As the creator of this site, I’m really happy to finally be able to tell our OWN debt free story here today. (Note: I’ve recently updated this post to add detailed info about our income.) Of course I’d love to to see your debt free stories here too!
So here goes:
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.)
~ Check out the debt app I created to help you do the same ~
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.
Our debt free story
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 about 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.
The most important parts of our debt free story: A mindset change, and goodbye loans
In late 2005, two important things happened: I got a part time job 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 in 2006 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 March of 2004, and he began sending in extra money to it at full tilt — finishing it up in December of 2006. (If you haven’t guessed by now, we keep “yours, mine, 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 with a vengeance.
Then we went through another layoff, which lasted more than a year. Eventually, we got better jobs and got 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 wild 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 early.
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 — a business that by then meant I essentially had two full time jobs.
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 tracker app I created.
Bottom line? We paid off that last $49,500 in less than a year, becoming completely debt free in August of 2012.
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’ve got to want it most, and then 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. Recharge, and get fired up.
Until one day, you’re DONE.
It’s so worth it!
There’s more to the story, of course
Motivation (along with only spending money you already have) matters a whole lot.
However, motivation doesn’t mean you have to be gung-ho and upbeat all the time. It means you have to keep going anyway, no matter what, and make changes as needed. Even if you feel like crap.
Sometimes you might need to regroup, and I hope you have some fun too, but don’t let the bad times cause you to give up.
Because if you don’t get back on the horse again after the setbacks you encounter, you won’t succeed.
So there’s that. And while it’s hugely important to do that, it’s only part of the story.
You also need money. So let’s talk about that now.
There are two ways to get the money to pay off debt. You can reduce your expenses, and you can increase your income. It helps to do both whenever possible, and that’s exactly what we were able to do.
Let’s start with the money we made
Here’s a chart that shows our earnings and what happened during those times:
Obviously 2012 is when we paid off our house.
You can see that our income varied a LOT while we were paying off debt, but especially mine. I also had a young son during that time, and got $200 a month in child support. That’s not included in the chart.
Here’s our same income shown as a graph:
I have to stress again that we kept yours/mine/and ours finances the entire time. I’ll write more about that in a future post, but the gist of it is that we each sent the same amount of money to our joint account each month to cover our housing, utilities, and groceries. (This wasn’t a large amount for either of us.) Then we each paid the rest of our own bills and our individual debts. We both paid off the house together.
So basically, we had a good income much of the time, except you know, for when I was living below the poverty level. I didn’t pay off debt when I barely had any money. Instead, I reduced expenses during that time because I wanted to eat.
So let’s talk about expenses next
By reduced expenses, I mean I cut pretty much every single thing except:
- the money I sent to the joint account for my half
- gas money to take my son to his dad’s house, and to go to interviews
- liability insurance for my 1990 car
- some clothes and shoes
- gifts (but I found ways to get many of those for free)
- pizza now and then
- business expenses
I lived off the $10,000 emergency fund I’d built by having gotten a second job shortly before losing my first job in 2001, $200 a month in child support, $200 a month in unemployment, and some earnings from wedding photography (although those were mostly offset by the expenses.)
When my mom died, I also got a small inheritance from her. I used that money to go to Hawaii, spend about $1500 on our wedding, and put a down payment on a condo whose rental income equalled its expenses. So none of that money went to debt, savings, or even living expenses. Maybe that wasn’t the greatest use of the money, but it’s what I did.
Luck does help
I was lucky during the bad years, because I already had a place to live. I also drove a used Miata that I’d paid off before that just by making payments until the end of the loan. The 1990 Miata I chose not to replace with a brand new 2000 BMW Z3 after getting a job at a dot com. The dot com I was later laid off from.
I was lucky that I got divorced and got a grip.
That I saw how unstable things were at work, and got a second job to build an emergency fund. That my (now) husband moved in when my roommate left, and that I had a supportive boss who GAVE me money for a car repair.
Lucky my health problems didn’t prevent me from working, etc.
Luck does help, and I’m grateful for it. I don’t think anyone ever achieves anything all on their own, and almost no one gets anything by pure luck.
And I believe that choices matter too, in all kinds of situations.
When I finally started making money again, do you know what I did with my spending? I increased it some, but not by much until after I paid off my student loan.
Even now, we have significantly fewer monthly expenses than most people I know — not even including things people typically borrow for.
Then when both our incomes increased dramatically, our debt payoff increased dramatically too
Those things did not happen by accident.
I did everything I could think of to make more money: from filling out $3 surveys, to negotiating a huge raise (after first quitting), to working full time and sometimes more in my own business. I essentially worked two full time jobs for YEARS. My husband also found ways to make extra money, and he worked full time at better paying jobs.
Did we want to work so much? Not really.
Did we want to be out of debt MORE and still do things we enjoyed? Yes.
Was it worth it? YES!
I wish the joy of debt freedom for you, too. And I believe in you.
You guys are rock stars, and your debt free story is really inspiring! Since getting out of debt myself, I totally agree with your point, that being debt free is totally doable – it’s just about doing what it takes. My debt repayment plan graph looks like a hockey stick too. Once I actually got motivated and began raking in some extra income on the side, my progress really shot up. I was out of debt in less than 8 months.
