Tuesday, July 5, 2011

Why It Can Be A Good Thing To Stop Paying Off Debt

My husband and I accumulated a whole bunch of debt in the first few  years of our marriage. We were finishing college, had a surprise baby, and made some rather foolhardy decisions along the way. Fast forward 10 years. We haven't been accumulating additional debt in the past few years except for some small student loans to pay for my husband's Master's Degree. This substantially increased his income in the short- and long-term so I think it was a good decisions. However, even though we've been budgeting and working on saving and paying down debt for the past five or so years, we haven't paid it off. We haven't even finished paying off our credit cards.

Someone might look at our financial situation and say that we haven't been aggressive enough at budgeting or putting extra penny to our debt. Some of that criticism might be warranted. We haven't even in the best of times always been frugal or careful with our money. Part of the reason that we haven't paid off our debt or at least our credit cards in the last five years are because of different events in our lives where we've had to hold off paying off debt to save or deal with reduced income. I consider this a type of holding pattern. We weren't adding to our debt in any appreciable way. We were paying what we needed to to stay current with our bills, but we also weren't making significant progress on the debt either. My husband's seven month stint of unemployment in 2007 was one of these times. My unexpected two months of bed rest during pregnancy with my second daughter and also the period leading up to and including my maternity leave. We had to divert money that would have normally gone to debt during this time to savings and/or bills.

But...There is a big but to all of this. Sometimes we have to make important life choices that cause us to move from debt repayment to a holding pattern. One choice for us was the decision to have a second child. Our daughter was four years old when we decided to have another child. We knew time was running out if we wanted the siblings to be close in age. It was the right time for our family, but it was a difficult time for our finances. It all worked out. We were more disciplined. We saved money for my virtually unpaid maternity leave. It all worked out.

We're now currently in a holding pattern now. Living on one income doesn't afford us extra to pay down our debt significantly right now. It was one of the reasons that it was difficult to leave my job. I knew it would make our debt repayment just that much harder. But, here is the but again; it was the right choice for me and our family. My job was making me emotionally and even physically sick. I didn't like the negative, unhappy person I was at my job. It hasn't been the best choice for us financially. Cutting your income significantly is never an easy thing to do. But it has been good for me and good for our family.

I'm not advocating people stop paying off their debt to save for a luxury vacation or big screen TV. These are things that should be delayed until debt is paid off. However, there are certain reasons that putting off debt repayment can be a good thing. My daughter is one of those good reasons. The mental and emotional well-being of myself and my family is another.

So, here is my counsel for those considering a decision that might put them off the debt repayment track. Think carefully and objectively about it. I stayed at my job for a good three or more years beyond when I started really disliking it. We waited at least two years after I wanted another child to actually try. A good dose of time and reflection is important. If paying off your debt is important, then you should think through it carefully before making a decision that will cause you to delay it. Also, be sure that you will be easily able to transition back to debt repayment at some point. You need to have good habits in place before you jump off the track so that you can easily jump back on when your income improves or your situation changes.

Life isn't all about money. We get only so much time to live our lives. Don't be a slave to money either the accumulation of it or the dispensation of debt. They are important, but sometimes money needs to take the backseat so you can live life to the fullest. 

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