The State of Our Finances (Part 2 of 4)

Yesterday I talked about the income side of things.  After all, one must have first things first.  Today, “Let’s talk about [debt] Baby, let’s talk about you and me.” (Salt ‘n’ Pepa throwback 😉 )

The DEBT

We have quite a bit of debt, in my opinion.  I totally get that whether our debts are HUGE or small is completely based on perspective.  Some people may be struggling with $5,000 in credit card debt and feel utterly swamped, while others may have $50,000 in debt and feel that it is manageable.  I think our debt is manageable, provided we don’t become unemployed, but it still makes me angry/scared/upset/frustrated. 

I lump our debt into 2 separate categories:  1. Life happens debt, 2. House debt. 

1.  “Life Happens Debt”

Our “Life Happens Debt” includes two things:  Student loans (puke) and a Car payment. 

Student Loans:  A Necessary Evil?  Neither Henry nor I took out very many student loans during our undergrad days.  In fact, we both graduated with about $5,000 each in undergrad student loans.  We also both worked part-time throughout most of our college careers.  However, we still have student loan debt, thanks to my law degree.  I racked up approximately $35,000 in student loans and interest in 3 years.  Notice I say “approximately.”  Honestly, I’m not 100% sure how much the debt was at the start.  I know the ball park figure.  When I started paying it off, I was scared of the number and I did not take a long, hard look at it.

What I do know is, today, my law school student loans look like this:

Sallie Mae $17,822.76
Citibank SL $630.72

We also still have our two, small undergraduate loans hanging around because the interest rates are so low that it made more sense to pay off my law school loans with a whopping 6.8% interest!  Those two undergrad loans started out at approximately $5,000 each and now look like this:

MOHELA $1,547.21
Great Lakes $2,334.77

When I first started keeping track of my student loan payoffs in February 2011, this is what our numbers looked like:

Sallie Mae $20,932.20
Citibank $8,965.53
MOHELA $2,561.06
Great Lakes $2,347.03

As you can see, the Great Lakes loan hasn’t changed much.  I paid ahead on it a long time ago and I don’t owe another payment until summer 2013.  So, I am not currently paying on it and will not do so until I pay off the higher interest SL’s or the bill comes due–whichever happens sooner.

Car Payment:  Yep, this one was absolutely necessary.  I will blow money like it’s going out of style on food, travel, and fun, but I am stingy to a fault when it comes to buying new “stuff.”  We found out last September that we were going to become parents.  At that point, Henry had caved and purchased a new-to-him truck to replace his that literally died in our front yard.  Like, manual transmission grease/fluid (whatever, I’m not a car expert) pouring, gushing out of it and into the street drain (we didn’t mean to be environmentally unfriendly).  I, however, refused to get rid of my hooptie.  That car deserves a post dedicated entirely to it’s existence, so I’ll save the story.  It was unsafe for me to be driving that car and I certainly was not going to drive our little bundle of joy around in that death trap.  Enter the 2008  Honda Accord.  Asking price was $16,000.  I got $1,000 trade in on the piece o’ junk, and paid $3,000 down.  Financed $12,000 at 3.7% interest in December 2011.  Today we owe:

Chase auto loan $9,452.10

2.  “House Debt”

We rented a little duplex for our first 5 years of marriage. In fact, we rented the same little duplex for those 5 years.  It was close to Henry’s work and it was close to work, then school for me.  It was fairly cheap for the area, although the rent seemed to go up almost every year. 

We were very selective in our home buying.   Even after I graduated in 2009 and got a job I loved before I even took the bar exam, we still did not jump immediately into home ownership.  We looked and waited for almost a year before purchasing our current home.  It was a short sale and we got the home for a bargain.  It was originally on the market for $195,000 and we got it for $145,000.  It has 3 acres, 2,000 square feet, and a pool.  Virtually no neighbors, yet it is 10 min. from downtown where I work.  Henry is not quite so lucky, he has a 25 minute commute, but since he’s a nurse working 3-4 days per week, it’s not as rough on him to drive to work as it would be for me working 5 days per week.

We paid $7,500 down and took out a mortgage for $137,500 at 5.25% interest.  It would have been more like 4.75% interest if Henry had a decent credit history. He is a cash or debit cardman and at that time had never had a credit card…EVER.  He had the one tiny student loan, but it wasn’t enough to give him a very good credit rating.  I, on the other hand, with my poor spending habits, had great credit!  Today, our mortgage is approximately $131,000 (the interest makes this number change daily).  Seems like an incredibly paltry amount considering we have paid on it for 2 years.  Makes me wish we had saved longer and made a bigger down payment.  Oh well, we love the house, so no regrets yet.

Total debt?  A LOT!!!

Total debt I am keeping tabs on?  $31,787.56.  That is the number I want to get to $0.  The house, in due time, in due time.

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