It’s Okay to Be in Debt, Just Not Okay to Stay in Debt
It’s Okay to Be in Debt, Just Not Okay to Stay in Debt
Ever since college, I always thought I was good with money. At least, that’s what I’d tell myself in my 20s. At the age of 25, I was completely debt-free! Yet, we somehow managed to accumulate nearly $200,000 in debt by age 30.
Most purchases were relatively normal in this day and age: a house, student loans, newer cars, a wedding, a condo at the lake. Oh wait, a lake house is not typical, but it happened. While getting into debt was not ideal, I don’t regret any of it, and thankfully we had the financial means to dig out. I know not everyone is as fortunate. Regardless, this is our story.
Going Nearly $200,000 in Debt
After graduating from college with a master’s degree at the age of 25, I started life with a clean slate. I had a little bit of savings in the bank that I could scrape together over the years. My “college fund” was a total of $6,000, and since I never had to use it, my parents gave it to me after graduating.
In addition, I had managed to save a few thousand dollars more over the years from my job, waiting tables and bartending in college. So at age 25, I had no debt and a decent amount of money to start my life.
If I could do it all over again, there are things I would do differently. Regardless, by my 30th birthday, we had managed to accumulate nearly $200,000 in debt. How did this happen?
Our road to accumulating this debt is not all that uncommon. Many life events can take place soon after graduating from college.
First was the newer car “needed” since I had a better-paying job and could afford it. That, of course, came with a five-figure loan.
Next was planning for a wedding. This included purchasing an engagement ring and paying for our wedding. In total, this cost us somewhere between $20,000 and $25,000. We mostly paid with savings, but it still set us back financially.
Along the way, Mrs. FP decided to go back to school to get her teaching certificate. Unfortunately, we stared at almost $50,000 in student loan debt once she graduated.
Then, of course, we needed to live somewhere. We purchased my grandparents’ old house shortly after my grandmother passed away. The house was purchased below market value though we still ended up with a $100,000 mortgage and a home that needed to be completely renovated. We are still spending money renovating this house ten years later.
And last but not least, we ended up buying a lake house with family. This also included buying a wave runner and chipping in to buy a boat. My parents paid for the down payment, and for nearly ten years, we’ve split the monthly payments along with my two other brothers.
Shortly after agreeing to buy the lake house, we found ourselves in a bank lobby taking out a home equity loan because two bathrooms were leaking into our basement.
More debt.
And yes, we went in on the lake house purchase already nearly $200,000 in debt. I’m a terrible personal finance blogger, I know.
Drowning in Debt
At that moment in the bank lobby back in 2011, we decided enough was enough. It was time to face the fact that we were slowly going down a path of debt accumulation that would be difficult to unwind if we continued pressing forward. Next would have been an even bigger house and nicer cars. But, instead, we decided that day to face our debt and begin paying it off.
Here’s the thing: besides the lake house purchase, all of those events are relatively normal in today’s society. Maybe not in the financial independence community, though definitely in this day and age. I’m not saying it’s right or wrong, but that’s reality.
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