Saturday, March 2, 2013

Something Amazing Just Happened

I wrote a couple weeks ago about our progress in paying off the last of our debt, my federal student loan.  Well, since then, something really great has happened.  As of today, we are officially debt free.  How did this happen?  Well, we had saved up about $20,000 and we had $50,000 more to go.  When we moved across the country a couple years ago, we did so because my husband took a job with a start-up company.  His compensation package included stock options.  The company has since gone public, and in February, we were allowed to exercise the options.  After taxes, they were worth just over $50,000.  We took it as a sign from the heavens to cash out and be rid of the debt, so we did.  Today, we mailed the payoff.


I am feeling mixed emotions.  On the one hand, I am amazed and relieved that we no longer have any debt.  On the other hand, I feel guilty that my husband’s big payout had to go to my student loan.  He insisted, though, and he pointed out that until a few months ago, all of our money had gone to pay off his debt (we call it “our debt” but in terms of whose name was on the debt, “his” was smaller, so it came first).  I still can’t help but feel guilty, but I know that in the long run, we will be happy that we paid off past mistakes so we can now plan our future.  I am still shocked at how far we have come in the past three years.  When I first quit my law job, I thought we would be in debt forever.  Both of our student loans were on 25 year plans, I’d just bought a new car, and our home had dropped substantially in value.  Today, we live across the country, we are renters, and we have no debt.  Life is all about change, I suppose. 

Our next step is a fully funded emergency fund.  Then possibly a house, but in this market, I don’t think we will ever be able to afford a 15 year mortgage with a payment that’s no more than 25% of our take-home pay.  So we are going to just save as much as we can and see what happens.  It’s worked so far, so we are going to just keep plugging away at the baby steps. 

The takeaway from all of this for me is: 

1)    Law school was a mistake.  I was stupid to take out loans to go to law school, when I had no idea whether I really wanted to practice law, and I hadn’t done any research on what the legal job market was like.  We have paid for this mistake with interest.  All of our debts were mistakes, which we will do everything in our power to avoid in the future. 

2)    Working together with your spouse can do wonders for your finances.  My husband and I got into the habit of calling my debt and his debt “our debt,” but I don’t think I fully grasped how committed he was until he told me he wanted to cash out his options to pay off my federal student loan.  He really was on board this whole time, not just faking it to please me (!!).

3)    Success cannot be judged by outward appearances.  We rent an apartment and share a car, but we have zero debt and can now begin investing in ourselves.  A few years ago, when we owned our own place and had two cars, I would have thought that renting instead of owning, and downsizing in general, were signs of financial instability.  I realize now how wrong I was.  I like living below our means.  It truly is the only way to be rich.

Has anyone else paid off a large amount of debt?  I’d love to hear your stories!

18 comments:

  1. I love this. And congrats on paying off your student loan. I grew up with a frugal family so it was ingrained in me, and I was lucky enough to pick a husband who has even more common sense than I do. We both never incurred student loans (he went to school on a full ride; my parents--thankfully--paid for my education) and we're holding off on children until he can get a better paying position so that I can stay home (we both do NOT want to pay for childcare). I am completely with you on the truth that outward appearances do not always translate into true wealth or stability. I used to be impressed with big houses, fancy cars, etc. until my husband (who used to work in collections) would come home and tell me awful stories of his encounters with individuals living the "high life" who in reality could not make their payments on time. Some are real scumbags...others truly got hit hard with the economy and he felt for them. But that was a real eye opener to what the definition of real wealth is to me. I think it's all about being free. I could go on and on, but I really enjoy your blog and agree with you 100%. Sorry you had to suffer through some rough years, but obviously you came out stronger and better from it!

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    1. Thank you so much for reading! It's so great that you and your husband were both raised with some money sense. I want to do that with my kids, if we decide to have them. It's funny how these days, luxury items seem to indicate poverty rather than wealth, at least in my experience. Everyone I know who has IRS debt or has declared bankruptcy has owned a boat. Just a coincidence? I think not. :) Thank you so much for cheering our debt freedom!

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  2. Congratulations to you and I do know the euphoric feeling when you make that last payment! I quit law and went overseas to pay $60,000 off in five years. It helped that my job provided free housing and I could legally avoid US taxes. Now, I use my JD diploma for bragging rights only. The rest of your debt-free life awaits you!

