With a healthy financial position despite it, he still had persisting doubts gnawing away at him for having made the leap, laying the ground for speculation about the psychological impact of debt payoffs and dishing out money-planning advice.
Financial breakdown
The man broke down his family’s finances:
- Savings: $40,000
- Monthly income: $8,203
- Monthly expenses: Approximately $5,000
- Monthly savings: Approximately $3,000
He explained that they have a soon-to-be-arriving $9,000 bonus that paid off the student loan debt. That cost them $3,500 in savings but freed them from a $321 monthly payment and ceased charging them interest.
Emotional aftermath
Though logically sound, he acknowledged, “I keep feeling like this was a bad decision.” This is an admission of a common psychological experience wherein individuals experience regret or anxiety after big money decisions despite being sound ones.
Future financial implications
The couple will buy their leased vehicle in July for $22,618. They currently pay $450 a month on the lease. They believe that they can afford to pay for the buyout without financial strain with their amount of savings and with the elimination of the expense of the student loan.
He said; “The only upcoming payment we have is buying out our leased vehicle. We currently pay about $450 a month for the lease, and when it comes time to buy it out in July of this year we will have the option to finance it, or pay the $22618. We should be able to buy it out based on my math and income above.”
Financial advisors suggest that eliminating debt can create emotional comfort in addition to increased mental health. Eliminating debt, however, must be offset by having some kind of emergency fund and savings for the future. In this case, the couple appears to have considered those variables, and that is a good financial strategy.
