Just so you know: Life Before Budget has partnered with CardRatings for our coverage of credit card products. Life Before Budget and CardRatings may receive a commission from card issuers. The content of this article as well as comments from users are not meant to be professional financial advice and have not been reviewed by the advertisers. Please read our disclosures page for more details.
Just 7 years ago, my family and I had a HUGE amount of debt! Although we had modest salaries, we made decisions that led to us to accrue $442,500 worth of debt! As debt guru, Dave Ramsey, says, we were “up to our eyeballs in debt!”
Being in this much debt was very difficult. Although most of it was low-interest and “good” debt, we certainly didn’t feel very good about it. After all, we were paying around $40 per day in interest payments. Since my wife and I were making under $40 per hour at our jobs, the first 1-2 hours of each day went to paying interest. Whether the debt was good or bad, it definitely was limiting the amount of freedom that we had.
By this point in our lives, we had paid off my student loans and we didn’t have any car payments. Most of our debt was from buying our huge house and also from a little rental home that we owned. The interest rates ranged from 0% on a credit card that we used for our home down-payment to 4.49% on our rental home. Again, it could be argued that our debt was “good”. After all, our debt was on assets that were appreciating in value. We should have been happy to have all of this “good” debt.
The positive thing for us was that we didn’t feel good about the debt. As a matter of fact, we hated it. It made us feel like we were working the first third of each month for someone other than ourselves. And, that was true. We were working for “the man” instead of for our family and our future. We were spending dozens of hours each month working, just to pay the payments on our credit cards and mortgages.
Eliminating the Debt
As I said, it was actually very good that we hated our debt. This made us want to get rid of it, now. Instead of slowly trying to pay off our debt like the sloth in Zootopia, we realized that a bear was chasing us and ran away from it as fast as possible.
To pay off our debt quickly, we went to work. A lot!
Besides working our full time jobs, my wife and I worked extra to pay down our debt. She took on extra duties at work that led to a higher paycheck and I took advantage of the gig economy by doing freelance work for a variety of publishers. I got up at 4:00 AM to work and I would often work from 8:30-11:00 at night after my kids went to bed. One year, we filed 10 different 1099 forms on our income taxes! It wasn’t easy for us to work so much extra, but we knew that it was going to be worth it.
We took the extra money that we made and paid down the debt immediately. Sometimes we paid 4 mortgage payments per month. Other times, we had to hustle just to pay 1. We kept grinding!
We were hardly perfect! There were disagreements about where our money should be spent and how much money should be budgeted for groceries. However, we always stuck together and did everything possible to pay off our debt.
Just 5 short years after buying our house, we had paid off $182,000 in debt! Our low interest credit card debt was gone and we even traveled to the Dave Ramsey show in Tennessee to scream that we were “debt free”.
Well, almost …
The Decisions
Although we paid off $182,000, we still had around $260,000 in debt. My wife and I were debt free when it came to credit cards, school loans, and car loans, but we still had debt. Instead of having all of our money go to our current selves and future selves, we were still paying on debt that we had accrued in the past.
So, we made a couple of decisions. One was to sell a little rental house that we owned. We were getting pretty sick of this rental house by this time anyways and we wanted to make our life a little bit simpler. This also allowed us to pay off $45,000 in debt!
The other decision that we made was to sell our huge house and move into a smaller one. We didn’t sell it simply to pay down our debt, but to improve our quality of life. The added bonus was that we got rid of around $105,000 in debt.
Whether it was a big decision or a series of smaller decisions, we always listed paying off debt as one of our goals. Besides just making it a goal, we made sure that we followed through on this goal by setting a series of simple, monthly and yearly steps that would help us to achieve it.
Now
We are not out of debt yet. But, the important thing is that we are working towards being debt free. We have set goals to help us get there and have made a series of decisions that align this important priority of ours with our everyday actions.
Our mortgage company tells us that we have 8 years left to pay off our mortgage. After we pay off this final amount of $58,970, then we will truly be DEBT FREE. But, I bet that we keep grinding and sacrificing to make sure that we are debt free in just a few short years. After all, our future and our life are just too important to waste on debt.
Don’t work for “the man”! Become debt free and work for yourself, your family, and your future instead. And then, when you are debt free, pay for a well in a developing country*. Or travel. Or be like Peter Gibbons from the movie “Office Space” and do nothing.** Whatever you decide to do, there won’t be a debt anchor that is dragging around behind you.
Tell us about why you want to get out of debt or how you have already done it in the comments below.
And thanks for reading!
~Nathan
* A fellow blogger and her readers are helping to pay for a water project in a developing country. So far, they have raised over $14,000! They are raising money to give to Charity Water through donations and tee-shirt sales, where the entire profit from the sales go to fund this project. To find our more, click on this link for Afford Anything.
** Actually, you probably shouldn’t try to do nothing like Peter Gibbons. Usually meaningful work and being surrounded by family and friends brings more happiness than just doing nothing. Although, Peter did seem pretty happy in the movie ….
*** The picture of the Legos is a motivational tool that my wife and I use with our kids to get them excited about paying off debt. Each Lego brick is worth $200 and the kids get to remove bricks when we pay money on our debt. It’s pretty cool to get the kids excited about paying down debt!
Let’s keep living a great life … with the help of money. So what’s next?
- You can travel for free by using rewards credit cards.
- You can get motivated and get out of debt.
- You can check out the next post or the previous post and continue to learn.
But no matter what you decide to do, let’s leave the ordinary behind and take action today!
2 Comments
Dan
Great article. And well done. You made some tough decisions and worked hard. Very inspiring. Keep it up.
Life Before Budget
Thanks, Dan. It definitely was worth it to pay off this debt because of the freedom that it provides us now and in the future.