Have you reached peak debt? That’s what I consider the highest debt you’ll willingly take on during your lifetime. Many people may not have hit peak debt yet. Think of people who have not bought homes but plan to do so. They will probably hit peak debt later. But even they can look at their peak debt to date.
Our Peak Debt Story
We hit our peak debt in June 2007. Predictably, this was when we took on the mortgage to our current home. I figure that for many, this would when they saw their debt at its highest. After all, for most people that buy a home, it’s the largest purchase they’ll ever make. Since so many people do so with a mortgage, debt lines up as well.
For us, our highest debt total was comprised of the following:
- Mortgage – $224,000 (this was 80% of the cost of our home)
- Student Loan Debt – $31,969
- Auto Loan – $8,647
- Credit Cards – $0
This put our total at $264,616. That was the highest debt we ever hit.
Where We Stand Today
I won’t go into the individual numbers, but will give some highlights:
- We have paid off about 45% of our total debt since then
- The auto loan was paid off within a year. We have not taken on a new loan since.
- We aggressively paid down student loan debt before my wife became a stay at home mom. There is one loan remaining. However the interest rate and payments are low enough that we’re fine with it. The loan is set to end in early 2020.
- Our mortgage started slowly as we originally had a 30-year mortgage. We transitioned to a 15-year mortgage and did another re-finance. The first took advantage of the lower rates. The second freed up some cash flow and continued to low rate advantage. Ideally, I’d like to have this paid off by 2029.
- The only new debt we took on was during our re-finances. In each case we rolled in some of the closing costs. Other than that our debt has gone down every month.
- We’ve never carried a credit card balance.
What Does Peak Debt Mean To You?
I’m curious what peak debt means to you. What is your personal story? At what age do you think peak debt should be reached?
I’m hoping that people will write their thoughts and experiences in the comments. I expect different perspectives. For example, owners of rental properties might continue to hit new peak debt numbers.
Readers, I’m curious as to your thoughts and experiences on peak debt. If you have a moment, please share in the comments below.