Debt Free For Life!
Posted on Dec 30, 2011 | 20 comments
Sometimes you have a big day.
Finally, after 15 years, we are debt free. No more bills. No more loans. No more hassle. We are done. With the exception of our home(which we are in the process of selling), we are financially free! And this makes traveling the world seem a whole lot easier than it did before.
I am happy. I am. But I have to say, I sure feel like an idiot for taking 15 years to pay back some money I borrowed.
Had I thought about things a bit more and not been so greedy, I could have paid off my debt 10 years ago. I would have saved tens of thousands in interest. I would have had more financial freedom. And I probably would be traveling right now. But instead I got caught up in stuff like everyone else seems to do. I bought too much. I got the house. I built up my savings instead of paying off my debt. I accepted paying hundreds of dollars in interest each month just because it was easier.
I guess it helps knowing I am not the only fool out there. After all, nearly 80% of Americans are in debt, and that number is not getting any lower.
What is wrong with us? We're not stupid. And yet we keep doing stupid things like buying phones, houses, cars, TVs and vacations we cannot afford. We are sending our kids to schools that cost $50,000 a year while we are making $40,000 a year. We are buying houses with 2 car garages when we can't even afford the cars we are putting in them.
And how is it that we think we need gurus and books to teach us how to stop spending money and pay our bills? It's a pretty basic concept. You borrow and you pay back, or you just don't borrow. Have we become so insecure we can't even figure out how to pay a bill?
And why aren't we able to just say NO when it comes to spending money we don't have? Aren't we well off enough? I can't tell you how many times I have heard people on the news say they are "sacrificing" by buying less gifts or not eating out as much. Not eating out is a sacrifice? Really? What world are we living in here? For 90% of the earth's people eating out is a luxury! A luxury! I think we all need a reality check. We are lucky we don't know what sacrifice really means.
We need to stop complaining about our debt when $20,000 cars are in our driveways. We need to stop whining about bills when we're smoking a pack a day. $4.50 cents for latte? Seriously? We need to get it together. Stop being spoiled. Show some restraint. Pay our bills. And grow up.
80%? C'mon, we are better than that.
How We Got Rid Of Our Debt
I am obviously far from a genius when it comes to managing debt. And I won't make any promises that if you follow my "plan", you'll suddenly be debt free. All I can tell you is what we did and give you some ideas. This worked for us, maybe it will work for you. But the bottom line really is, and always has been, stop spending and pay back what you owe. Don't buy the latte when you still owe someone for last year's latte.
1. Minimize Your Spending & Cut Your Bills. If you don't need it, cut it. Turn off the heat. Drive less. I've been riding a bike for almost 2 years now. Cut where you can. Start today!
2. Use Your Savings. What's your savings get you, about 2% interest? Why save for 2% when you have debt that is charging you 10%. I made the mistake of holding onto my savings for years instead of just paying off my debt. I gave away thousands to banks. Pay off your debt today with your savings now.
3. Attack Your Highest Interest Debt First. Lay everything you owe out on the table and start paying off the bills with the highest interest. Forget how much you owe, just pay off the big dogs first and work your way down. I also suggest having everything online so you can make quick, free transfers and payments.
4. Pay Daily! I think this is the key to getting out of debt. Most of us have a tendency to spend money as we make it, so why not put this terrible habit to work for us. Whenever you get your hands on some cash, pay off your debt. I sometimes made payments 2 or 3 times a day. Just keep going, and eventually you will be in the clear.
That's it! That's all we did. I wish we had something more for you, but really we are talking about owing money. And how do you stop owing money? You just give the money back. Same as it was in elementary school when you borrowed that lunch money from little Sally Walker.
And for those of you who dream of travel, you'll be amazed at how possible things seem when you don't have the weight of your debt holding you back. I will never, ever again have any debt. This is in stone. Lesson learned; moving forward. Now, onto traveling.
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We've been debt free (including mortgage) for 5 years now and it is truly freeing! Congratulations on reaching this significant milestone!!
LM recently posted..What Are We Doing Here?
Thank You! It sure is! I don't like to live in the past, but man I wish I had done it sooner!
Congratulations! An excellent post with some excellent advice.
One of the key things allowing us to make the transition to a mobile lifestyle was taking a long, hard look at our finances and then taking control of them with a steady hand. We're still learning, but at least I feel like our life is the result of deliberate, informed choices rather than the chaotic flurry of 'unexpected' bills and debts I remember from years past.
