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Hi there friend! How’s it going? I wanted to share more of the details behind how we’ve paid off $51,170 of our debt in 17 months.
The due date of our first payment was in January 2017. We bought an unloved foreclosure that had terrible carpet, a make-shift drywalled, broken fireplace and unending small projects.
We bought the home intending to pay it off very quickly or at least before I turn 30.
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The dirty details of how we’ve paid off $51,170
If I could could tell you in one word what this journey has been, it’s emotional.
- It’s joyous to think of what we can do with no payments of any kind-whatsoever.
- It’s sad to see so much of our paychecks leaving us.
- It’s frustrating at times to not feel like I have 100% control over my time now.
- It’s fascinating to read from experts in the financial independence community.
- It’s confidence building to set a goal and then achieve it.
In 17 months, we’ve paid off $51,170, making less than $100,000 gross. At the start, it felt like we were on the road to climbing Mt. Everest. Now that we’re over 1/3 complete, I feel like I’m in a groove and can speak to the trudge of paying off debt.
In the first 5 months, we hardly paid any extra on the debt because we wanted to have ample savings during our pregnancy and birth center birth. We also had a fair amount of renovations since we bought a foreclosure and also wanted to save up for baby’s medical expenses.
After a while, it seemed silly to us to have our cash sitting uninvested. We decided to start paying extra on the loan in June 2017. You can see from the beginning that our interest charges went down at a g l a c i a l pace. That’s because that’s where the bank makes the money-at the beginning of the loan.
When summer rolled around, we started working to make our principal only payments as large as possible. I spent an embarrassingly obsessive amount of time on our amortization schedule I made in Excel.
I would do all sorts of what-if scenarios to see how we could speed up payoff (and pay less in interest).
While I don’t recommend the obsessive approach, necessarily, it did help me become very familiar with how the bank makes money off of us.
Our strategy was simple: prevent paying as much interest as possible. This meant paying the bank back their money as quick as possible.
We had Terin in August at a birth center and didn’t put as much on the debt in September since I was on maternity leave.
It was then that I realized I had to do something different with my life and own my time. Experiencing new life helped deliver me as a new person, too.
You’ll notice that in December, we paid off a large amount of the mortgage. The story with that is – before we started seriously budgeting, I kept a very large buffer for emergency funds. Too much really.
We had better paying jobs and established our emergency fund from that. In 2017 with baby on-board, we got serious and really cut our expenses and became even more frugal than I thought was possible.
As we figured out how to increase our savings rate, it became obvious that we could live with a more realistic (lower) emergency fund and invest the extra cash.
In December, we used the extra emergency funds + a bonus from Nick’s employer + regular extra principal payments to arrive at $14,266.
We didn’t really celebrate getting the bonus before it was on its way back out to the lender.
In 2018, I quit my full time job because I wanted to freelance on my terms. I now work a manageable 20 hours per week.
This has been a big help in keeping our payoff date closer. I don’t have to travel like I did pre-baby and I enjoy the flexibility so much more. Having the time and energy to share here is great.
While my hours at the office changed, Nick’s work increased. He began studying for his engineering licensing exams that he took in April.
The exam is a rigorous 8 hour test and has several eligibility requirements. He has had this goal for 10 years and finally achieved it by passing the test.
So you’ve paid off some debt. What’s the take aways?
1. Always, always, always pay yourself first and invest that money to build your life.
2. Remember that your spouse is on the journey, too and may not be as eager. Love them through it. Make good memories with them because you want to be with them long after the debt is gone.
3. You don’t need to obsess all day-every day to pay off debt, but you do need a plan.
4. Life will happen while paying off debt. Get back up and keep going. The time will pass anyway and you’ll be no closer to freedom unless you keep going.
5. Find people who inspire you to live the life you want-they will keep you encouraged when it doesn’t seem possible. I’m really into podcasts now since I can sharpen my skills while mothering Terin.
I hope this is helpful for you along your journey to freedom in whatever form that takes. We’ve enjoyed the path and look forward to sharing more of our travels down the road less traveled.