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Why Rushing Debt Payoff Isn’t The Answer

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Last Updated on November 30, 2020 by Yovana

I finally paid off my student loans!

It took me 8 years to pay off $15,000 in student loan debt. That is a long time considering it wasn’t a large debt balance like others you see that have $100,000+ in student loans that were able to pay them off in 2 years.

Those people are awesome! However, being able to pay off $100,000 in debt in a short time frame like 2 years isn’t exactly realistic. They were amazingly able to do it, but not everyone can do the same.

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Why rushing debt payoff isn't the answer. Don't take away your quality of life because you think getting out of debt is more important. I tell you in this post how debt can actually help you. Image of two journals and paper clips. #payoffdebt #moneytips
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My Student Loan Debt Situation

Sure, I didn’t have $100,000+ in student loans, but I still had debt. And I still have debt.

My wife and I still have $18,000 left on our auto loan. Why take out a loan on a car while I still had student loan debt? We can’t give you a solid financial reason besides reliability and we love that car.

From solo debt to joint debt (lol).

For me personally, there were a lot of factors that pushed back my debt payoff date. These range from my horrible money management skills out of college to a small period of unemployment and putting my loan in forbearance during that time.

So with forbearance, I probably paid closer to $20,000 in debt on a $15,000 loan. Whatever you do, never put your loan in forbearance. I don’t care how many student loan representatives tell you too, just don’t.

Then when it came time to increase my payments and start paying more off each month, other things kept coming up. My wife lost her job for a short period of time, we had some health emergencies, paying off other debts, and other life events.

We also love to travel and would never sacrifice that time for the sole purpose of paying off debt earlier.

You might say I was irresponsible to keep putting it off like I had. Maybe I was, but I still eventually paid it off. Does it matter how quickly I paid it off? Absolutely not.

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Credit Card Debt

If you have mountains of credit card debt, rush that payoff. Seriously.

My rule of thumb is to pay off the debt with the highest interest rate first. And credit cards have some nasty interest rates.

We paid off my wife’s credit card debt before touching any other debt. This was so that we could prevent that debt from growing any further.

With any other debt balances you have that have a high-interest rate that you are unable to get down to a lower interest rate through refinancing, you may need to think how you can aggressively handle those to prevent your overall debt balance from growing any larger.

For the smaller more manageable debts, it is ok to take your time. Especially if your life is going to suffer from you rushing the payoff.

Your Debt Isn’t Who You Are

You shouldn’t take away the quality of your life just to work more and pay off debt quicker. You might think that debt is the reason you are unhappy and if you pay it off quicker, you can do x, y, z. Paying it off quicker may certainly help you in your financial situation, for sure. But it isn’t the sole reason you are unhappy.

Paying it off any quicker won’t make you any happier.

Since the start of this blog, it has centered around side hustling to pay off debt and this blog really helped me stay on track with that. I often felt embarrassed when reading other blogs where they paid off $58,000 in 6 months or $120,000 in 2 years. Then there was me..sitting there with my $15,000 balance I had only started to really work on 2 years ago.

But unless you have the salary to do it or the time for multiple side hustles, paying off such a large debt balance in a short amount of time is very hard to do. Then there are systematic barriers that also may hinder you from reaching your debt payoff sooner.

Don’t worry, you don’t have to rush your debt payoff. Your debt isn’t who you are.

Prioritize what matters to you, and work that debt payoff in there but in a realistic way. Everyone’s financial picture involves a lot more than just debt. You still have to be able to contribute towards your retirement, emergency fund and savings, investments, children expenses if you have kids, medical expenses and healthcare, and be able to do the things you want to do like travel.

How Debt Can Help You

Debt is often portrayed of as evil. It is the scapegoat as the one thing standing between you and your ideal life.

It’s not. Debt is only temporary. It isn’t going to be there your entire life!

While it’s there though, it can actually help you. By making payments on your debt over the long term (and on time), you build a solid credit payment history.

Your payment history accounts for 35% of your FICO credit score. Without establishing a history of making loan payments on time, your credit score could suffer.

Your credit score isn’t everything. But without decent credit, you may be denied for loans or get charged higher interest rates. Some employers even check your credit if your job involves a security clearance.

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Debt Payoff Shouldn’t Be Your Only Financial Goal

Of course if you have a much larger debt balance than $15,000 then you may need to prioritize that payoff. Every person’s situation and financial goals are different.

