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I’M DEBT FREE!!! (except for the mortgage)

Well, we did it! On Feb 1st we paid off our last chunk of consumer debt.

It feels good.

I would love to tell you a story of us getting mad at our debt and making a huge lifestyle change. I wish I could walk you through the daily grind of sacrifice and debt repayments. I wish I could enthrall you with images of me selling my once prized possessions at garage sales to get money to pay extra towards debt. But for us it wasn’t really like that.

It was more of a slow progression away from stuff and towards financial freedom. As we focused more on what we really wanted in life the “stuff” of life fell to the side. I used to think that having a budget and saving a little each month was good enough. If you could make your payments then you could afford it. I didn’t see a problem with that.

But the more I read, and wrote, and learned about personal finance the more financial freedom took the forefront of my thoughts. My journey to debt freedom was a slow process of gradual debt reduction. I didn’t wake up one morning pissed off at my creditors, ready to take action. I just slowly changed what I thought was important in life. As a result, my finances changed too.

I made my first debt freedom spreadsheet in January of 2008. At that time I had $38,000 in consumer debt and was paying $943 per month in debt payments. I don’t know the high water mark on our debt. It was more than that once. At one point we had almost $1,100 just in car payments!

Slowly but surely we have been paying off the loans. We didn’t use any particular method. Mostly it was avoidance of new debt and an unofficial debt snowball. We did have one set back in March of 2010 when my husband’s car broke down and we bought him a new-to-us one. We borrowed $10,500. We were going to pay it off the following month but a week later our business took a huge hit and a few months later went out of business. So we decided to hold on to our cash since our future was unknown at that time. (I guess the future is always unknown, but right then it was especially unknown!)

That car loan is the one we just paid off. I talked about this some the other day, but I’ll go over it again for those who are just joining us. About a year and a half ago we paid off my minivan. Instead of absorbing that payment into our lifestyle we set up automatic transfers of the payment amount into a new savings account dubbed “the car fund”. This is our savings account for replacement cars when the time comes. Our goal is to never have another car payment.

The car fund has taken some hits along the way. Unexpected medical bills mostly. But in January the balance of the car fund and the balance owed on my husband’s car was about the same. $7,300. Gulp. We could be debt free!!

It was actually really hard to pull the trigger on this. I don’t know why. It’s like the debt becomes part of who you are. My inner change-resistant self screamed “But I’ve always had a car payment!” Plus I didn’t want to let go of this big chunk of savings. Honestly, it kinda felt like a step backwards. I liked seeing that balance. When you have always had a car payment it’s hard to imagine it not being there, sucking away your dollars. I felt like I was just sending money into the abyss.

I finally bit the bullet and sent the money. As soon as it was done I knew I had done the right thing. I had always known mentally it was right, but it wasn’t until the check was in the mail that it felt right emotionally. It won’t take long to beef up our car fund now that we are banking $670 a month in there. That will feel WAY better than making car payments.

25 thoughts on “I’M DEBT FREE!!! (except for the mortgage)”

  1. Congratulations on getting debt free! I’m hoping to follow in your footsteps and ditch the credit card debt – that’s the only one that I’ve got left. I know exactly what you mean about the conflict – you have a nice savings, then it’s ditched to pay off something… but you’ll definitely get it back. ๐Ÿ™‚

  2. Travis @DebtChronicles

    Congratulations, Ashley! I cannot wait to be able to say that same thing. I’ve got a couple of years to go, but hearing stories like yours makes me want it even more…!

  3. Congrats. Bank the money that you would have sent in payments into a car fund, that way you won’t have to make payments on your next car. Writing a check for the full amount is an awesome feeling!

  4. Congratulations! That’s a great accomplishment. We are CC debt free but do have 2 0% loans that we’re paying off (one vehicle, one furniture). Right now instead of the loans, we’re building our savings. I hope one day we’re just like you though! ๐Ÿ™‚

  5. Congrats to you on meeting your goals and getting out underneath a huge mountain of debt!.. You guys should be very proud of what you have accomplished..

    What are you goung to do with the extra cash flow?

  6. Thanks everyone!!!

    Money Beagle: We will be doing exactly that. I figured out how much we need to save per month to have enough to replace our cars when I think we will need to do so. It came out to almost exactly what our car payments were. So that actually worked out nicely.

  7. Cynthia: We did the same thing. I know “they” say to attack the loans first before building savings but if it makes you feel more comfortable to put some extra in savings then I have no problem with that.

    Jefferson: We will start saving for replacement cars and for some big medical bills we know are coming this year.

  8. Congratulations! My consumer debt isnt at the same leve, but it’s like a horrible heavy shadow that follows me around. I cant wait to say what this post headline says!


  9. John | Married (with Debt)

    Awesome job guys – I would have done the same thing. Kudos for saying there is no magic bullet – just hard work and a shift in mindset.

  10. That is so awesome ๐Ÿ˜€ I will be in that boat this year as well. I was there a few years ago but immediately got hit with some big expenses and didn’t have the emergency fund to cover them all.

    Course that’s another one of my problems. I hate using my emergency fund and I need to acknowledge that this is what it is there for lol

  11. Way to go Ashley. Slow and steady is winning the race for you and the fact that you are not adding new debt. We had 37 cars in our 1st 25 years of marriage and always had at least two car payments. Now I still drive a 1999 Toyota Camry with 150,000 miles and the clearcoat coming off the top. I am going to drive it until it drops and we have a car fund to buy a brand new car if we want. Ten years ago I was addicted to car lots and the smell of leather. It feels good to be out of debt and now we are working on the mortgage. I know the grass will feel better when our house is paid off.


  12. Awesome job! You’ll save so much money by saving up for your next car — paying outright with no interest to repay as well will be an awesome feeling. My husband and I hope to do this with our next car.

  13. Jason Cabler (@DrCabler)

    Welcome to the club Ashley! We’ve been debt free except for the house for over 6 years now. We even paid cash for my wife’s Infiniti since then. Debt freedom really is all it’s cracked up to be.

    Make sure you build up a good emergency fund if you haven’t already and you’ll never have to go back into debt if something unexpected happens.

    Keep up the great work!

  14. Well done!!!!
    I will be there where you are now on 21/12 2012 when i will make my final payment to my debts.I will have paid off ยฃ12,964 in 2012.Never again will i get in debt!God Bless from the United Kingdom!

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