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    1. Thank you so much for reading, and for the kind words! It sounds like you found a great setup overseas. Did you ever make it back to the states? I haven't gotten to the point where I talk about my JD to people I've just met, but I'm sure someday I'll be more comfortable bragging about it a little. Maybe once the reality that I no longer have law school debt set in. I'm glad you got to pay off your loans, too. It's a great feeling!!

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    2. I did, in fact, make it back to the States but on my own terms what with not having debt. Another thing I discovered (and I think you will as well) is that the survival skills you developed while paying off the debt will help you accrue savings faster than most others and be better prepared for retirement. At least, that seems to be what's happening in my case. Good luck and please keep posting!

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  3. Congratulations! Your stories about delivering pizzas remind me of some of my awful gigs, like working at a calling center. After 4 years of underemployment, I am now starting to find "real" jobs. I am confident that my greater success on the job market is due to my ability to leave the JD off my resume and that I don't have to include an employment gap during the years I was in law school.

    In one of your posts, you mentioned that after you left your pizza delivery gig, that you started temping. I am full of questions because I plan on moving to a city and starting to temp. If you don't mind, can you please answer these questions:

    1)Where were your temp assignments?
    2)Which temp agency did you utilize?
    3)Did one of your temp assignments become permanent?
    4)How did your recruiters view your JD?
    5)Did they look down on you because of your pizza delivery work?

    Thanks.

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    1. Thanks so much for reading, biker! I'm glad you've been having better luck in the job market with the JD off your resume. It really is a mood killer for HR folk. To answer your questions:

      1. My first temp assignment was at a real estate company, working as an admin. assistant. That job ended after only a few months, but I did get to sharpen my computer skills, since those had been neglected during my years in legal practice. Then I got a job through them at a call center, at the same company where my husband worked (coincidentally). That job was actually ok because they hired temps on permanently once they were able to evaluate how good they were. And call center people were often promoted to better jobs, so if I had stayed there, it it might have been ok for me, but we ended up moving. When we got settled in to our new city, I contacted the rep for the same temp company and got a job at a pharmaceutical company, in the IT department. I did web content updates for them. It was fun because I got to learn more about HTML, etc. I didn't have any experience that really qualified me for it, except that at my first temp gig, I had to update the company website regularly so I was familiar with how to do that kind of thing. Then I finally got hired on full time at a job that I found through a friend of a friend. In total, I was a temp for about a year, and it was a good experience. It is possible to get hired on permanently at certain companies, but you have to stay put, which I couldn't do under the circumstances. :)

      2. Email me for the name of my agency. I'll try to email it to you if your address is linked with your profile. The agency I used had a website that listed the contact person for each of their offices, which was a feature I utilized before our move. I emailed all of the offices in our new area before we arrived just to introduce myself, and by the time I got here, I had developed a rapport with one of the reps who helped me get placed at the pharma company IT department. (to be continued...)

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    2. 3. I think this one was answered in my previous answers.

      4. The first recruiter, the one who got me into the real estate office, wasn't bothered by my JD. BUT - she was shocked to learn that none of her clients wanted to interview me because of it. I finally lucked out because the woman who ran that branch had a husband looking for a temp in his real estate office, so he took pity on me and gave me a shot. I think it's important to be honest about the JD, but you don't need to highlight it, since it really won't help you with non-legal employment. I'm sure with the way the economy is and how many JD's there are in the marketplace, it will not be a shock to temp agencies when they see the JD on your application.

      5. I didn't tell my day-time employers about my pizza delivery gig. It was none of their business. The only reason to disclose it would have been if they had a no moonlighting policy, but they didn't. The way I saw it, nothing good would have come from everyone knowing about my pizza delivery job. It would have either inspired pity, which I didn't need, or possibly jokes, which I also didn't need. I did tell one of my coworkers, since she's a good friend, and she wasn't very supportive. She was nice about it, but she was always worried about me running myself ragged, etc., and it didn't feel good. In the end (aside from the one daytime coworker) my husband knew about it and my aunt ended up finding out about it when I had to make a delivery to her house. And of course my coworkers at the pizzeria knew.

