When Does It Makes Sense to Stop Paying Off Debt?

charlie_imageThroughout the last five years our family has aggressively sought to pay off all our debt. Currently all we have left is our home mortgage, and we have hope that the finish line is soon approaching.

However, we have to take a pause (or slow down) on our road to financial freedom. You see we have some expenses that are coming up that require us to save up a large chunk of cash. Here are things we need to save up for in the coming year or two, and avoid any loans. 

  • Private schooling – next year will be our biggest school expense year ever since we will now have three boys in private school. Two years ago we only had one kid in, but next year our youngest will graduate pre-school and move up to kindergarten. With this comes a large bill in August 2015. We like to save up the large lump sum, because our school offers a 3% discount if we pay up front for the entire year.
  • Purchase a new van – currently our 2005 Honda Odyssey has 120,000 miles on it, and we will likely need to purchase a replacement inHonda Odyssey the next two years. In order to remain debt free (besides our home) we will need to make saving for a van a priority. With that, we need to pause on paying so much extra on our home and save for a new (used) van.
  • Washer and dryer – from what I hear, the average washer and dryer’s life is about 6 years, and anything beyond that is borrowed time. Next year we will have had our washer and dryer for 10 years. We need to start saving a little bit each month to prepare for this expense.

As you can see, from my real life examples, we have some reasons our family is slowing down our debt payoff. Here are a few other reasons that you might want to consider also.

  • Medical Issues – are you or anyone in your family experiencing medical issues. How are preparing for this? If your $1000 emergency fund won’t cover this, then consider stashing away more cash to prepare.
  • Moving – are you preparing to make a major move across the country? If so, then how are you preparing to pay for it? Consider decreasing your debt payoff, and stashing some money aside for paying for moving expenses. It’s better to do this, then
  • Marriage – you going to be popping the big question soon, but first you need to know how you are going to pay for it. Consider halting your debt payoff, and saving for this major life event! The ring alone you ought to have a sizable sum of cash set aside to pay for.

These are just a few of my ideas of reasons why you should put the breaks on your debt payoff journey. A lot times the reasons comes down to foreseeing a major purchase need in the future.

Is this the case for you? I’d like to hear from our readers on reasons why you would stop (or slow down) paying off debt. Let us know your feelings! Leave a comment below.

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7 comments

  1. Hey, think about keeping that Odyssey for longer!

    We have a 1996 with 202K miles and it’s still running strong. They’re known for being bulletproof, and as long as you’ve taken care of it… there’s no reason you shouldn’t get at least 200k miles from it.

  2. I think another big reason people should stop paying off debt is if there is rumor of a possible job layoff in the family. Back when Rick was laid off in 2010 (before Financial Epiphany) we heard rumors that layoffs would be coming, but did absolutely nothing to prepare. Not a smart move.

  3. stephanie says:

    Just a little tidbit here – the average life for a FRONT loader W/D is 6-7 years. the less glamourous top loaders still have a life span 15-20+. Just something to keep in mind. I have told my less frugal friends this as they have replaced their top loaders twice in the time that I have had my top loading machine which after 13 years work perfectly and have never even needed a repair. And the front load machines normally cost more too . . .

    • Kathy says:

      I’ve heard the same thing, Stephanie. Also, my sister-in-law had a front loader and she said she frequently had to do a load twice before it got the clothes clean. That sort of negates the energy efficiency that manufactures and consumer advocates claim is so great.

  4. I was aggressively paying down my student loans but stopped a couple years ago when my employer switched from a pension to a 403(b) matching program. My interest rates on my student loans are relatively low and the monthly payments are affordable; I think the effective rate of return on my retirement account with a match will be greater than the theoretical return I’d get if I were to pay down my low-interest loans early.

    That said, I still want to be debt free and plan on increasing my student loan payments whenever my wife and I start making more money (hopefully next year!).

  5. If you go shopping for a new washer check and see if a nearby Lowe’s has any that they discontinuing. When I recently went washer shopping I think I found one for around $180 (definitely not bad for a brand new standard size washer)! Too bad it was out of my free delivery zone. :(

  6. This is a great post about planning ahead and strategically when it comes to our personal finances. Managing our personal finances is the same as managing corporate finances, just on a much smaller scale. We can’t be myopic with our financial goals because there are so many moving parts. If you know you have a big purchase pending, diverting money towards that purchase makes sense. The need for the purchase will likely not subside, so not preparing for it is financially detrimental.

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