After just about 5 years, I (we) are debt free except the mortgage. I honestly cant believe that we are here. Things have changed so much since I started writing on this site and started my quest to become come debt free. I think that it could be useful to look at then and now.
Back in 2009, I was at the beginning of my debt free journey. I had a job that paid the princely sum of 30k per year (approximately 5x more than I made every year prior to that) and about that much in debt. However, I had laid the foundations that turned around my finances before, and for the first time in a while my spending was under control. While this was a welcome development I was still very afraid of my finances at this point. I had more debt than I was making in a year, and that’s not even accounting for mandatory tax deductions and things I needed to live, such as rent and food. My back was still up against the wall, and to top everything off, I had to commute 50 miles one way from my house to my job in a very rickety car that had only started on fire one time while I was driving it up to that point.
Something had to be done to give me some breathing room, so I decided to keep my old hourly job and simply work later during the day. The catch here was that my old job was also a 50 mile commute but in a different town than my new job. So I was working in 2 different cities, and living in a 3rd, and driving between them. This was a huge sacrifice and I did this for over a year. It was nice, because I had absolutely no time to spend any money. I got up, grabbed my lunch and went to work, then when I was finished I went to my other job. I stopped for gas when I needed it, and hardly ever ate fast food. Once the weekends came, I was too tired to really do anything, and really missed hanging out with my then girlfriend, so we mostly just relaxed and didnt spend much (if any) money. I was able to make a lot of headway during this time, but unfortunately my great fortune didnt last long.
As I had known the entire time, my car was going to give up the ghost – I just didnt know when. Well, it finally happened, and I decided to make a shocking purchase in my situation – I bought a new truck. In one fell swoop after my car died, I almost doubled my total debt, from around 27k to slightly over 55k in consumer debt alone. Even though I felt slightly better about it, I was still pretty afraid – but I wasnt having trouble sleeping at night anymore because I was worried that my car wouldnt start and I’d get a pink slip.
None of those things happened of course, but I was still worried and kept hustling. Slowly, the debt started to go down. After a few years driving, I got really sick of being on the road (and it wasnt sustainable) and I switched jobs to a job in town. Now I could stop driving and walk to work (which I did every day for 3 years – and now I ride my bike). This new job also came with a pretty significant raise, so I was spending much less on transportation and fuel costs and earning quite a bit more. The debt paydown didnt really go into overdrive, but the savings did. During this time period, I was able to pay cash for quite a few things that I normally would have forgone or simply put on credit card. My wifes engagement ring, car insurance, and the beginning build up of our house fund, to name a few. I had never really had a “goal” for my savings accounts before this – I had just been taught to pay yourself first. That advice works great when you’re running your mouth but when you’ve actually paid yourself first for a while you think to yourself “what the hell am I doing with all this cash?”
From there, I just let the debt repayment ride. I am luck in that I have a terribly supportive wife, who was always behind me 100% in this. The balances started to go down slowly as we focused our efforts on one loan, then another. Once the notes got below about 5k is when the real effort started kicking in – the end was near, and it was time to finish them off.
Now, my wife and I have no consumer debt except the mortgage. We save about 45%+ of our income, and are looking to increase that once our financial situation solidifies in the fall. We have an emergency fund that’s funded to 3-5 months of our expenses, and we have savings accounts for projects we want to take on around the house, as well as for our current (and potential future) children. As I write this, I can not think of a single need (except FI) that we are not at least saving for – if we have not fully funded that need already.
There has been a total shift in my finances – and it has been because of lots of hard work and support from my family and friends. If you are deep in debt dont freak out – just take it one step at a time and know that it will be a long road. I seriously thought that when I started this debt-free thing that I could be done with it “in a few months” so I could get back to living a “normal life”. None of that ever happened, and I’m glad for that.
Just to be clear, we are not “debt free” – we are “consumer debt free” or “debt free without the mortgage”. I (or we) have paid off car loans, credit card bills and student loans for the past 5 years – and freed up about 1200/mo+ in the process that we have started to use to save. We are working on a plan for the mortgage to be paid off soon (5 years) and have one but are still hammering out the specifics.
Here is the graph of the student loan from mid April to now. I really enjoy the cliff at the end.
So, for those of you just starting your debt free journey do not be overwhelmed. Dont listen to the people that tell you “you’ll never become totally debt free”. Just keep working and keep hustling and you’ll get there. The people that tell you you wont be debt free are probably people who you dont want to deal with in the future anyway – they dont get it. Stay true to yourself and keep working and do not beat yourself up if you slip up. I slipped up plenty of times, but the most important thing was that I kept at it. Collect your big wins as soon as you can, and from then on focus on your day-to-day.