Approximately 2.6 seconds ago, I finished calculating our total debt and it was not pretty.
For the first whole year of our marriage, I was focused on paying off credit card debt. I was angry with Eric for bringing it into our marriage and it was something I constantly held over his head. My “free” spending money was suddenly being used to pay off his debt, and I was more bitter than a grapefruit.
And now I sit here, a little dumbfounded actually, by how much debt I own in this relationship. Eric’s credit card debt is trivial compared to my own total debt.
But I never saw my debt as a whole–I saw it, naively, as monthly payments that I could comfortably afford. Yes, I can afford that car payment. Yes, I can afford that student loan.And yes, I can afford to go out to fancy meals with friends every weekend.
It seems wrong that as a sorta, kinda, maybe personal finance blogger that I always just sort of ignored the total debt number and rather focused on the credit cards and monthly payments. But here it is:
As of June 13, 2011. Ouch. That large number isn’t even really what is driving the stake in my heart. I just logged into one of my student loans, that is just automatically deducted from my bank account every month. I never get a bill, except every two years, when they tell me that my graduated payment is increasing.
I’ve always been fine not knowing anything about this loan. They take the money out of my account every month, and life goes on. But in an effort to face my debt, I logged online, and found out this gem.
I have been paying off this account since January 2007. In those four and a half years, I have paid $3,570.19 toward this loan, of which $2,716.68 has gone toward interest. That’s right, folks. In those four and a half years, I have only paid $853.51 toward the principal of my loan.
It’s enough to make me want to vomit. How could I have been so naive? How could I have ignored Mysti’s pleas to focus on paying off those loans? I just kept thinking, “oh big deal…they don’t cost a lot a month, it’s fine.”
So after a little pity party, I sprang into action. I came up with a plan.
Rather than focus on paying off that CitiCard, which currently has a 0% interest rate until April 2012, I am going to focus all of our efforts into paying off the car loan by the end of this year. And we will do this, despite Eric not working for four months (he’s entering the fire academy in August). Once we hit our $8,000 savings goal, I will roll our monthly savings into paying off the car.
Then when the car is paid off, I will roll that payment into paying off the CitiCard. And when the CitiCard is paid off, I will roll that payment into paying off the student loans.
What do you think of the plan? Would you do it differently?