Debt Freedom

kw18

A little less than 10 years ago, my graduate thesis was approved. My final bill for five years of school was about 32K. I went on one 12-month forbearance period to get a handle on my credit card debt down, and then went hardcore to pay down my loans.

And now I have.

I sent my final student loan payment in today. For a decade, it has been a monkey on my back -- a crazy, smelly, money hungry, soul crushing, beer guzzling monkey who pulled out all the hair on my head (mystery there solved!). And now, that monkey is dead. Dead. Dead. DEAD. :twisted:

My massive amount of credit card debt was paid off about five years ago, and now all I have is my car loan, which I should finish in less than a year -- just 2.5 years after I bought the car.

I'm so pumped to have finally finished my student loans, and I can't believe I'll be totally debt free in less than a year. (Well, except for the house. But that's like a constant in life, pretty much.)

This, on top of a new part-time coaching gig, just about makes it the best week ever. I'm going to drink a lot of beer tonight and make some mistakes. :shifty:

Is there anyone else out there who recently finished paying off some debt? Share your stories!

Oh, and for those of you still struggling with debt ... keep your eye on the ball! Paying off huge loans sucks and you feel as if you'll never get out from under the crushing debt, but you will! The day will come, and you will be overjoyed when it does. Good luck!

ajedigecko

good work and congratulations.

we made the move this past year to be debt free...we live on 2/3 of one salary now. the other 1 1/3 is being used wisely.

MayDay10

its not over yet.


Now you get money to work for you

hedonist

Congrats! It takes a lot of work, sacrifice and discipline. SO worth it though.

Aside from our mortgage and a car that'll be paid in full within the next year or so, we're debt-free too! We pay cash/debit for everything and won't make larger purchases unless they can be paid in full up front.

Cheers to you!

afroannnie

kw18 wrote:

A little less than 10 years ago, my graduate thesis was approved. My final bill for five years of school was about 32K. I went on one 12-month forbearance period to get a handle on my credit card debt down, and then went hardcore to pay down my loans.

And now I have.

I sent my final student loan payment in today. For a decade, it has been a monkey on my back -- a crazy, smelly, money hungry, soul crushing, beer guzzling monkey who pulled out all the hair on my head (mystery there solved!). And now, that monkey is dead. Dead. Dead. DEAD. :twisted:

My massive amount of credit card debt was paid off about five years ago, and now all I have is my car loan, which I should finish in less than a year -- just 2.5 years after I bought the car.

I'm so pumped to have finally finished my student loans, and I can't believe I'll be totally debt free in less than a year. (Well, except for the house. But that's like a constant in life, pretty much.)

This, on top of a new part-time coaching gig, just about makes it the best week ever. I'm going to drink a lot of beer tonight and make some mistakes. :shifty:

Is there anyone else out there who recently finished paying off some debt? Share your stories!

Oh, and for those of you still struggling with debt ... keep your eye on the ball! Paying off huge loans sucks and you feel as if you'll never get out from under the crushing debt, but you will! The day will come, and you will be overjoyed when it does. Good luck!

I'm so proud of you, sweetie! I can't wait to celebrate tonight!

FrankieG

Congrats!

I graduated May 2013 and my first payment is due in December! :evil:

PureandEasy

That is awesome and not easily achieved. Nice job.

I pay everything with cash/debit as well.

We have a purchase plan here at work where you buy things through payroll deduction - anything from large appliances, tvs, furniture, etc. So instead of charging a new mattress set (which I desperately needed) I purchased it through work with no interest and payment comes right out of my paycheck for 24 payments. And you're limited to the amount you can spend (depending on your salary) so you never get over your head in debt.

and you learn not to miss that amount being deducted from your paycheck, you just adjust your budget. And believe me, we can all cut some expenses that we don't really need - eat out less, reduce your cable access, etc.

rival.

kw18 wrote:

beer guzzling monkey who pulled out all the hair on my head (mystery there solved!)

kw18 wrote:

