At the height of the Financial Crisis of 2008, I found myself with a “useless” Master’s Degree and $60,000 worth of student loans. I also decided to get married at the end of the year, which added another $5,000 of credit card debt to the pot.
Yes, I know. What an idiot. But I will refer you to the title of this blog, in case you forgot.
One of the things I did right was marry my husband.
Cue Charlie Brown teacher sound effect: Wah-wah!
I’m half-joking, but there really is some truth in that. Before we got married, we had a serious conversation about our finances. I told him about my situation, about the enormous hole I’ve created in our future life together because of my student loan debts. Even with all that, though, he was still willing to marry this loan-infested woman.
What a man.
We worked out a deal. I would try to get a job and his salary would pay for our daily living expenses. Not bad (for me). Only, we got married in December of 2008 and I didn’t get a job until October of 2009. In between, though, I moved to Japan and prepared for another wedding. Whoops.
We had two weddings. Because my family and friends were all in the US, and his were in Japan, we decided to have two receptions to accommodate everyone. The American one was a small gathering of friends and family. It was really casual and a lot of fun, hence the small price we paid for it. Most of the American wedding cost was for the venue and the photographs. Everything else was a gift from friends and family.
The Japanese wedding ceremony, meanwhile, was a full-on spectacle. We had 150 guests attend, and I only knew about 20 of them. These were mostly co-workers and hubby’s relatives who I’d never met before. Luckily, we were able to keep the costs down and paid about $15,000 for the whole thing. Not bad. It also helps that your brother-in-law had connections in the hotel industry–which is what drives the wedding industry in Japan.
This ceremony we paid for in cash. All of it hubby’s and his family, of course–since I had nothing to offer except myself.
There is also the Japanese tradition of the immediate family contributing to our wedding with “gifts.” My in-laws all gave my husband and I cash to help pay for the wedding. The only thing is, it is tradition to return half of the gifts we received. If I remember correctly, my sister-in-law gifted us the equivalent of $2000. However, after the wedding, we gave them a thank-you “gift” of $1,000 or half of whatever we got in cash. We did this for everyone we got money from. Even though we had to return some of it, we were able to pay off as much as we can and never got into debt for the wedding.
How I Paid Off My Debts
While I was in the US, I had consolidated my undergraduate and graduate student loans right after I finished school. Looking back, I’m not sure if I should have done that. My graduate loans were at an interest rate of 7% while my undergraduate loans were at 2.5%. I should have paid off the higher rates first then paid off the lower one after that. However, consolidating both loans averaged the interest rates at 6.75% which I am glad. I also signed up for electronic payments so I was able to save an extra .25% on the interest rates. I was lucky enough that they had those options.
Again, I arrived in Japan in March of 2009 and had our wedding in June. I didn’t really start looking for a job seriously until after the wedding. Because of the preparations, I didn’t have time to actively look for a job. The timing was also difficult. But because I knew there was still that 6-month grace period before I had to pay off the loans, I wasn’t in much of a hurry to pay them off. I should have, knowing that interest accrued during that time, but again, they were not collecting yet, so I didn’t really feel the pressure yet.
In the end, it took me months to find a steady job. There were a few gigs I did to earn a little bit, mostly from friends who needed someone to do quick translations or English narrations. I also taught a few private lessons, here and there, but they were not really full-time teaching jobs. I finally got my current job in September of 2009 and started teaching part-time. After that, I found another job teaching at a small conversation school and at a technical college. After a year, I found my rhythm. The people I met wanted to help me out so they willingly shared lots of information about job opportunities. This way, I was able to work part-time steadily at two places and supplemented that income with sporadic one-time gigs.
All the income I received from those gigs went into paying off the debt. I did the avalanche method and paid off the debts with the higher interest rates first. I blasted the credit card debt with 20% interest rates within the first six months. After that, I was able to dedicate all the money to pay off my student loans. I did the smart thing and didn’t rack up any more debt after 2008. I knew that I didn’t want to fall behind on any of the payments.
It was really hard. I had to say no to many things. One of them was traveling with friends. I knew that I didn’t want to have the debt hanging over me so I didn’t travel much, even though it is a passion of mine.
But, I was lucky enough to be living in Japan at a time when the yen was so strong against the dollar. The exchange rates were to my advantage because the price of the dollar was so low. At one point, the value of the dollar fell to ¥70 per dollar. I took advantage of that fact and sent as much money as I could to my US accounts. I’m so lucky with that timing.
However, economic factors being what they are, the dollar eventually strengthened and the yen weakened again. When the yen got stronger and I had to start paying more in yen to be able to make the payments. This is still how it is now.
The Value of Family
In the midst of all this, my husband fell ill and had to take a break from work. For about nine months, he received unemployment benefits. When that stopped, my income had to help pay for our daily expenses.
I’m also lucky that my family in the US was financially situated. The financial crisis was tough for everyone, but my family all had STEM degrees so they were in jobs that were always stable. My younger brother, in particular, was a bachelor making a steady paycheck in a technical field. I talked to my brother and borrowed $10,000 from him.
I know the standard advice is not to mix family with debt and money, but I have a really good relationship with my younger brother. He also knew that I was serious about paying him back. Since he really had no use for the money in his bank, I borrowed the money so that I could save on the interest rate payments. At that time, in 2014, my remaining student loan balance was about the same amount with maybe a couple hundred more.
He lent me the money and I used that huge chunk to pay off the last bit of my student loans. I was able to not only save money on the interest but I was able to pay off my personal loan to him without having to worry about getting the payments in time. Because it was a personal loan, I paid him whenever I had the money to spare or whenever the exchange rates were favorable to me. I made sure that the yen was low enough so that I could send as much money as I could back into my brother’s bank account.
In May of 2015, I finally paid off all the money that I owed. It felt really good that I was able to do this. However, I am very aware that I didn’t do all of this by myself. My husband was there in the beginning. My friends and family helped pay for our weddings. Co-workers and friends shared info on paying gigs. The economy helped me with the currency exchange. My husband’s job kept us from starving and being homeless. My brother came through when I needed financial help.
Since then, we have been officially debt free. I never want to be in a situation like that ever again. I hope I have learned my lesson.