As paying off debt is a great financial goal to have, it shouldn’t be the only one. You may make a mistake and while paying off your debt, you might starve your emergency fund or retirement fund.

Don’t drain the emergency fund just for the peace of mind that you are finally paying off your debt. There are no returns when you request debt payoff and send through that last payment. Make sure you will still be okay in the event something happens right after you made that payment.

Rather than paying off your debt balance sooner, think about investing that extra money saved.

My recommended apps for beginner investors:

  • I love using M1 Finance which is a mesh between an online brokerage and robo-advisor. M1 Finance is 100% free with dynamic rebalancing of your portfolio and there are no fees. But my favorite feature on this app has to be their research section.
  • Blooom takes the confusion out of your retirement. For free, they look at your current 401k and see how they can improve it. After your analysis, blooom will place the trades within your account for a low flat fee.

Ways to Save More and Make More Towards Your Debt

To help you out a little every month, here are some resources from this blog to give you some ideas.

Resources to help you save:

Resources to help you hustle:

Don’t stress about your debt and avoid comparing your situation to other’s financial successes. Everyone’s situation is different. You got this!

Are you stressing about your debt? How has rushing your debt payoff either helped or hurt you? Or better yet, how has NOT rushing your debt payoff helped or hurt you? Let us know in the comments below!

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13 thoughts on “Why Rushing Debt Payoff Isn’t The Answer”

  1. I agree—paying attention to interest rates is important when deciding which debt to pay off. It looks like you can pay off credit cards with P2P lending; taking out another loan at a lower rate. I didn’t realize forbearance would have such a huge impact on debt!
    It sounds like you prioritize living your life over paying off debt. That’s a good mentality.

  2. Hmmm. This is an interesting take to debt payoff. While I fully agree that paying off your debt sooner is going to help you in the long run, it is nice to hear someone tell the “other side” of the story. Congratulations on paying off your school loans!

  3. I have a different perspective and you do not necessarily have to agree with me.

    Firstly, you had a small loan and the interest you pay for it will not make a significant difference. I personally would not apply the same logic to a large loan because the interest you pay on a bigger loan over a span of 8 years is humongous. You may not notice the difference now, but 20 years down the line the difference is paramount.

    I understand you not wanting to sacrifice your present fun for long term savings. But I think you must be careful when you say that clearing off debt fast is not a good idea. The world is filled with people who are drowning in debt. They need to be told to make some sacrifices instead of going slow on debt while enjoying life. While you might have the discipline to accumulate wealth later on, the others in debt may not.

    In my opinion, your message can be interpreted in the wrong way by many people by taking debt too easily. Just my 2 cents.

  4. I think this advice applies to smaller debts. We do have over $100,000 in debt and if I continued on minimum payments my husband would never be able to retire and we’d have debt in our 80s. All of the people I’ve talked to actually are A LOT happier without them.
    I do like that you said “you aren’t your debt” that is profound and critical to remember while living in debt.

    1. I didn’t pay off our debt with just paying the minimum payments. I still had to pay more every month to get it off my plate once I finally buckled down and addressed my debt as I mentioned in the post. I just wanted to let others know that if they are unable to pay more every month (even with large debts), that it is okay and there will be a time when they will be able to. Until then they should prioritize what matters to them and work debt payoff in there in a realistic way. They should still work towards their goals but not let debt rule their lives as all these high debt payoff stories keep getting thrown in their faces (that may make them seem “less than” for not being able to do the same). Thanks for reading, Ali!

  5. “Your debt is not who you are”. I love that, Daniella.
    I too have a student debt. a measly 2400 euros which is about $2500. However, I live in Serbia where you’re lucky if you have any job; and you’re king if you earn $300 per month, in Serbian Dinars of course.
    So it’s actually a lot of money here, but yeah, to cut this short, I’m very close to paying it off, and I have blogging to thank for it.
    I feel lucky that I found this blogging thing:)
    Congratulations on paying off your debt, and doing it on your terms. 🙂

  6. Pingback: Why Rushing Debt Payoff Isn’t The Answer ⋆ Camp FIRE Finance

  7. Definitely a different take on debt. I agree that we can’t all emulate the people who pay down a sum each year that’s as much or more than a lot of people’s salaries. When my ex-husband and I were paying off debt, we were living on $36,000 a year and for most of the time had $1,200 of expenses between just rent and health insurance. So it took us several years to pay off the medical and student loan debt we dealt with. But it felt great once we did! And I wasn’t thinking about how long it took, just that it was paid off!

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