This, on top of a new part-time coaching gig, just about makes it the best week ever. I'm going to drink a lot of beer tonight and make some mistakes. :shifty:

congrats man, huge achievement! maybe you should give ashlee your credit cards for the night to avoid credit card mistakes

Kimmiebyrom

CONGRATULATIONS!! That is huge!!
To be debt free, which we have been for several years now, means to live like no one else so you can live like no one else. Debt is bondage and it sucks. So happy for you, man! Nothing like financial freedom!

hedonist

Kimmiebyrom wrote:

CONGRATULATIONS!! That is huge!!
To be debt free, which we have been for several years now, means to live like no one else so you can live like no one else. Debt is bondage and it sucks. So happy for you, man! Nothing like financial freedom!

Dave Ramsey fan? :P

MayDay10

I was floundering between Credit Cards, Student Loans, Car Payment for most of my 20's which sucked ass.

They really need to teach Personal Finance in public schools.

In 2007 I said enough is enough. I made a complete written budget and a giant excel spreadsheet with a workbook with each account, that calculated everything up until it was paid off (like I could type in paying double the payments every month and it would show me when it would be payed off including interest).
Hacked away a lot of unnecessary spending, payments, fees, etc. Basically made myself anal overnight.

Then I was able to eliminate everything in less than 3 years. It was weird, and went much quicker than I had imagined.

So then I started to invest. Maxing out my 401k contribution, making a Roth on my own, and also saving $ for a house. Also had inherited some individual stocks. I had/have everything on the excel sheet and closely watch, updating the 1st of every month. Now I have the house and track its value, how much I owe, how much it will be worth in 30-40 years, etc.

And now I am so disciplined, I am able to make all purchases on Credit Cards, which help the credit rating and also accumulate points (I have a Southwest Card and have like 10 trips to Vegas-worth). I was also able to shop around and get a car at 1.2%, which is good as you expect your investments to exceed that.



So looking at this sheet and seeing in just about 6 1/2 years, going from -$50,000.00 to where I am now... and where I strive to be when I am 59 1/2 is really exciting. I remember having $-dread always in the back/front of my mind in my 20's and how much that sucked.

Kimmiebyrom

hedonist wrote:

Kimmiebyrom wrote:

CONGRATULATIONS!! That is huge!!
To be debt free, which we have been for several years now, means to live like no one else so you can live like no one else. Debt is bondage and it sucks. So happy for you, man! Nothing like financial freedom!

Dave Ramsey fan? :P

Well, fan is a strong word. But I did get out of debt thanks to his program and our hard work.

Kimmiebyrom

MayDay10 wrote:

I was floundering between Credit Cards, Student Loans, Car Payment for most of my 20's which sucked ass.

They really need to teach Personal Finance in public schools.

In 2007 I said enough is enough. I made a complete written budget and a giant excel spreadsheet with a workbook with each account, that calculated everything up until it was paid off (like I could type in paying double the payments every month and it would show me when it would be payed off including interest).
Hacked away a lot of unnecessary spending, payments, fees, etc. Basically made myself anal overnight.

Then I was able to eliminate everything in less than 3 years. It was weird, and went much quicker than I had imagined.

So then I started to invest. Maxing out my 401k contribution, making a Roth on my own, and also saving $ for a house. Also had inherited some individual stocks. I had/have everything on the excel sheet and closely watch, updating the 1st of every month. Now I have the house and track its value, how much I owe, how much it will be worth in 30-40 years, etc.

And now I am so disciplined, I am able to make all purchases on Credit Cards, which help the credit rating and also accumulate points (I have a Southwest Card and have like 10 trips to Vegas-worth). I was also able to shop around and get a car at 1.2%, which is good as you expect your investments to exceed that.



So looking at this sheet and seeing in just about 6 1/2 years, going from -$50,000.00 to where I am now... and where I strive to be when I am 59 1/2 is really exciting. I remember having $-dread always in the back/front of my mind in my 20's and how much that sucked.

Freaking excellent!!!

MayDay10

This book actually did a world of wonders for me, and I still refer to it from time to time.

hedonist

MayDay10 wrote:

This book actually did a world of wonders for me, and I still refer to it from time to time.

