Author Topic: Being debt free... from the begining  (Read 1630 times)

Offline Dagny

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Being debt free... from the begining
« on: June 04, 2010, 11:35:57 AM »
I was listening to a recent show about debt and Jack encouraged us to post about our own debt experience. Including those that have never had any.

My husband and I are both in the latter category, having never had any debt, except for a mortgage, which we eliminated by the age of 30 (with the exception of briefly taking on a mortgage again in order to move). This experience might be of greatest use to those young enough to still make the decision to STAY out of debt, or at least confine that debt to student loans and a mortgage.

Our situation comes as a combination of good luck as well as good decision-making. I will be the first to admit luck's role in life. Both my husband and I had our school expenses paid for by a combination of parent support and scholarships, and both of us were blessed enough to be completely unapologetic geeks. How is that lucky? As geeks, our compulsion to keep up with the popular culture of acquisition of "stuff" or the keeping up with fashion never materialized. I claim no superiority there - it is no great triumph to refrain from blowing hundreds of dollars at the mall, when I have no interest in going to malls to begin with.

However, I am also sympathetic to those whom frugality is not natural. Like any human being, I have my own struggles that I work to overcome. And I DO work to fight them, and I know it is not always quick or easy.

Anyways, here are some of the steps we followed to remain debt-free:

- We worked through school even though we didn't need to. We saved 80-90% of that money, even though we didn't "need" to, ultimately amounting to enough to put a 20% down payment on a house by the age of 24. If we hadn't had financial support for tuition and living expenses, this would have been enough savings to make a huge dent in student loans, enough where we may have not been buying a house at age 24, but the student loans would have certainly been gone by then.

- We went carless when we could get away with it, and then drove whatever used/handmedown/crummy car we could find - and did not purchase ANY new vehicles until we had the cash to do so

- While we did (and still do) have credit cards, "credit" was not even in the picture. If we did not have the cash to buy it, we never considered it an option. This meant garage sale, Ikea, and hand-me-down furniture literally until our house was paid off and 3 months savings was in the bank. If we don't have the money, we don't spend it. That includes items, vacations, clothing, cars - anything.

- When money came our way (severance package, followed immediately by a new job offer) we paid down our mortgage. Ignored any notion of that money being used for anything else.

- When we woke up to realize what was happening to the California economy... we got.. the hell... out. We sold our house and moved to Alabama, in spite of living in California our entire lives. If only we had pulled our heads out of the sand a year or so earlier, but we still got out in time to buy a house mortgage free - which is exactly what we did, instead of spending all our "house money" on a ridiculously large house of equal value (and mortgage)  in Alabama, which is what we have seen a lot of people do who move here.

- When we sold our California house, we immediately turned around and paid off our Alabama home, and banked the rest of the cash, ignoring all advice from family and friends to keep the mortgage and invest in the stock market. Thank God we listened to our gut and not the advice of others.

I cannot say the joy it has given us to remain debt free. When I hear of the debt of friends and neighbors I literally cringe. I can only imagine the sleep I'd lose and the tension it would cause in my life and marriage. I have friends with tens of thousands of dollars in credit card debt, plus a mortgage and car payments, and no savings - at age 40, 45, 50. By avoiding the trap, we have enjoyed our adult lives free from financial stress and worry. Whatever material possessions we have done without has been MORE than worth it.

« Last Edit: June 04, 2010, 11:42:02 AM by Dagny »

Offline beachwalker

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Re: Being debt free... from the begining
« Reply #1 on: June 07, 2010, 02:51:27 PM »
It is such a slippery slope... God bless your good fortune and smart choices.

IMHO Savings... probably as important as zero debt. I always tried to skimp by with as little cushion as possible, and I learned you can never have enough savings. 

We've eliminated our consumer debt after a decade of little discipline, and quite honestly... knowing better. Throw in a few bouts with Murphy and you get the picture...

Just doing a refi to a 20 year mortgage which will equal my current 30 year payment... save 8 years and about $100,000.

All money left over is going to a floating fund for unforseen expenses, build the financial bombshelter of six months liquid cash, six month eqivilents in PM's, Health Savings Account, and finally mortgage debt reduction.

Total debt free target date is December 31, 2021 with a paid for acerage, small homestead, self sufficient. My wife is totally on board.

Zero consumer debt has been the best thing that has happened to our ten year marriage.

No more arguements about money... we discuss larger purchases and budget accordingly.

No more dread of going to work... I find work more enjoyable and look forward to it.

Retirement savings... luckily I have in the low six figures and at 10% annual growth I can still reach those goals without ever contributing another dime.