It’s amazing how motivation makes your progress shoot up :)
Good Job. We too are out of debt but trying to save extra for retirement. Saving is hard, but you’re right, you just have to commit to it.
Have you tried increasing what you’re setting aside for a retirement a percent or two at a time? That really helped me when upping my retirement contributions, because it wasn’t hard to get used to an incremental change.
That is impressive. My much more modest goal is to have my $2500 in consumer debt paid off by the end of the year. That will just leave my student loans which I might never be able to pay off.
Every bit of debt you get gone is great :)
And I bet you can pay off those student loans too!
This is such a totally inspiring story! I’m almost a year into debt repayment and I’m really disheartened with how much time I had left before I’m debt free. But reading this makes me feel like there’s a light, a little tiny one, at the end of the tunnel.
Oh there absolutely is! If you’re feeling disheartened (and you have multiple debts) I’d suggest just focusing on the amount of time left before the next one in your list is paid off. Celebrate incremental progress, in other words :)
What an inspiration! We have about 90K in college loans and it feels like we will never be finished. We are snowballing it, though, and you’re right – eventually it will go faster and faster and it will someday be gone! Congratulations!
Thanks! And you’ll have to write about it when you’re done!
Congratulations, what an inspiring story. I have about 60K in student loans and it seems insurmountable at times, but it’s nice to see others who have done it.
You can do it :)
I agree with everything you said except “I came to my senses and sold the rental property.” That would be a great idea if it cost more to own than you were making in rent, but if it was producing positive cash flow why sell it. While most debt is “bad,” not ALL debt is, and rental properties are a great example of debt that isn’t necessarily bad. My wife and I paid cash for a rental last year and the extra income is really nice. I thought cash was the way to go, but after looking at prices, rent, interest rates on investment property, etc. we would have been better off putting 25% down on 3 houses instead of paying cash for just 1. Our net profit would be around $200/month more. Another example is the house we live in. We borrowed, had to pay PMI for awhile (got that taken care of quick) but if we hadn’t borrowed to buy the house we’d still be living in a crappy neighborhood. Borrowing allowed us to move to a nicer neighborhood, much less crime, less traffic, less noise, our son goes to a better school, etc…
Ah…In this case though it wasn’t producing positive cash flow, I had an interest only loan on it, and it was in another state. It was barely paying the interest on the mortgage. In retrospect I’m REALLY glad I sold it when I did, because shortly after that the market crashed and property values in the area went down dramatically.
Your debt free story is awesome, but it doesn’t tell what your income was during those times.
It’s hard to give meaningful numbers about income because our income was all over the place, and because we keep semi-separate finances.
Basically we each pay our own bills from our own accounts, and each put in half of the total for joint bills (like I did when I had a roommate.) Also, at least one of us was unemployed for 5 of those years.
So basically our incomes ranged from a low of about $2,300/yr to $90,000/yr — and they hit a lot of spots in between. The lowest income that I paid off debt on (my student loan, described in the post) was $2100/mo.
That is absolutely fantastic!
We paid off $235,000 in 5 1/2 years. We are still plugging away at 2 car payments, some back taxes, and the last of a laptop and couch. The credit card debt was $57K (personal and business), plus car loans, taxes, and computer loans. No mortgage in that number. Would love to buy a house someday, but have to save up for the down payment.
Our business has gone up and down over those years. We weathered through 9/11 and the Great Recession. Sometimes it was a struggle to make minimum payments and other times the snowball was a crazy 7-8K a month.
We started in 2006 officially on the Dave Ramsey bandwagon even though I had been trying to pay off debt before, I finally stopped debting on our personal credit cards and got serious about living within our means.
Looking forward to the day when we can take our family to Hawaii or Italy and pay CASH!
I can’t wait to read more on your blog on how you are going to save, give, and have fun now that your mortgage is paid off. That is so exciting! Congratulations!
Shay
Wow you’re doing AWESOME, averaging nearly $43,000 in debt paid off per year! Thanks for sharing your experience :)
This blog will remain primarily about getting out of debt, but will include additional personal finance stuff. And debt free stories from other people too :)
In the past four years, we’ve paid off about $40,000 in debt – which is funny, because I never really tallied that total up until reading your post. I now only have two loans left – my mortgage and my last student loan (technically, my parents pay my student loan, so even though it shows up on my credit report, it doesn’t really affect my month-to-month finances). I’m happy you gave us a concrete timeline here, because it’s nice to be able to put all your numbers in perspective – a lot of PF bloggers sometimes make it sound like they did it overnight!
I hadn’t totaled the amount we’d paid off up until just recently either. Congrats on getting so much of your debt paid off!
Just found your site from Enemy of Debt. What a great story this is! I was feeling awesome about our own $37K reduction this month (about $60K total so far) and then I see THIS! Great work!
You’re doing great too! I can tell you’re completely committed to getting out of debt!