The blurb on the front reminds me of "A Festivus for the Rest of Us"

I agree personal finance would make a great school course...but it should also be taught at home, at a young age. And demonstrated by (parents') example.

And really, the concept is so simple (for most situations)...spend less than what you earn, and save where and when you can.

MayDay10

yes, I agree... but as we see so much, parents are inadequate and it gets passed down. Just look at our current society of debt. These people arent passing on good habits to their kids.

Growing up we were somewhat poor, lower-middle class. I wasnt tought much at all... other than a very strict forbidding of any kind of credit cards (with little explanation). By the time I signed up at a hockey game, and got one in college, I could buy Madden 99 and a Playstation, and a grip of groceries with it and pass the buck down the road.... it was great.

I think of myself as fairly intelligent, and I had to burn my hand on the debt stove quite a bit to understand. But in school, it was more important to tell me what the Boxers rebellion was.

rick1zoo2

hedonist wrote:

MayDay10 wrote:

This book actually did a world of wonders for me, and I still refer to it from time to time.

The blurb on the front reminds me of "A Festivus for the Rest of Us"

I agree personal finance would make a great school course...but it should also be taught at home, at a young age. And demonstrated by (parents') example.

And really, the concept is so simple (for most situations)...spend less than what you earn, and save where and when you can.

that, and dont get married....

MayDay10

yes, the basic principle is as simple as can be. However, so much stimulus to spend, spend, spend, and you have friends (who can and cannot afford things) spending money, which encourages people in their 20's to 'keep up'.

You can drive a 'beater', shop for essentials at Sams Club, bring your lunch to work every day & brew your own coffee, plan your meals/grocery so you never waste food, go without inessential cable, etc...


of course if everybody was on point, and knew how to save... our economy, as well as China's would crumble.

hedonist

rick1zoo2 wrote:

hedonist wrote:

MayDay10 wrote:

This book actually did a world of wonders for me, and I still refer to it from time to time.

The blurb on the front reminds me of "A Festivus for the Rest of Us"

I agree personal finance would make a great school course...but it should also be taught at home, at a young age. And demonstrated by (parents') example.

And really, the concept is so simple (for most situations)...spend less than what you earn, and save where and when you can.

that, and dont get married....

Aw shit! ...we took that leap last week.

Taxes should be interesting next year (or hopefully not).

MayDay, I got in credit card trouble too despite having what I thought was a grasp on the concept. I will NEVER go back there again.

ldent42

MayDay10 wrote:

This book actually did a world of wonders for me, and I still refer to it from time to time.

I just bought that from my local thrift store for $3 as a gag gift for a friend who is TERRIBLE with money.

Personal finance should absolutely be taught in public high schools, but in a way that is mandatory for everyone to take it. I also think it should be offered as a free college course/workshop type thing as well. I read 'Mutual Funds for Dummies' to learn how to make investments because I had literally no idea. I tried to do the stock market thing myself but wound up with a complete mess. After reading the appropriate sections of that book, plus a bunch of details for specific funds on Vanguard's website, I've got a 13.2& rate of return on my investments after 1 year. For someone who didn't know what the hell a mutual fund even was a year and a half ago, I'd say that ain't too shabby.

I was never directly taught how to handle money by my parents, but looking back on it now I can see that I should be really grateful for that because they would've made terrible role models. I grew up broke as well, so (thankfully) I did learn bargain-hunting.

I didn't start going to college until I was 23 because I knew I couldn't pay for it. I applied at 19 or so to a private college (I dont know if it's private, what I mean to say is that it's not a city school) and the tuition was about 20 or 25k a year. When they told me I wouldn't be getting any financial aid I just left. I kept working and started saving, and after a couple years I was able to get a job not far from the city community college in my area. The tuition there was a fraction of what the private school wanted and I already had some savings to back me up. Since it's a city school I was able to get night time classes and graduate with an associates in business, AND transfer to a 4 year school with the general education requirements already done (so i just need to fulfill the requirements for the majors). It's not the "traditional" or "typical" way of doing things but it's working for me!! and NO student loan debt. Because student loan debt does not make any sense whatsoever in my brain.

