’t be postponed until you can enjoy it guilt free.

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *