I am so thrilled that I am finally out of credit card debt! I got my first credit card in 2007 and have been carrying balances of various amounts ever since. Making my last credit card payment was a huge relief and it is great to know that I will be saving money on interest and not have the anxiety of credit card debt hanging over me.

However, as I’ve stated in previous posts, most of my debt is in the form of student loans. Thankfully, it is all low-interest federal Stafford loans (the majority subsidized) with generous repayment options. Currently, I have not made a single payment on my loans due to working less than full time since graduation in Spring 2009. This has been very helpful for my budget, but with capitalized interest my loans have increased from the original $33,000 that I borrowed to nearly $37,000 that I currently owe. I am trying to continue to defer my loans since I am still not working full time, but I know that I have to tackle them very soon and have been imagining possible repayment plans for the past several weeks.

Despite feeling confident about handling my student loans and really proud about paying off credit card debt, I feel as if I am constantly stuck in an eternal battle to pay off debt and save. Not necessarily save as in put money in my emergency fund, since that is pretty well stocked, but save for other goals.

Beautiful! Love those round zeros!

For example, I’m hoping to start pre-recs for a second master’s degree in 2012, and I would also really like to learn a language and travel more. Therefore, I have been looking at language schools in Central and South America, since they tend to be much cheaper than taking classes state-side and I would also learn through immersion. Plus, I’ve always wanted to go to Guatemala which is a country that is not only cheap, but highly recommended for Spanish language learners. I estimated that my trip would cost around $1500, which isn’t much and totally doable if I start saving very soon. However, I feel like I shouldn’t be spending money on something “frivolous” like traveling and learning when I could be putting money into my student debt. On the flip side, I feel like I should take advantage of having the time to travel since I know that won’t last for the rest of my life, while paying off my debt will take years if not decades. 

How do you balance paying off debt vs. spending money to enjoy your life and reach other goals? Is there are way to do both bit by bit?