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Two steps back

My student loan payments are going to go up considerably – about $250 a month. This is going to happen in December. I’m not panicking about it, right? I’m not? Because I knew it was coming, and because now that it’s at its upper limit, I won’t have any worries about this happening again in the near or far future. If I can make my budget work with this amount of payment, even if PSLF doesn’t work out (I have faith that it will but am also preparing myself to be disappointed), then worst case scenario, I’ve got 10 years with this payment going.

But, with all that “hey, it’s okay, buddy, you’re going to be okay!” talk going on in my head, there’s also this: my budget is very tight right now as I try to pay off debts, and there just isn’t a lot (or any) wiggle room. I wiped out my meager emergency fund again trying to cover the cost of surprise car repairs (surprise! I didn’t have enough in my emergency fund, but at least I had something). Each time I pay something off, that payment amount rolls into the bigger debts that I have. I have a spreadsheet. It’s all a part of a very clear plan.

And that very clear plan doesn’t have room for an increase in money leaving the house at this point. That very clear plan depends on bills going down as smaller things get paid off. A la Dave Ramsey except not really, it’s just how I am doing things, because I’ve never really read Dave Ramsey’s drivel and don’t intend to (I’m sure it’s great information, I just…don’t like to listen to people who think women are so dangerous as to not get on an elevator with them).

So, to make up for this, I’ve swallowed my pride and done something I really didn’t want to do: I reduced my retirement contributions. This is not a good idea. I am not reducing the 529 plans, and I am not reducing it to 0 (it’ll still be at 10%), but it’s also not a good idea to be building up debt that includes huge interest rates just so I can keep contributing to retirement. It’s just not.

I will still be contributing to retirement, my husband will still be contributing to his, and we will still be paying down debt, which, after all, improves our net worth. I feel a little bit like I’m being strangled just admitting this, but also feel a little bit like I can breathe a little easier, which is a very strange combination of feelings.

According to the spreadsheet, things get considerably easier in about 12 months. I’m not sure we’ll be able to do that, but if we are self-disciplined, if I continue to freelance my rear-end off, 18 months should get us to where we need to be, to a place where I can increase those contributions again. And, 20 or so months after that, and my student loan payments should just -poof- disappear.

I’m okay with this decision, or, at least, okay enough. I was sad it came to this but it’s what needs to be done. We live a life that we want to live, including supporting family, raising three pretty great kids, and taking vacations to spend time with extended family. It would be amazing if the debt would disappear and I could just contribute all that money to retirement…but at the same time, that’s what we’re making happen – making that debt go away. Just a little slower than I had hoped.

6 thoughts on “Two steps back”

  1. Good for you! I think maxing retirement contributions is most important for people who dislike (or at least don’t love) their jobs and want to get out ASAP. You’re in a very different situation because you love your main job and don’t have any pressing desire to leave it. So it’s much better to pay down loans and reduce stress in the present, knowing that you guys will both eventually have solid social security benefits (even if they do end up cutting it 30%) as a boost to retirement income. It’s such a blessing to have a job you love and the skills to make lots of money freelancing when you need to. But ironically, it’s often the most talented and driven people who forget that our most valuable asset by far is our future ability to work, so protecting that by decreasing stress and maintaining health is paramount.

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    1. That’s such a helpful perspective. I have a knee-jerk reaction to “I’ll catch up later,” because something always comes up. But for now, it doesn’t make sense to not be paying off debt.

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  2. The fact that you are contributing at all to your retirement plan puts you ahead of the average adult. Frankly I would be all about being debt free, even if it meant decreasing savings/retirement/etc.

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  3. As someone who put off retirement too long, my knee jerk reaction would be telling you to pay down debts a little slower to keep contributing more to retirement. But everyone’s threshold for debt tolerance is different and as Fitness Fanatic pointed out, you’re happy at your main job. So that advice just isn’t for you and I get that. Good luck in the coming 18 months. It’s sounds like you’re going to be doing a lot of work, both on your debt and in general.

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    1. That’s my knee-jerk reaction, too – but I’m trying to tell myself that my husband’s retirement isn’t being reduced, and mine is still at 10%. It was getting to where we were robbing Peter to pay Paul (well, adding debt so we could fund retirement), and I think things will be simplified if we get rid of the debt. I hope.

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