As the creator of the Debt Myth site, I’m really happy to be able to tell our OWN debt free story here today. (Of course I’d love to see yours here too!)
We’re officially debt free! We’ve paid off approximately $147,106 in debt — including our mortgage. (About $52,000 of that amount was consumer debt.)
Tell someone that you’ve paid off your house (along with a slew of other debt over the years), and you’re likely to get responses like these:
1. How did you do it?
2. How long did it take?
3. I wish I could do that.
Well, let me speak to that last response first: You CAN get out of debt. You don’t need debt to get ahead, or to buy the things you want. You can stand on your own two feet — saving for emergencies and the things you’d love to do. (Stuff you probably can’t do very easily right now, in fact, because of all the payments you’re making.)
Becoming debt free is totally doable, so long as you’re willing to do what it takes.
What it takes to get out of debt
If you wish you could pay off debt (whether that’s your house, your credit cards, your student loan, or something else) you’ve got to start by doing something that’s not as obvious as it might sound:
You’ve got to stop borrowing more money.
That was by far the biggest step we took. (And the hardest thing to do, in retrospect.) It sounds so simple too, right? “Quit borrowing money.” Well, duh. Yet many of us get so used to using debt for everything — emergencies, things we forgot, stuff we want — that the idea of getting by without it doesn’t even seem realistic.
But trust me, it is.
You CAN get by (and AHEAD) without using debt by saving up money for emergencies, planning for regular and irregular expenses, saying no until you’ve got the money for stuff you want, and getting creative about what you do spend money on. That’s how you do it, and how we did it.
It’s hard at first, because most of us aren’t used to doing that. But it’s absolutely doable. And once you start paying stuff off, it becomes easier and easier because your money isn’t flying out the door to service debt. The first time you pay off a debt and no longer have to send in that monthly payment is AWESOME.
Remember this: As long as you don’t give up, you can get out of debt.
Now, on to how long it took.
We didn’t pay of $147,106 in debt overnight. In fact, if we’d sat down and figured out how long it would take us to become completely debt free, house and everything, I’m not sure we would have even started. Luckily, we didn’t even consider doing that.
Paying off our credit cards
We just wanted to pay off our credit cards, which were a combined $17,000 or so. That part took about 3 years, mainly because we didn’t really know what we were doing then. We didn’t use the debt snowball method to pay them off (because we hadn’t heard of it), and we didn’t know much of anything about personal finance.
Instead, we each (separately, since we weren’t married yet) used CCCS, paying them a monthly fee to basically talk to the credit card companies and come up with a plan. That worked for us, but looking back, we could have done it SO much faster if we’d only known what we know now. (And if we’d set up a debt snowball ourselves.) Because it’s not about making “one easy payment”. It’s about changing our behavior. And we didn’t, really — with the (critical!) exception of deciding that we were never going to carry a balance on a credit card again.
Shortly after that, I lost my job. And it took me four years (during which I tried to start my own business, and job-hunted) to get another one. But that was ok, because we felt like we were debt free — even though I had student loan, we had a mortgage, my (now) husband borrowed money to buy a car, and I borrowed money to buy rental property (which isn’t even included in the $147K total).
We didn’t try to pay anything else off during that time.
A mindset change, and goodbye loans
In 2006, two important things happened: I got a job (bringing home about $2100 a month) and we changed our mindset.
Suddenly — after years of living on pretty much nothing — I had money coming in. It felt like a fortune to me, and I decided to pay off my long-deferred student loan, which had a balance of $9,759.46 left on it after years of sporadic payments. It took me less than 5 months to knock that out. (Click here if you want the details).
More importantly, I began learning about personal finance, and talking about it with my husband. The idea of becoming debt free really started to sink in for me.
My husband got on the bandwagon too, and decided to pay off his $15,500 car loan, which he’d taken out in 2004, and he began sending in extra money to it like crazy — finishing it up in November of 2006. (If you haven’t guessed by now, we keep “his/hers/and ours” finances.) I came to my senses and sold the rental property. Then we began tackling the rest of our debt. We paid off the $10,000 no-interest home improvement loan we’d taken out. My husband and I paid off our last bit of consumer debt in October of 2009.
So that’s more than $35,000 in debt paid off in three years — while making almost the same amount we did while spending three years paying off $17,000 in credit card debt.
Taking a break
Then we took a break. After all, we were “debt free”, except for the $95K or so we owed on the house. We got our emergency funds fully funded. We began contributing to retirement like crazy. We went through another layoff, which lasted more than a year. We got better jobs, and raises.
We took trips various places. We paid for multiple surgeries, braces, college tuition for my son, months of weekly vet visits for our sick cat, more home improvements, a slew of “minor” car repairs like replacing a transmission, and major car repairs after an accident.
And somewhere during all that, we got the crazy idea that we’d just go ahead and pay off the house, too. So we started off 2009 with the vague goal of paying off the mortgage.
By 2010, the goal was to “Pay a minimum of $35 extra per month toward the mortgage”. (Hey, at least it was more specific.) Well, we did that, and then some. Sometimes we slacked off, and sometimes we hit it hard. My husband did a few odd jobs. I brought in extra money with my side business.
By late September 2011, we were down to $49,500. We just kept at it, sending in as much as we could, as often as we could. There were some months when we made 8 payments to the mortgage, in varying amounts. And we obsessively tracked our progress using the debt snowball app I created.
Bottom line? We paid off that last $49,500 in less than a year.
A hockey stick
If you graphed our debt payoff progress, it would look like a hockey stick. (A lot of slow progress that gradually sped up over time until it shot up with what seems like an unbelievable speed.)
But that’s the way it works. Getting out of debt is slow going at first. You’ve got to get the hang of it, you’ve got to get determined, and you’ve got to really want it.
You want it most, and then you make it happen. You get through the setbacks, and start looking at them as personal challenges to overcome. You keep going through the down times. You recharge. You get fired up.
And one day, you’re DONE.