Right on, this is exactly how it’s done. Exactly. If you schedule out how long it’ll take you to pay off debt, I don’t think any of us would get started. YEARS to pay stuff off seems like FOREVER! And so when my wife and I got serious about paying off debt, we took it month-by-month and had a plan too ($100/mo extra should go to our Visa card bill, etc). That method works wonders. It’s a goal, it’s doable, and you’re not extending out your view so far that you suddenly get overwhelmed.
Yup, you’re extending it out far enough to stay motivated and want to GET IT DONE! :)
Jackie, your story is so inspiring! Thanks for sharing with us and in the comments I found inspiration when you encouraged the commenter you were replying to, to just focus on the next debt you will get paid down. Great advice. Thanks!
Thanks, and I’m glad you found inspiration :)
Dear Jackie,
Thank you for your incredible and do-able words of wisdom! I have recently been focusing on debt reduction as well, and I have a question for you. My past priorities included focusing on everyone else, and I put myself at a real financial disadvantage, taking on many thousands of dollars of debt for a failed business. I have about $64,000 in student debt remaining as well as $126,000 from the business for which I’m responsible. If I sold the home I recently inherited, I would have enough to pay it all off and set aside a small emergency fund, too. On the other hand, if I keep working away at it, I can pay the debts off through regular employment. My question is, what would you do? I’d love to know, since you are clearly an “expert” on this, lol! Thanks very much….
“Do” ;D
Hm, I have a few questions before I could say what I’d do in the same situation. What would you do with the house if you didn’t sell it? Have you changed your behavior so that you’re no longer focusing on everyone else first? Are you committed to staying out of debt, and have you already proven that you won’t turn to debt if things get rough?
You knocked out $ 9759.00 in loans in 5 months yet your net pay was only $ 2100.00 a month? That’s $ 1951.00 a month in loan payments, leaving a total income of $ 149.00 per month. For many working Americans, without a cushion of another income, we could not live on $ 149.00 a month. So it takes more than “want”. I tell people get an education or learn a trade skill. Those are your tickets out of debt (assuming you don’t have someone to support you).
Kitty, if you click through to read the details of my student loan payoff you’ll see that I paid off part of that from savings I had accumulated previously. So it was more like a little over $1000 a month, and since I had been living on a ridiculously low amount of money prior to that, I felt rich while living on the other $1000ish a month.
Great job! We started a business in 2010 and that’s when paying off debt became a priority. Filling out loan documents showed me that my net value was in the red. Needless to say, we didn’t get the loan. So, I financed the business with a partner and my savings. All the while, working two jobs, saving and paying off debt. Since March of 2010 we have paid off $75,000 of the $144,000 we owed.
I’m proud of us and working for the rest. My main concern is the largest amount left is a student loan of $57,000. The interest is 1.6%. I hate debt at this point but should I really put my money towards paying this off early?
That’s awesome that you’ve paid off that much debt! If it were me I’d pay off the student loan too, because I hate debt and it’s not worth it to have that hanging over my head. Are you also saving adequately for retirement though? I’d make sure to be doing that at the same time as working on the 1.6% interest debt if I were in that situation. (I did max out my 401k and Roth while we were paying off our house.) I guess my question to you is, why are you having doubts about your plan?
Thanks for the support! I love the app and it has been a huge help and boost to my confidence. I agree with you; I hate having debt hang over me at this point. My wife and I have discussed it numerous times and I think she is concerned we will have too small of savings and limited resources for buying a home. I explained to her that we are not adding more debt with a home when I still have $50,000+ in student debt. She feels that since the interest is so low then we should not focus our money there.
My goals are to have $10,000 in savings at all times, put all extra money towards debt, put what we can afford in monthly installments into my IRA, her IRA and our sons 529 college plan. Then, since I own a business, any bonuses I get go to fund the remaining amounts of our IRAs and to paying off more debt. I plan to get it done by the end of 2014 (maybe sooner!) Again, thanks!
It’s important to have both spouses on board though. Maybe you guys could come to some kind of compromise. 2014 sounds nice and soon though!
I found your site, and App, by accident and am so glad I did. Looking for a snowball tool that was portable, you made it so easy to do. I’ve purchased the App and spent most of the day literally looking at all the possibilities for getting out of debt while at my best friend’s lake house! Just an FYI, the reason I purchased was seeing your response to every comment in this posting. That is incredible and much, much appreciated. I will be back!
Glad to hear it Denise :)
Happy getting out of debt!
Congratulations on paying off your debts. This story may inspire others as well, since some of us still undergo debt. Thank you for sharing this.
Hi there, Jackie. I’m super inspired by your story. I’ve actually been working on simplifying my financial life by closing a bunch of dormant accounts and consolidating them into a new Simple Bank account. I’ve also been using YNAB to better let me handle my finances on a daily basis. I’ve been debt snowballing using a web-based tool provided by Utah State University and have been looking for a nice mobile app to offer the same. I happily paid for your app this morning for my Android and was pleased to find out that my overall debt payoff date presented in your app matches the same date in the web tool. I’m now enjoying going through your articles.
Thanks so much for taking the time to share your story and provide a great app. I feel like I’m on my way!
Cheers!
– Kory
Thanks! It does sound like you’re on your way :)
Keep me posted!