Certainly. I have always been on top of our finances, but I my big mistake was holding onto the debt. I knew what we were spending out of pocket, but didn't pay enough attention to what we were losing to interest and debt. You are right, you don't get to make as many mistakes when you're mobile. Better learn quick. Thanks Seth!
Congrats on being debt-free. That's an amazing accomplishment! Interesting how your perspective changes about stuff. When I see expensive new cars or big houses, I don't see awesomeness, I see bondage. We drove total clunkers until we had the cash for a newer used vehicle, then it took us 6 months to find what we wanted at the right price. We have no regrets. If it breaks, we've got cash set aside to fix it. There's never panic when you have financial cushion. There's no huge payments hanging over your head keeping you in a job you hate. Peace and freedom feels way better than any overpriced coffee drink or status symbol will ever make you feel.
Looking forward to seeing what the next step will be on your journey.
I couldn't agree more. Give me the peace and freedom over the flavored whipped cream any day. Thanks, and good to know others are making wise choices out there.
We haven't quite taken it to the extent that you did, but your pay daily principle has been really important for us. Pay what you can when you can. And before you know it you've paid a lot. If you keep waiting to get a bundle of money to make a big payment, you'll have spent all that money all around town on lattes.
Clark Vandeventer recently posted..3 reasons why 2011 may have been the most important year of my life
Daily is important! We should do what's most important each day right? So if paying your debt is at the top of the list, it should be done daily. Get rid of it before you spend it.
this point was one i hadn't thought of. i do always wait for larger chunks but i am going to start implementing this right now.
Joy recently posted..Day 19
CONGRATS!!! I've never carried debt so can't imagine the feeling, but I know we are much more free because we don't have to make those payments that so many make. You really don't need all that much money to live - just food and a place to sleep. Once you don't have that debt from previous years, you'll be able to save all of that!
Getting debt-free was a HUGE goal for you and YOU DID IT!!
Nancy from Family on Bikes recently posted..A year in pictures: 2011 in review
Check another goal off the list! I know we don't need much money, and getting free makes sure we are not just giving it to someone else!
Wow, congrats!
What an amazing achievement! I love how you make payments 2-3 times a day, that is such a great attitude.
Cheers to the rest of your debt free life!
I treat it like a kid would. I filled my debt piggy bank til I was done. It worked!
Thanks Serena!
Totally agree. I was thinking about this recently as I watched the countryside roll by me on a bus trip in Laos. We think we need soooooooo much more than we actually do. Even down to the amount of furniture and the way in which our toilets function. You see people here live with so much less and you start to realize that what they have should be enough for anyone. It has been brainwashed into us from the time we were born I think, strive for a better life, you deserve more, etc. etc. Sickening!
I mean honestly in America at least we have thousands upon thousands of people getting rich off the crap we don't even need and certainly cannot afford. That should be the definition of insanity!
Well Said! All this crap we don't need and yet we spend our days shopping for it. Too much!
Congratulations! It must be a great, freeing feeling not to owe anyone money. We've been living debt free for the last couple of years and recently got a copy of my credit report. My overall credit score went down because I don't have enough debt!! Crazy.
We've been very inspired by your adventure. We're about to have our first child and it seems crazy to pay $25k for someone else to raise our baby in daycare. Hopefully we'll be on the road within the year!
Tell me about it Andy! Paying that much for daycare is crazy and I have done it every year. Enough! If you're debt free you have a head start. You'll figure out a way if you keep at it.
Congratulations! This is great. I know we are really looking forward to our year (or so) on the road for many reasons, but one of them is that freedom from monthly bills like car payment, car insurance, cable tv, etc. All those big bills add up to a LOT that we are going to be happy to live without for a while.
Good for you!
Paige AllOvertheMap recently posted..Don’t forget the… gifts for family travelers
Wow what a great post.
we are on track to pay off our mortgage this year too! YAY.
It will be soooo liberating. Then we will hunker down for one-two years and keep saving madly before we too, head off into the big wide world for an unplanned amount of time.
We are unschooling our children and look forward to the day when we can just go and leave societies shackles behind us.
C
Carla recently posted..Christmas decorations
Thanks Carla!
I have to tell you, if you had told me I would be doing this 2 years ago I would have thought you were nuts.
You can do it. You just save, pay it off, save some more, open the door, and leave!
All the best!