Small successes and interest payments

We paid off another loan! Woohoo!!! It feels great to know we are slowly, but surely, making some progress. Since our move, everything has been a little crazy, and we finally starting to get our new budget in order again. Since this loan was a little bit smaller, we decided to take all the extra money we had and just pay it off with one lump sum. Hopefully next month we will have determined how much we can put toward out loans each month and really start working the "snowball".

The thing that just kills me about loans are the interest. If for no other reason, I would just want to pay off these loans to avoid the interest that we are racking up. Phil took this loan out while he was still completing his undergrad and the total principal was $5,500 at 6.4%. We had already paid around $1,100 on it before he started his Masters at Thunderbird and then it went into deferment while he was in school (but it was still accruing interest). So guess how much we had to pay to pay off the loan in full? $5,550.54!!! That's more than the initial loan was even for! And that is not even including the $1,100 we had already paid in the past, so it was all that interest just adding up over time. And that's just one of our "small" loans. That's nothing compared to the $18,000 loan at 7.9% interest! Yikes.

So, we are really trying to just put as much money to these as we can and knock down the principal so the interest doesn't just swallow us up. The best thing you can do is to never borrow money in the first place (we have learned our lesson). The next best thing you can do is pay more than the minimum payment on the debt you do have. When you make a payment, the amount goes toward paying off the interest it has accrued first and then the principal, so if you only pay a little it basically does nothing to get your loan amount down.

We are definitely in this for the long haul, but we know it will be worth it in the end.

Why we aren't going to buy a house...yet

Lately we have been asked a lot if and when we are going to buy a house. This questions almost always immediately arises after we tell people that we are living in an apartment. We never got this question in any of our previous apartment homes, but I guess now that Phil is done with school and has a "real" job, apartment living is not considered very cool.

I get it. Owning your own home is part of the American dream. It's a step into adulthood and responsibility. We want to own our own home one day too. But, we have decided that it's going to be a while before that happens. Here's why:

1. We already have a ton of debt. There is no reason to take on more debt when we are trying so hard to get rid of the debt we already have. If we can achieve our goal of paying off our student loans in 5 (or less) years we will start looking to buy a house around that time. 
2. We don't want the extra expenses. Sure, renting can be a hassle at times. You don't get to paint the walls or remodel the way you want. You have other people living literally all around you. You usually don't have a yard. But owning a home can mean a lot of extra expenses that you don't have when renting. There are HOA fees, property taxes, maintenance, and insurance to pay for and those things add up fast. 
3. We don't need or want the extra space. Yes, you read that correctly. We are Americans who don't want an enormous home. Why? Because then we have to furnish that enormous home. Having a smaller space helps us avoid the desire to get more things, which inevitably costs more money. We like to live a simple, minimalistic lifestyle, and we hope that our home and possessions reflect that. Obviously, not all homes are big, so we could buy something small and upgrade later, but that just doesn't make sense to me. It's fairly easy to move into a bigger apartment when you run out of room; it's not always so easy to sell and move out of a smaller home into a bigger home whenever you want. 
4. We like apartment living. I know that sounds crazy to a lot of people, but for us apartment living works at this stage in our lives. We like having someone else do the maintenance. We like the amenities such as a swimming pool, fitness center, and playground. And despite arguments that renting is just throwing away your money, we don't mind paying the monthly rent. The way I see it, paying rent isn't all that different than putting gas in your car. You fill up at the beginning of the month and drive your car everywhere you need to go. Once the tank is empty you don't think, "well that was sure a waste of money", because it wasn't. The money you spent on gas provided you the means to get where you needed to go, just as paying rent each month provides us with a roof over our heads and a nice place to call home. It is money well spent. 

We do want to own our own house one day, and we will. But for now, we are happy to call our apartment home.