Hey Pink and Rick-ers,
Did you know there’s a “sweet spot” for debt pay off? This means there’s an optimal amount of debt to have–if you’ve got to have it. There’s an amount that will give you the biggest feeling of accomplishment, paying it off will make a huge impact of your life, but paying it off won’t take your entire life. What’s the number?
How do I know this?
From experience: when we started down the road of no debt, we had to pay off $20,000 of student loans– which were ALL mine. It was pretty awful, and it was really perfect at the same time.
1. You get to be a super hero! Trying to destroy something as big as $20,000 in debt, will make you feel like a million bucks. You get to take down a huge obstacle and feel like a super hero in your own life. What’s better than that?
2. You get to feel like part of a team. To pay off $20,000 you will have to ask for help–maybe it’s just finding a budget online, or maybe this means you have to get your partner/spouse on board. If you’re single, finding an accountability partner can be a great way to stay motivated. If you don’t have one, you can always ask me! Being part of a team will make you feel amazing.
3. You’re going to feel great afterward. You’re officially taking charge of your life, and the sense of accomplishment is HUGE after paying off $20,000. You will feel like you can do anything.
4. You are going to lose a big monthly payment. After paying of $20,000, I got rid of a $300+ monthly payment. We felt so free, that it made the work feel even MORE worth it.
Now you might feel 3 ways.
1. You have $20,000 in debt. Great! You’re in the perfect debt pay off position! You’re going to have to work very hard, but start by finding your team and feeling like a super hero!
2. You have less than $20,000 in debt. Congratulations! You don’t even have to work as hard!
3. You have more than $20,000 in debt. Congratulations–ish! You’re going to have to work very very hard. But, there is a very simple solution. Split your debt up into $20,000 chunks and celebrate (by doing something awesome) when you finish killing each chunk.
I’ve actually been in all 3 groups. When we were paying off my student loans we were in group 1. When we were done paying off my student loans we were in group 2. Now, we’re actually in group 3 when we decided to pay off our house a year and a half ago.
After a tonnnn of work and a VERY small house loan, (seriously our house is tiny and we live in a small–yet awesome–place) guess what?!? We’ve made it to the $20,000 level. Yesterday, we sent in a payment and our remaining balance is $20,000 and some change. It’s been crazy hard and a huge task, but we’re excited to be down to only owing $20,000 on our house.
How are we celebrating? We’re going on two trips this month– one is to Vegas! We’re really excited to celebrate in Sin City, and we promise not to get into too much trouble. Actually, I don’t promise that, I only promise to tell you if we do get into too much trouble!
But, even though $20,000 is the sweet spot, there is one spot that’s MUCH sweeter–$0. Hopefully we will be there soon!
*full disclosure- I don’t think paying off your mortgage is right for everyone. It’s the right thing for us based on some future goals. However, I DEFINITELY think you should get rid of all credit card/student loan debt. Mostly, because it will make you feel amazing!
Do you think $20,000 is too much or too little to be the best amount of debt to pay off?