Starting off your Moustachian journey with Debt?

[saahee]

Well that would be quite hard to deal with considering how you are going to start not a level playing field but even lower.  But it totally attainable and something you can totally deal with.  People just can't wait to be free of debt though they practically know that it is to their fault that they are down with this much.  But in some cases, they just do not have any other option to make it lighter.

[keith]

May numbers are in...

- $4025.73 towards debt reduction.
- Car is 100% paid off now, leaving student loans as my only remaining debt.

I called in some reinforcements to help give me an extra push. Some additional company stock vested, so I sold it. The stock was a bonus, so I didn't purchase it in the first place. Was a quick way to pull in some extra cash for the month. Also I paid things earlier in the month so I can let everything else "fit" into the budget. I think this is going to help a lot.

FYI - this will probably be my last personal progress update in this thread until I hit zero. I will likely move my future progress updates to a journal thread in the other side of the forum, to avoid cluttering this thread too much.

[carolinakaren]

I've only just started on this forum (although I've been reading MMM for a while), so I'm late for your challenge.  I am now free of all debt except the mortgage.  In March I paid off the second mortgage. It had a ridiculous variable interest rate and needed to be punched in the face!  Right now the mortgage sits at about $137,000 at 5.89%.  When I bought the house in 2005 that was the best rate available.  This obviously needs to be refinanced, but I have something I want to throw at you guys..... I think I can be mortgage free in 23 months.  It will take 6k extra each month.  If anyone has advice I would love to hear it.  My credit is excellent, but I'm chicken-shit about refinancing for some reason.  Part of the problem is maybe closing costs would be high and wouldn't be recouped before the pay-off. On the other hand, I could save approximately $400/month in interest!  I'm gonna knock it out either way dammit!  :)

[grantmeaname]

See if you can roll closing costs into the rate instead of paying for them out of pocket or rolling them into the balance. You could also see if you could do a streamline refinance, which eliminates many of the costs (like appraisal, title insurance, etc.).

[Mr Mark]

Ask for a no-fee refi, and get a 30yr 5/1 ARM. Don't mention your plan to repay early, as a 30yr variable (which it will be after 5 years) is worth more to investors, so you'll get a better subsidy and a lower initial rate. Make sure there's no penalty for early repayment. With good credit you'll save ore than 2%

[carolinakaren]

Thanks guys!  I also think a 30yr 5/1 ARM seems like a good idea.  I was unsure about how to lower the closing costs.  I will use your ideas to streamline or do a no-fee refi.....didn't really know if that stuff existed.  I appreciate the ideas!

[amyable]

  Yes, we will be able to send about half of our income to debts. Even thought we have a combined income of about $55,000 (pre-tax), we live in a very cheap area of the country.

Our financial situation is very similiar to yours, Stella.  We're currently living on around half of our income to pay off $40,000 in student loans and expect to be debt-free by mid-2014.     

[jdoolin]

My wife and I just started reading MMM about a month ago, and in that amount of time we've made a LOT of changes.

We're starting our journey with about $50k in debt, mostly student loans, some of it on a car and a few thousand in credit cards.

Now, here's how serious we are about punching this debt in the face: Within just 2 weeks of reading my first post on MMM, my wife and I made plans to move in with her parents.  See, we currently, for all intents and purposes, rent from my parents, who have been divorced since 2003.  The house is still theirs, but we've made payments and done the upkeep (and improvements).

But my in-laws have a big house all to themselves.  Last year they offered to let us live with them after I had lost my job (my employer was funded primarily through a government contract that wasn't renewed).  We asked if that offer still stood, we told them our plans and they immediately agreed.  This is a HUGE win for us, because that does two things: 1) they are only requiring a measly $200/mo compensation, so our living costs will be miniscule, and 2) our commuting costs are significantly reduced, as my wife is much closer to work and I'm now within biking distance (for at least a couple days a week) AND my new job is only 9 months out of the year, allowing me to work another job in the summer and extra hours during the year (yes, I'll be a teacher at a local community college).  The commute should also work out that my wife's overlaps, eliminating the need for two cars to be on the road.  We're also in biking distance of all necessary stores.

