Sunday, May 22, 2011

Our Debt Free Adventure: Part 1

** I am breaking up Eric's post into three parts. Please stay tuned for parts 2 & 3!**

This is Eric.

Hello loyal readers of the Brinkman family blog. Today I bring you a guest post on our story about getting out of debt. Over the past 16 months, Christine and I have paid off $76,000 by getting on the same page financially and creating and sticking to a budget (and also by not buying stupid stuff we didn't need.)

We'll start our story at the point where Christine and I got married which was in August of 2008. I knew she had school debt, but to be completely honest neither of us knew exactly how much she had. Additionally, when we got married, she had another year of school, so we didn't need to repay them at the moment anyway. Out of sight, out of mind, right? I brought about $5,000 of debt into the marriage that I owed on my car.

Halfway through the year through a bunch of circumstances, Christine decided that she'd like to teach instead of do children's ministry. We signed her up for Texas Teachers, an alternative teacher's certification program costing $4,000. At her graduation in the spring of 2009, we were blessed with a pre-K teaching job for Christine. Because we now had two incomes, we thought we needed to buy a house because, well, that's what people do when they get jobs, right? So we pretty much instantaneously got a realtor and began searching for a house. Additionally, sometime in the middle of the summer, the '94 Chevy Corsica that Christine brought into our marriage refused to not overheat driving it anywhere, so we traded that sucker in for $200 and picked up another $11,000 in car debt. Pretty good deal, huh? Oh, did I mention we STILL didn't know exactly how much school debt Christine had?

So, like good American dreamers, we bought a house (no, we don't have that paid off yet) carrying two car notes, paying off alternative teacher certification, and an unspecified amount of college loans. Since we didn't have to pay back those student loans for ~6 months after graduation, we figured we were set for the short term. Then we learned....$60,000 in school debt. Womp womp.

Let me take a break and talk about school loans for a second. Most financial counselors say that they are the best kind of debt because it is low interest and you can request deferences on the payments if you need to etc, etc. Now, I'm not a financial counselor, but here's my opinion on them. They suck. They are the absolute worst debt you can have. Why? Here's a few reasons:
  • College debt is completely unsecured. You can't sell back the knowledge in your mind if you get into a financial pickle to get rid of them. Contrast that with secured debt, like a house mortgage where you can always sell the house to pay back most, if not all of the debt.
  • College debt is traditionally heralded as low interest debt. I don't know what most people consider low interest, but of our 60k, about 40k of it was at the 8-9% interest mark. We had no loans lower than 5%.
  • This one won't apply to most, but if you were to ever declare bankruptcy (don't do it the Michael Scott way) you cannot bankrupt college loans. They will stick with you forever and ever.

1 comment:

  1. Looking forward to hearing more details.... thanks for sharing! And again, so proud of you guys!!

    ReplyDelete