Last month, I decided to make a list of all the debt my family has. Between student loans, credit cards, car payments, and home repairs we've had to pay, I discovered that my husband and I currently owe $131,985.17. I have to admit that this is both better and worse than I thought it would be at this point in our lives.
My husband and I make more today than either of us ever did, and we're still getting by. Our income should be enough for anyone to live a comfortable life (in fact, I managed to make $30,000 a year living in New York City in my early twenties), but between student loan debt and the rising cost of child care, we're now broke. Sadly, we're not alone.
According to the Department of Education, as of 2021, one in eight Americans has student loan debt. And more than 40% of American families have children under the age of 18 living with them. We're in both camps.
Living the DINK lifestyle
When we first met, my husband brought $100,000 in student loan debt into our relationship. I, too, had accumulated a lot of credit card debt from getting sober the year before. Soon after, I needed to buy my first car as an adult, adding another $25,000 in debt to our household finances. Yet, we were DINKS (dual income, no children) and enjoyed the lifestyle.
We paid our bills on time and were able to travel a lot in and around our home state of Florida. During our first few years together, we went to Chicago five times, New York three times, Mexico for a week, and New Orleans for my brother's birthday. We spent two weeks in Europe (Holland and Germany), flew to Los Angeles to visit friends, took a honeymoon cruise to Havana, and went to Denver for Thanksgiving. We also took many short trips within our home state of Florida: Orlando three times, the Florida Keys twice, Miami Beach, St. Augustine, and Sarasota.
Yes, we had a lot of debt, but our combined six-figure income allowed us to get by and live a fulfilling life. We were even able to buy a house (largely thanks to financial support from my parents) and save some money before we became parents in March 2020.
Giving birth during a pandemic
When we decided to have a baby in early 2019, my husband and I got serious about paying off our credit card debt. We cut back on travel and focused all of our extra income on paying bills. Within six months, we were able to reduce our credit card balance from $15,000 to $0.
We were proud of our accomplishments, and then I finally got pregnant after a miscarriage. We spent the rest of 2019 saving up money until our son was born. By the start of 2020, we finally felt secure financially and decided to upgrade our car so we could better fit a car seat for our newborn.
By February 2020, we were ready to welcome our child into our home. The baby shower was over, we had everything we needed for our baby, we'd been setting up the baby's room for months, and we'd continued to save money, including on a new car.
We thought we had a great situation as a family, but then the pandemic hit. Our child was born at the end of March 2020, just as the world was dealing with the first lockdown.
I was on maternity leave during the first months of the pandemic, happy to have my baby safe and close by. Not being able to go anywhere meant that my savings miraculously started growing again, despite the costs of childbirth and having to buy formula when breastfeeding wasn't enough. We consider ourselves very lucky to have two stable jobs, jobs that we love.
Then, when I returned from maternity leave, my hours were cut in half and stayed that way for almost a year, and then my work eventually went back up, but the baby kept growing and needed more, which meant even more expenses.
Increased income, increased expenses
A year into the pandemic, just after our baby turned one, my husband got a great job opportunity in Denver, Colorado, so we decided to move from Florida (where our family is) to this new state. Around the same time, my job would go back to normal and we would return to financial stability. But I was so wrong!
Moving across country is expensive, even if your new employer helps. We decided to buy a house in our new hometown because, to our surprise, all the rentals were more expensive than our monthly mortgage. But we had to dip into our savings to make the purchase, and now we had to factor in child care costs. But for the first year of our son's life, we didn't have to pay for child care because my mother was able to take care of him while I worked part time.
Within a few months, our credit card debt had skyrocketed from $0 to $15,000 due to a new mortgage, child care expenses, and unexpected moving expenses, like having to buy a new washer and dryer. On top of that, we refinanced our student loans in early 2021, which cut our interest rate in half but doubled our payments. So, even though we were making a decent living from our jobs, we were in more financial straits than ever before.
We thought we would be OK because we make about $150,000 between us as a family, but in reality we have no money and we are drowning in debt.
Between student loan payments and child support for our new child, we are paying $3,000 a month, which is just a little more than our new mortgage payment. We also have car payments, credit card debt, and some major home repairs that we've had to fund. Every month, all we do is pay bill after bill and wonder when things will get better.
We thought we would be OK because we make about $150,000 between us as a family, but in reality we have no money and we are drowning in debt.
My student loan debt has grown from $100,000 to $85,000 in the last 5 years and feels like it will never end, while the $20,000 for daycare is temporary (I mean, my kid will end up in public school eventually), but it feels like I'll be paying that for a long, long time.
The economic burden on American families
I know how lucky my family is. We had financial help from my parents to buy our first home. We earn good salaries, my husband's job is pretty stable (though writing is not for me). Plus, our baby is healthy and safe. And we've all managed to maintain our mental health, albeit just barely, during this pandemic. But the financial strain all of this is putting on us is overwhelming. a lot. Financial worries are constant, and I'll be honest, the moment I decided to create a debt spreadsheet, I had a breakdown.
I often worry about how I can provide a decent life for my children when we barely have enough money to live on. Once I finish paying off my student loans, I have to start saving for my children. his College costs. And, of course, one day my son will be in public school and we won't have to pay for daycare, but there will undoubtedly be a lot of other new expenses along the way. For example, both of my parents are approaching retirement age, but I'm not sure if they're prepared for that. Will my husband and I be helping out?
Unfortunately, this is the current state of the “American Dream” for many millennial parents: caught between having to make ends meet before payday, while dealing with their own debt and the rising cost of child care.
According to a 2019 Child Care Aware of America report, millennials spend between 18% and 42% of their income on child care. The Department of Health and Human Services recommends keeping it at 7%. I'm hopeful that one day this will change and the US will make college tuition free or provide preschool for all, but I worry it's too late to help families like mine.
So in the meantime, the best I can do is to support my family and hope that my work situation doesn't change. But families who are doing well on paper but don't have the money in reality can often feel really desperate. And if our If families are drowning, what happens to the less fortunate?