So the plan is:

Year 1: Kick that debt right in the liver and watch it crumple to nothing.  DEBT FREE by this time next year.
Year 2: Save up for a 20% down payment on our own house even CLOSER to work AND some extra to start building that 'Stash

Years 3-12: Continue the frugal, Mustachian lifestyle and accumulate the savings we'll need to be Financially Independent

Actually, the accumulation phase could be even shorter depending on any wage increases or other profits.  I intend to become quite the producer in my ample free time as a community college instructor.  My wife is a teacher as well, and she's going to start doing summer work as well.

I'm really excited about the future.  And I *adore* my wife for so immediately being on board with these plans.  She's read through most of MMM's blog herself already and has very quickly adopted the right mindset.

[keith]

my wife and I made plans to move in with her parents.

Based on the rest of your plan, this sounds like a great move to help get yourself out of the hole.

Housing costs are usually the biggest part of the budget for most people, and reducing it to that level will completely work wonders for your savings and debt paydown rate. Not to mention the commute stuff working out even better for you anyway.

Good job, keep us posted on the progress!

[carolinakaren]

No kidding you guys are serious about this!!! Really awesome job to move forward with such decisive action.  It really gets rolling sometimes when both spouses are on the same page!

[sarafi]

I am in, although in many ways we were "mustachian" for a number of years, but we fell right off the cliff last year.

Moved internationally, during a traumatic pregnancy/health issue with another kid and hubby moved ahead of us (baby was waiting to be born and get a passport) and bought a fully financed $40,000 car. Then we bought a house! Holy god do I wish the car thing never happened.

We spent $20,000 out-of pocket for airfare and hospital fees in 2011, even with very good insurance and relatively cheap flights.

Car is now at 30,000 at 2.8%

House is at Euro 299,000 at 3.5% (the good news is that we only pay upkeep and interest on this amount as part of our pay package for ten years and the loan is set to pay off in that time.) If we pay nothing early and have reasonable repairs we are looking at putting in less than USD $100,000 over the ten years and ending up with a house worth USD $400,000 .

We've maxed out retirements for the past few years and has contributed what we could for many years prior, while fully funding Roths as well. This year will be a squeeze to get the Roth's in, but I am committed. Had to drop the TSP contribution to 10% due to cash flow/debt issues.  If we can't find anything cheaper that will fit our six person/three car seat family in the near future I plan on powering thru and paying the damn car off this year.

We are both 35, have $175,000 in retirement accounts and a net worth of $250,000 (I count the car value in net worth as it is fully insured and sell-able. Not to mention four beautiful children as well. I stay at home and hubby brings in $75,000 salary before living allowances. Our eldest is nine, and the baby is one. School here starts at 7:30 and gets out between 11:00 and 1:00 (all different times  for each age group/day). This makes it difficult to envision working outside the home myself for the time being. I am looking into teaching English to toddler as that program has recently been cut from the kindergarten.

Anyway, good to meet you all! We already bike most places, hubby commutes via bike and our village is fully walk-able as well. We use the car to go hiking on the weekends, and hubby uses it once/week to commute (weather or just so he can do errands). I use it for errands once a week also, so typically we drive 3 days/week maybe 30 minutes at time.

We do all the normal things, thrift shop for stuff we can't get free, no cable, no cell phone plans, make cleaners/beauty supplies, internet long distance, cloth diaper (brief experiment in cloth toilet paper but kids kept flushing the wipes), grow some of our own food, plan on adding free-range chickens this year for eggs and tick control.

Things we could work on: grocery budget!!! My kids eat sh$t tons of bread and it's not cheap. Thinking about going Paleo for the price and for some behavioral issues.

Wow, long first post! Looking forward to learning more.

[kdms]

Things we could work on: grocery budget!!! My kids eat sh$t tons of bread and it's not cheap. Thinking about going Paleo for the price and for some behavioral issues.