      In general, I'm the kind of person who values my privacy and freedom so unless there's some law telling me I have to disclose something to an employer or if I feel like opening up to a good friend, then I'm not going to just put everything on blast, you know (unless of course it goes on my blog - ha!)? Especially when it comes to finances, I just feel like each person does what they have to do and it's no one else's business to judge it (unless something illegal or immoral is going on, of course). You might feel differently, though, or you might be restricted from moonlighting by your daytime employer, in which case you might disclose your night job. I think most people respect hard work, though, so I can't imagine that potential employers would look down on a nighttime restaurant job.

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    3. I posted on your blog post titled "Something Amazing Just Happened" under the username "biker". Thank you for detailing your experiences as a temp worker who performed diverse administrative roles. I am also very relieved for you because you were able to finally throw away the yoke of student debt.

      How can I contact you outside this comment thread? I clicked on your profile, but I only received a gmail address. Is there a way to send a message through blogger so that we can preserve our anonymity?

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    4. I'm not sure how to message without a gmail on blogger? My address is recovering.lawyer1@gmail.com. I would keep your identity anonymous if you email me, but for extra protection what you can do is create a gmail with a pseudonym and email me from there. Looking forward to hearing from you!

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  4. So incredibly proud of you and very inspired!! Enjoy this debt free feeling and let go of the guilt. Your debt has caused enough negative emotions. It's gone so feel the freedom in EVERY way. :)

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  5. Thank you so much, Lawfrog! I am trying to let go of the guilt. I think it's going to take me a little while, but I know eventually my mind will start focusing on other things. Today I feel light as a feather, despite any lingering negativity. It's amazing how heavy debt can feel. It's so hard to believe we are FREEEE!!!! I've had to concentrate on not grinning like a fool at work today. :)

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  6. Congratulations. Now you can start giving to your law school endowment... what? What'd I say?

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    1. Thank you!! That is too funny - yesterday, with only a hundred dollars left in our checking account, I received a package from my alma mater. I get them once or twice a year. Big glossy pamphlets talking about what great things they're doing and how many successes they've turned out. And won't I please donate? I'll get back to them the second I stop laughing.

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  7. Knowing how LIBERATING becoming debt free can be! I've been there, done that.

    Anyway, two years ago, my mom died unexpectedly. I say unexpectedly because the women on my mom's side of the family lived until their late 80s-early 90s. Great-great grandmother (who I never met, since she died in 1947) lived to be 94; great grandmother lived to be 94 or so; grand mother (my mom's mother) lived to 89. Ergo, I figured my mom would have lived another 15 years, minimum. After all, there's a REASON why we pay attention to family histories, especially WRT health.

    Having said that, my mom died in April of 2012. My brother and I, who are almost finished with closing out the estate, got an inheritance from the estate. My share (which was same as his, BTW) was enough to wipe out my student loan debt and mortgage. Though my mortgage payment was less than my rent had been, money simply was not and is not going as far these days-not when food, fuel, utilities, etc. are going up while pay isn't.

    After paying off my debt, there was enough to pad the emergency fund. Though I hope I don't have to use it any time soon, it's nice knowing that it's there; it's nice knowing that I have that financial parachute should I need it.

    Now, as for buying a house, the only thing I could say is this: don't buy UNTIL you can have a mortgage payment that is equal or less than what your rent is now. Though Seattle isn't cheap, I'm sure there are parts of town that are more affordable than others; look for them, and you might have a chance.

    Also, try to take emotion out of the home buying process. For example, there was nice, small 2BR ranch I loved; I wanted it badly. However, the owner (a bank, since it was a foreclosure) played games with the home inspection. Long before I ever bought my house, I did a LOT of research on it; part of that research showed what can happen when buyers, because they just HAD to have that house, would skip a home inspection during the housing boom of the early 2000s; then, they'd find that they had a major issue like a cracked foundation or something else requiring tens of thousands in repairs. DO NOT SKIP A HOME INSPECTION UNDER ANY CIRCUMSTANCES! If the seller plays games with that, walk away.

    That's one HUGE thing you can do while you're renting: research the home buying process. Read and study everything you can find. I'm serious! You'll learn about the potential pitfalls that await the unwary buyer. One big lesson I learned was to have an inspection done. Years before I bought my home, I made up my mind that no inspection=no deal. Learn about the various kinds of mortgages, HOAs, everything. Not only will you be better prepared for when the big day comes; you'll feel better about yourself, because you're taking a step towards your goal (becoming informed and prepared beforehand).

    Hope this helps...

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