How you doing? $63K in debt with a six figure income.

Last month I asked for PDITF readers to submit stories about how they’re doing. I was amazed by the feedback I received, overwhelmed even. Far more people expressed interest in contributing to the series than I anticipated. I couldn’t keep up with all the emails and submissions I was getting, so I avoided them instead  (Haha, like a true Ninja right?). I added the emails to my “To Do” list and haven’t paid much attention to them. I’m just now taking the time to look ’em over and get things worked out (sorry for the procrastination).

Today we are kicking the series off with  BR, a woman who doesn’t necessarily agree with her husband on how their six figure income should be allocated…

My name is BR, and I have been married to DH (dear husband) for about 18 months.

Together, DH and I make $100,500 before taxes. After taxes, 401(k) contributions, insurance and all that come out of our checks, we usually take home just over $62,000 a year. We both can get yearly bonuses (last year, I didn’t get one, but my husband got $8,000) and my husband gets a Christmas bonus at the end of each year, usually the amount of one paycheck, but again, this isn’t guaranteed, so I don’t count it as income.

Our debt:

  • Car loan- about $12,000
  • Truck loan- $16,000
  • My student loan- $8,900
  • Husband’s student loan- $26,700
  • Total debt: $63,600

When we got married, we had about $15,000 of credit card debt between the two of us. We set a goal to pay it off before our first anniversary, and actually did it two months ahead of schedule (thanks mostly to my husbands bonus)! We were both really relieved to be out from under that debt, but we completely disagreed on what to do next.

If I had my way, we would never go out to eat or buy anything that we don’t NEED until we have everything paid off. It would only take a year and a half, and then we would be free and clear! My husband feels like this is not reasonable, since all the debt is low-interest (what he calls ‘good debt’) and both our vehicles are worth more than what we owe on them. His bigger priority is saving for a house, since he feels that paying rent every month is throwing away money. He also thinks that going out to eat is fun and relaxing (I think he’s just trying to get out of doing the dishes :)) and he loves to go to the movies.

So, we compromised. We put $900 a month in our house fund, and then I pay whatever extra I can find in our budget on my student loan. We go out to eat once a week, and we each get $20 a week to spend on whatever we want. My $20 usually goes toward my student loan, but I also use it to thrift shop or get a haircut occasionally. While I would love to have my way, I am able to compromise with this, because our debt is no longer at a point where it keeps me up at night, like it did when we first got married. If push came to shove, we could sell our cars and reduce our debt to only student loans. Also, watching the balance on our savings account go up is super fun, and it is comforting to know that right now we could live for two months with what we have.

Really, we are not in a bad place at all. We spend much less than we earn, we save a decent amount, and we are working on paying off our debts. I get impatient, and really want to ‘punch debt in the face’, but at the end of the day I would rather have a peaceful marriage than no debt.


Ninja’s comment: If you want to submit your story for the “How you doing” series, shoot me an email.

10 thoughts on “How you doing? $63K in debt with a six figure income.”

  1. Nice series you are doing Ninja. I’m always fascinated how others live. Especially how others balance spending versus saving.

  2. While I’m glad you’re able to keep the peace financially, it feels like you’re compromising more than your husband. I personally side with you on ridding yourself of all debt except for the eventual mortgage. I am very familiar with ongoing battles with a spouse about saving more, spending less. It quickly gets to a point where you feel you’re being “tuned out”. Best of luck finding a true middle ground.

  3. If your husband thinks rent is throwing money away, what does he think of interest on these debts?

    For your rent money, you get a roof over your head. For interest, you GOT (emphasis on past tense) to use someone else’s money. Remember, a loan is spending tomorrow’s income to pay for today’s expense. Saving is the opposite.

    Besides, if you apply for a mortgage with $60k in other loans, including student loans which can never go away, you may not get such a great loan. However, coming to a loan debt free will really help. When I bought my house in 2007, we had zero debt and paid the credit cards off in full each month. Debt is a tool to be used responsibly. When was the last time you tried to paint your house with a hammer?

    • “If your husband thinks rent is throwing money away, what does he think of interest on these debts?”

      Really good point.

      Maybe there are other ways to cut down than eating out and shopping. She said nothing about the other expenses. They could follow the common financial tips – reduce the cell phone plan, buy some generic foods, use coupons, and hundreds of other small things.

      I feel like I’m missing part of the story. I want to hear the husband’s side!

  4. I think your compromise is perfectly reasonable. And your debt is very reasonable for your income. Once you get the car loans paid off, I would definitely start a “new car” fund so hopefully you can avoid having to take out another loan next time you buy a new vehicle, but other than that you are in great shape! I’m with the husband in that I absolutely would not want to stop eating out and going to the movies just to pay down low-interest debt. Life is meant to be enjoyed.

  5. I agree with slug…I would crunch the numbers and prioritize that way but that’s just me. It sounds like BR and DH are finding a middle ground is good but for me it’s logic all the way.

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