That said, since so many of you guys have dealt with student loans, could someone please tell me if you get a student loan, could you pay the whole thing back at once in your first payment? Or do they MAKE you pay back little by little so that they can get the interest money from you?

kw18

I have 2/3 of my auto loan paid off ... in another four months -- just before we leave for Europe -- it'll be totally paid. Total pay-off time on the 5-year loan = 2 years, 7 months. I'm fairly excited as that will mean, with the exception of the mortgage, my wife and I will be totally debt free!

FrankieG

How big of an emergency fund do you all have? Trying to balance between retirement fund, student debt, and emergency fund savings..

SVRDhand13

ldent42 said:

That said, since so many of you guys have dealt with student loans, could someone please tell me if you get a student loan, could you pay the whole thing back at once in your first payment? Or do they MAKE you pay back little by little so that they can get the interest money from you?

You could pay it off right away. But if you are able to, why even take out loans to begin with?

I am done with 2 years of 10 years of law school loans.

My final payment will be the best feeling ever .

Congrats to the OP for being school debt free!

kw18

FrankieG said:

How big of an emergency fund do you all have? Trying to balance between retirement fund, student debt, and emergency fund savings..

My ultimate emergency fund goal is six-months salary. Due to my recent wedding and the upcoming Europe trip, the fund is only about 1-month. But I'm not too worried as I have a two stable jobs; by the end of the year I'll have six months saved up.

There are a couple different ways to approach debt. I generally attacked the highest interest first, throwing everything at it. If you have retirement through work, that makes it easy because it's not money you'll ever have your hands on, so you won't really miss it. If not, set up some sort of auto-withdrawal and budget around that.

I wasn't too concerned about my emergency fund, and I don't think most people with a lot of debt should be if they have a stable job. My advice is that if you definitely want some sort of saving fund but have a lot of debt, have a small and manageable amount from every paycheck automatically go into savings. Like $10. Another way to think about it is sacrificing a couple drinks at a bar every two weeks. It's such a small amount you don't really notice it, but after a year you'll have a couple hundred saved up. If you keep that up, while your paying off your debt, you'll be in a good spot.

PJ_Soul

Congrats!!! That's a real achievement. :-bd
I am still paying off my student loans, after many years. Should be done in another couple years. I can't wait for the day!

kw18

SVRDhand13 said:

ldent42 said:

That said, since so many of you guys have dealt with student loans, could someone please tell me if you get a student loan, could you pay the whole thing back at once in your first payment? Or do they MAKE you pay back little by little so that they can get the interest money from you?

You could pay it off right away. But if you are able to, why even take out loans to begin with?

I am done with 2 years of 10 years of law school loans.

My final payment will be the best feeling ever .

Congrats to the OP for being school debt free!

Thanks! And congrats to you ... law school, Wow! Good luck with your payments -- you're 1/5th of the way there!

And I agree ... there's no reason to take out a loan if you don't need it. But if you need it while going through school and can pay it back with one payment after school (that's some first job!) you absolutely can do it.

The big thing everyone should watch out are the "scams" some financial institutions offer for low monthly payments. Yeah, you'll have a super low monthly payment, but the interest will kill you and you'll wind up paying the loan back three-times over throughout the course of 30 years.

kw18

PJ_Soul said:

Congrats!!! That's a real achievement. :-bd
I am still paying off my student loans, after many years. Should be done in another couple years. I can't wait for the day!

Good luck! It's a great feeling when all is said an done, for sure.

hedonist

kw18 said:

I have 2/3 of my auto loan paid off ... in another four months -- just before we leave for Europe -- it'll be totally paid. Total pay-off time on the 5-year loan = 2 years, 7 months. I'm fairly excited as that will mean, with the exception of the mortgage, my wife and I will be totally debt free!

Bravo! ...and behold the glory of patience, sacrifice and determination - virtues which carry over into so many other non-monetary aspects of life.

FrankieG

kw18 said:

FrankieG said:

How big of an emergency fund do you all have? Trying to balance between retirement fund, student debt, and emergency fund savings..

