Are you in debt up to your eyeballs? Surrounded by debt as far as your eye, which is slowly filling with tears, can see?
In fact, do you have so much debt that when you compare your annual income to how much debt you have, your debt could consume your yearly earnings and still be there, waiting for you to feed it your entire soul and life?
When Your Debt is More Than Your Income: Two Student Loan Debt Payoff Stories
When Debt And Love Mix
That was the situation for me and my partner, Tbone. My debt wasn’t that much ($25,302 in student loans), but my income was so laughably low ($18,000), that thinking about paying off my debt was like someone saying ‘hey, why don’t you go climb Everest this weekend?’
The entire time I was paying off my student loans I made less than my original debt total. The same was true for my partner, who had a little over $60,000 in student loan debt. (Listen to The Fairer Cents episode where we talk about his debt!) He made less than that until 2018, when his income climbed above his original student loan debt total.
This fact meant very real things for our relationship and our money. Date nights weren’t frugal because we were so excited to max out our 401k’s. They were frugal because we didn’t have that much money.
Today I’m debt free and Tbone continues to carry student loan debt. And while we talk very openly and freely about money in a very healthy way now, our financial backgrounds were so different that it took us awhile to find a solid financial ground. (You can learn about the tools we use to talk mone right here.)
Paying off debt was the best thing I ever did for myself, but it was also the mother-friggen hardest thing I ever did. It required getting my budget on lock (free spreadsheet here!), increasing my income, understanding how debt works, and changing a lot of my life.
More on debt payoff here:
How Side Hustles Changed My Financial Life
Is There a Wrong Way to pay off Debt?
A Dance With Debt
At the end of the day, in order to see change in your life, you need to make change in your life. You can’t keep doing the same things and expecting different results. That’s the definition of madness, and we’re not going to fall for that ish.
But this is a super-important caveat: Making change doesn’t have to mean completely overhauling your life. Change can come in small does, and it can come over a stretch of time. Change can mean many things too. It can mean pulling back on spending. It can mean creating new sources of revenue. It can mean getting a raise at your job.
So today, let’s dive a little deeper into the two stories of TBone’s debt and my debt, and how each of us have approached having more debt than income.
Kara’s Dance With Debt
I graduated college with no job, a degree in English, and $25,302 in student loans. Suffice it to say, I had zero financial know-how and also, zero finances.
For the first three years out of college, I waited tables and made well under $20,000 a year.
For me, my debt was a huge emotional and mental burden. It weighed me down every day. I knew that debt was bad but I had no idea how to change that particular fact about my life.
Until one day, I decided to change everything else about my life so that I could change my debt.
In the summer of 2014 I decided enough was enough. My life was going nowhere fast and I was sick of it. I spent about two months learning everything I could about debt payoff via University of Google, and in October 2014, I got serious about paying off my debt.
And when I say serious, I mean code red level serious.
My whole life began to revolve around my debt pay off. I stopped spending money on anything but the BARE essentials. And sometimes, I stopped spending money on even those.
I ate the leftovers from my catering side hustle instead of buying groceries. I walked anywhere that was 30 minutes or less from my house. Once, a pair of Forever 21 leggings that I owned ripped (aka $2 leggings) and I sewed up the hole rather than buy another pair.
I refrained from giving Christmas gifts in 2014 to save money. Date nights became catering leftovers and Netflix at home.
Everything in my life was about trying to earn more money, (which I did by picking up any and all side hustles I could find. I didn’t have a full time job while paying off debt.) Or it became about spending less money.
And it worked like WHOA. I paid off my last $18,000 in ten months.
Tbone’s Dance With Debt
Tbone accumulated his debt from one year of law school. After year 1, it became clear it wasn’t for him, and he left school, taking $60,000 in debt with him.
For Tbone, this debt was not an emergency. It was a fact of life. The debt had been necessary to go to school and to live in the HCOL city he had been in, and that was fine.
Plus, everyone around him had debt. It was not unusual to be hundreds of thousands of dollars in debt. So why worry about it? The debt came with a payment plan. And while yes, that payment plan was 10 years long, it was still a plan.
Even after we met, debt remained at the bottom of the to do list. Even as Tbone saw me working 5 part time jobs and eating catering leftovers (which he would eat with me!) to squeeze ever bigger debt payments out of my budget, he kept quietly making the minimum payments on his debt and cheered me on.
Why the turtle-esque pace with the debt? How can someone date a debt payoff ninja like me and still be like ‘nah, I’m good?’
Because for Tbone, his money was best served elsewhere in his life.
He wasn’t willing to sacrifice the things and experiences that bring him joy in order to make larger debt payments.
And while he was low income, the decision truly was ‘do I give up having fun to make a bigger debt payment, or do I make a lower debt payment to have more fun?’
It’s not that Tbone was spending lavishly all the time. He is also a frugal person just like moi. (And he contributed to his savings and retirement accounts in the past few years.) It’s just that I was devoted to paying my debt off as fast as I could and he was not. He was devoted to being financially responsible and still enjoying life.
In the last two years, that has changed somewhat. Tbone’s income has grown significantly, which has allowed him to both increase his savings rate and his debt payoff rate. Tbone has made aggressive payments of $1,200 a month for about a year, which is well over the minimum.
This increase is in direct response to him having more money to work with. He still thinks his money is better spent on the things that bring him happiness than on lowering his debt.
Having more money allowed him to better balance his enjoyment and his debt payments. The simple fact of more money coming into his bank account eased the pressure of having to choose between enjoying his life and making good financial choices.
Tbone still has about $14,000 in student loan debt today.
So Who’s Right Here Anyway?
Who is the winner in this debt face off?
BECAUSE THERE IS NO ONE RIGHT WAY TO DO MONEY.
Excuse me for yelling, but there are a lot of people in this personal finance world that will tell you their way is the right way. And I am here to tell you they are full of shit.
Money is different for each person out here on our blue and green rock. Circumstances ebb and flow over time. It may well be that there is a time in your life that you need to pull a Kara and go balls to the wall with your debt pay off.
Or you might go with Tbone and choose the more measured approach. The point is, that you need to find what’s right for you as an individual and for you in your relationship. Talking about money with your boo is key to a healthy relationship but it doesn’t mean you have to each take exactly the same steps.
Neither one is more correct that the other. Neither one is better than the other. The decision comes down to which path is best for you?