After tallying up your debt, you’ve finally decided on an action plan. You’re going to pay your debt off quickly so you no longer have it looming over your head.
I get it because that’s what my wife and I initially decided when we vowed to pay off her student loans—asap. Thankfully, we were open to considering other opportunities as they arose regardless of her debt.
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In hindsight, we had blinders on while paying off her $80,000 of student loans as fast as we could. We became fully consumed by our goal.
Thankfully we had a huge realization part way into our journey. Paying off debt as fast as possible while completely ignoring all other opportunities was not the right choice for us. It took an amazing deal on a townhouse to make us rethink our strategy.
Long story short, we came across a two bedroom, one-and-a-half bath townhouse less than three blocks from the beach… for just $79,000.
The mortgage would be barely more than half of what our old rent payment was and we knew that once we outgrew the townhouse we could rent it out for much more than the mortgage payment. On paper everything seemed perfect, but still we were hesitant.
We couldn’t swallow the $16,000 down payment, plus closing costs. We knew it would significantly slow down our student debt pay off.
That’s when we had our light bulb moment. The student loans didn’t own us.
Yes, we had to pay them off, but not as fast as humanly possible. We could use some money to close on the townhouse.
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The tradeoff? We would secure a great deal while only slightly delaying our debt payments. While it added about a year to achieving debt-free status—we got an amazing deal for a home just three blocks from the white sand beaches.
My point is— it may not sound super responsible to go out and make a home purchase when you’re in the midst of paying off student loans. However, we almost missed a fantastic deal because of our laser focus on our student debt repayment.
Sometimes there may be a bigger opportunity to discover. Would you turn down your dream job while paying down debt because it would cost you $2,000 to move to where the job is located? Hopefully, not! What happens if you’re never offered your dream job again?
Was it worth paying an extra $2,000 toward your debt rather than using that money to relocate? The answer will vary for each person and circumstance, but don’t let debt completely blind you from other stellar long-term opportunities.
Did we buy the townhouse? You bet! We decided it was the best long-term financial move, despite the temporary setback. In the end, it was the right decision for us.
The townhouse is now a rental, earning positive cash flow each month. The property has appreciated in value since we bought it. We’re glad we were able to take off our blinders before it was too late.
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