My ultimate emergency fund goal is six-months salary. Due to my recent wedding and the upcoming Europe trip, the fund is only about 1-month. But I'm not too worried as I have a two stable jobs; by the end of the year I'll have six months saved up.

There are a couple different ways to approach debt. I generally attacked the highest interest first, throwing everything at it. If you have retirement through work, that makes it easy because it's not money you'll ever have your hands on, so you won't really miss it. If not, set up some sort of auto-withdrawal and budget around that.

I wasn't too concerned about my emergency fund, and I don't think most people with a lot of debt should be if they have a stable job. My advice is that if you definitely want some sort of saving fund but have a lot of debt, have a small and manageable amount from every paycheck automatically go into savings. Like $10. Another way to think about it is sacrificing a couple drinks at a bar every two weeks. It's such a small amount you don't really notice it, but after a year you'll have a couple hundred saved up. If you keep that up, while your paying off your debt, you'll be in a good spot.

dam 6 months?! Right now I have like 1/4 of a month ) Yeah retirement is through work and earning more that the interest on my debt, so I'm coming out ahead by contributing more to retirement than paying off my debt. (We'll see how long that lasts..)

I am mainly concerned about my emergency fund becuase I know I'm gonna need to find a cheaper apartment in the summer, plus I'm gonna need car repairs soon, and a new car probably 2 years out. Plus this the possibility of another Pearl Jam tour (always got to figure that in ) )

kw18

FrankieG said:

kw18 said:

FrankieG said:

How big of an emergency fund do you all have? Trying to balance between retirement fund, student debt, and emergency fund savings..

My ultimate emergency fund goal is six-months salary. Due to my recent wedding and the upcoming Europe trip, the fund is only about 1-month. But I'm not too worried as I have a two stable jobs; by the end of the year I'll have six months saved up.

There are a couple different ways to approach debt. I generally attacked the highest interest first, throwing everything at it. If you have retirement through work, that makes it easy because it's not money you'll ever have your hands on, so you won't really miss it. If not, set up some sort of auto-withdrawal and budget around that.

I wasn't too concerned about my emergency fund, and I don't think most people with a lot of debt should be if they have a stable job. My advice is that if you definitely want some sort of saving fund but have a lot of debt, have a small and manageable amount from every paycheck automatically go into savings. Like $10. Another way to think about it is sacrificing a couple drinks at a bar every two weeks. It's such a small amount you don't really notice it, but after a year you'll have a couple hundred saved up. If you keep that up, while your paying off your debt, you'll be in a good spot.

dam 6 months?! Right now I have like 1/4 of a month ) Yeah retirement is through work and earning more that the interest on my debt, so I'm coming out ahead by contributing more to retirement than paying off my debt. (We'll see how long that lasts..)

I am mainly concerned about my emergency fund becuase I know I'm gonna need to find a cheaper apartment in the summer, plus I'm gonna need car repairs soon, and a new car probably 2 years out. Plus this the possibility of another Pearl Jam tour (always got to figure that in ) )

Six months is for sure on the extreme side of things, I know! Most places I've looked at suggested three-months salary ... it can be hard, though! I had a lot of expenses that kept digging into my savings, and that sucks. Sounds like your on the right track though.

Downsizing to cut expenses is a really good idea. I got rid of my cable TV, which I didn't really miss after it was gone. Cook more, eat out less, and buy in bulk ... those are good tips, too, to free up money to pay down the debt faster, and/or give you a bit extra cash on hand for emergencies.

Good luck, and keep at it!

kw18

hedonist said:

kw18 said:

I have 2/3 of my auto loan paid off ... in another four months -- just before we leave for Europe -- it'll be totally paid. Total pay-off time on the 5-year loan = 2 years, 7 months. I'm fairly excited as that will mean, with the exception of the mortgage, my wife and I will be totally debt free!

Bravo! ...and behold the glory of patience, sacrifice and determination - virtues which carry over into so many other non-monetary aspects of life.

Indeed.

And thanks!