Recently I shared how intensely I think people should destroy their debt depending on what type of debt they have and the interest rate of the debt. We’re pretty lucky that we didn’t have any of the worst types of debt, which include payday loans and credit cards. However, as you’re very aware, we do have mortgages and a lot of student loan debt left that we’re working on paying off.
How serious are we about our different types of debt? We are currently working on destroying our student loan debt as quick as we can but have no intention to pay our mortgages off any faster than their 30 year terms. With that in mind, we’re trying to decide whether or not we should treat ourselves with a couple of larger purchases before the student loans are gone.
What Are We Considering Buying
Particularly, we’re considering buying a cheaper laptop (around $500) and a much larger purchase of fencing in our backyard (around $4,000) so we can let Daphne, the expensive personal finance dog, roam around without going on a leash. This also frees our time up a bit (but not too much) since we wouldn’t have to physically take her out multiple times a day.
Why We Don’t Think It Is A Good Idea To Buy
Tori’s student loan debt hangs over both of our heads because, while it was necessary for her to take out the student loans to pay her way through college, she ended up with a crazy amount of debt that we’re constantly reminded of every time we make a payment. By making either of these large purchases we will be delaying our student loan debt payoff which means the loans will hang over our heads that much longer.
We’re also against taking out debt for purchases such as computers or a fence. We feel these should be cash purchases and I think 99% of the people reading this will agree. While we would technically be paying cash for these items, to us it would feel like we’re taking out a loan to purchase either the computer or the fence. What’s our logic?
By purchasing these large items while still owing money on the student loans we’re essentially buying something else instead of paying off and lowering our debt. So, instead of having less debt we’d have more stuff which is almost as bad as taking out more debt to buy more stuff in our minds.
Why We Might Cave In And Make The Purchases
Paying off the amount of debt that we have in student loans is more of a marathon than a sprint. By balancing debt pay off with our other goals, it could be argued that we’d end up paying the debt off in a more controlled way since we’d be less likely to splurge along the way.
That said, we do already have a mini fun budget each month so we already have the little splurges baked into our plan. If we budget to buy a laptop or fence we’d be increasing this mini fun budget by quite a bit.
The question is, does it make sense to make a large splurge and go for the new laptop or installing a fence, or should we just wait for the loans to be completely gone before we buy them?