I read a lot of personal finance blogs, and always smile when I read other's debt-repayment success stories. Paying off debt is such a rewarding thing to do! In addition to providing a sense of accomplishment, it also has an amazing power to instill good habits and have a slingshot effect on your savings. Here's how having a large amount of debt impacted my own situation.
Out of college, I had over $150k in student loans. I had gone to an expensive private university on a scholarship, and my parents had agreed to help with the rest of the cost. The first year went great - but engineering was hard! I also realized I loved a lot of other things in school, and took my eye off the GPA ball. Long story short, I lost my scholarship in my junior year. Coincidentally, my parents experienced some changes in their lives, and could no longer help with the costs. I had two options: take out student loans, or transfer to a less expensive school. I opted for the loans, not realizing how much money was truly at stake.
Fast forward to graduation, and I had about 15 different loans. Some were big - for tuition - and some were small - for books. I only then realized how expensive on-campus housing was, or how much those summer classes really cost. I was heartbroken when I realized the payments for all of this debt would be about $1,800/month after the initial grace period. I was truly humbled.
The first year of adulthood was wild. I was literally broke and slept on couches for months, then borrowed money from my grandmother to pay for the security deposit and first month's rent for an apartment with my best friend - who also borrowed money from his parents. Once we were settled in, we moved into a room together and rented out the second bedroom that first year.
I got a sales job and excelled. Without that job, I don't know how I would have made it.
I was able to pay off about $30k of my highest-interest loans after about two years. I set up my retirement accounts and learned about compound interest - which led me to believe it would be better to invest as much as I could, rather than pay off some of my lower-interest debt. So that's what I did.
I began making minimum payments on the low-interest debt around 2009, when I also went to graduate school. I took out another $50k in ~3% loans to cover 2 years of business school, reasoning that what I had at the time (about $50k) would be better off left to grow in the market. Glad I did, because that turned out to be the 2009 low point, and the market went up for more than a decade after that.
So come 2011, I had about $120k in undergrad loans and $50k in business school loans. I had paid off about $30k. But at this point I had almost $100k in my investment accounts, which were growing.