Debt. It’s become a way of life for the majority of Americans. Just about everyone has it from student loans, car loans, credit cards, mortgages. It’s pushed onto us at an early age when we go off to college. At 17 and 18 years old we’re supposed to make a decision that means, for many, that they’ll be in debt for years to come, slowly chipping away at an enormous mountain that just seems to keep laughing at you. Should we really be spending out lives working in order to pay off our debts instead of living the lives that we actually want to live? My answer: absolutely not.
I personally did not go to college. (Okay, well not entirely true. I did one semester through Penn State World Campus, but the majority of that was paid for by tuition assistance from the military. However, I did have to still pay over $600 out of pocket and after that I said never mind, this isn’t for me).
Instead of the traditional four years at a college or university I joined the military. It seemed like the right choice to me and after being in for over five years now, I still believe it was one of the best decisions of my life. I’ve learned very valuable skills, have had amazing experiences, and I’ve made some of the best friends you could ask for. I also started getting paid right away and I began my adulthood with zero debt!
After finally finishing two years of training, it was time to move on to my actual duty station and I needed a car. At 19 years old, after some research and test driving, I decided to purchase a brand new 2014 Kia Soul.
By that time, I thought I had a pretty good grip on my money. Being under 21 throughout my training meant I wasn’t able to purchase alcohol or really go out with all of my friends so I feel I had an advantage when saving some money. When I lived in Texas for four months, there was pretty much nothing to do and I was being paid a housing allowance while living in the barracks so by the end of my stay there I saved close to $10,000. When I bought my car I had around $24,000 in my bank account. I thought I was so rich! haha
The Soul I bought had cost $23,000. I put $10,000 down bringing my monthly payment to $277.88 a month, which is low compared to the average monthly car payment in America of $479.
I drove off the lot that day with $13,000 in debt and I was locked into a commitment for 60 months. Had I done the average thing and just slowly paid it off during those 5 years I would’ve paid $16,672.80 in total. That’s over $3,500 more than what I owed on the car! It’s crazy! I didn’t do the normal thing though. I paid the car off in two years.
The first year I had the car I paid the regular payments mainly just to build up my credit. The day I bought it I was told that I was a ghost and had no sign of a credit history so I figured I should work on that if credit is supposed to be so important. After that first year I was fed up. $277.88 was gone every single month from my paycheck. That was 8% of my income not to mention the extra costs of having a car like gas and maintenance. I’d rather put that $277.88 towards that stuff in order to keep it running or put it back in savings or invest it to make more money. I just hated paying somebody that money. I thought it was stupid even if I did get a car out of it.
In hindsight, I would’ve bought a used car and paid for it in full that day. Or I could’ve done the same thing when purchasing the soul and just had nothing in my bank account for a very short amount of time. What makes things even worse, and this was a huge lesson in my life, was the fact that I bought a second car while I still had the payments on the Soul. I bought a 1988 325i BMW. I did pay for that in full and I loved that car, but I bought it for all the wrong reasons and when I sold it I lost a ton of money. That story is for another time though.
After that first year of payments I was only down to just over $11,000 left on the car. Not too shabby, but still too much for me. Once I decided to pay off the car I put everything I had towards it every month. Usually an extra $1,000 every single month. Some months less some months more. I stopped contributing to my IRA and I stopped going out as much with friends. I would have paid it off even faster, but as we all know too well life does happen and I’d have to spend money on other things, especially around the holiday season that I didn’t end up planning for.
Finally, finally, finally I paid the car off and I became debt free! Well, sort of. I had bought my first house by that point so I had the mortgage. I remember making the last payment on the car and I even made a little graph to show myself how much I had left every month to help me keep going because it’s truly not easy.
I think that’s the most important thing I can say. Paying down debt is not easy. It’s super simple, but sticking with it, along with saying no to a lot of other things you’d like to go do or have is not easy. In the end though, it’s always worth the sacrifices you may have had to make. There’s also so many ways you could plan your debt pay down. It all depends on your personal situation and what you’re willing to sacrifice.
Just know that you can do it and you’re not alone in tackling your debt. Plenty people have accomplished this task before and I’m always here if you need help with anything. Feel free to reach out to me!