We tried going Paleo for similar reasons....but we just like bread and pasta too much to give it up entirely.  If your kids like bread that much you may face a mutiny!  :)  Any way you could try making your own?  It's not that hard, and you'll get faster as you go.  It's saved us tons of money on bread and pasta by going home-made....and we can control the contents, make it healthier by using ancient grains instead of white flour, honey instead of sugar for sweetening, etc.

[sarafi]

We tried going Paleo for similar reasons....but we just like bread and pasta too much to give it up entirely.  If your kids like bread that much you may face a mutiny!  :)  Any way you could try making your own?  It's not that hard, and you'll get faster as you go.  It's saved us tons of money on bread and pasta by going home-made....and we can control the contents, make it healthier by using ancient grains instead of white flour, honey instead of sugar for sweetening, etc.

We try to buy whole/ organic. My husband is a dear and packs the kids lunches so I buy 6 loaves of bread at $3.50/loaf to hopefully last the month. We freeze the excess. Sadly, the kids are on to me and have been know to get a loaf out and make toast as a snack anytime they think I am not able to hear them. Yes they are naughty, and yes they frequently eat the 6 loaves in two weeks.

I could buy organic bread locally for $3.00 for two loaves, BUT it isn't sliced and then hubby isn't as helpful in the lunch making department. If I do that I end up spending $10/month rather than the $40 ish that totally ridiculous to spend on something I view as a protein-wrapping-devise. Also our 3 year old acts like a complete lunatic when he has too much bread/wheat, so I may just have to suck it up and start making lunches and give bread up entirely.

We do make our own pizza dough once a month or so, but the kids are all lactose intolerant so it's a special occasion food. Bread could be purchased cheaply and healthily but we don't b/c of the slicing issue.

For breakfast/dinner it's not an issue. We rarely do pasta, kind of like rice, but mostly stick to protein and fruits/veggies. I think I'll switch us out in a few weeks (use the last of what we have and then start having soups for supper and more meat based lunches).

[wagonwheeljr]

Just discovered this site about a week ago from ERE and have decided that FI is possible sooner than I had originally thought. It will be a long row to hoe since we have a significant amount of debt accumulated but if I start now then it will happen sooner than later.

DEBT:
mortgage = $248,500(5%APR)
CC= $22,500
Car loan = $13,000
Personal loan = $7400
Student loan = $7000

Savings:
TSP = $24,000
IRA  = $3585
MMSA = $1100
CD = $975

Income:
Me= $56,000(net)
wife= $13,000(net)

seems a little daunting when I write it down like that but no time like now to start.
 

[flyfamily]

We started out in debt 3 years ago.

We're now approximately 60% complete.

One thing that keeps (me, at the least) motivated is knowing that even with our one income and repaying debt, we live comfortably. We have everything we need. It's a Friday night, husband is on way home from work, food is on the smoker (corn in husks, included). Life is good!

So.. once the last auto loan is paid off, the final credit card balance shows -0-.. all that money is just gravy for us. We do not plan to increase our housing costs when we're paid off. We found a rental rate, a standard of living (even moreso) that works for us. That's how we will be able to sack away that money plus future time in service/pay increases as our savings for when husband retires from this career.

For that reasoning, I think that folks that actually start with some debt are in a good place. They've learned to live without that money for the duration of time that they've been paying off debt.  If they rewire their minds, adapt to a standard of living that is modest yet comfortable, that 'excess' once the debt is repaid is just going to seem like a HUGE pay raise. I think that is pretty awesome. Anyhow, that is what gets me through the day.

Editing/forgot to add:

1 Auto Loan - $15,900 (we sold the other vehicle and paid off that loan), husband bought motorcycle cash
Loans, CC's - $39,000 (we pay off lowest balance to highest, has worked for us for 3 years)
Cabin/House - $10,800 (on our family land/10 acres/this is not something that we will ever be selling)

Paying off our next in line creditor tomorrow = $380 balance. We like the small wins along the way. 3 credits have been paid off this year alone, feels good to rid ourselves of them one by one!

We also cash flow - a lot, including braces (child #2 is next year), so not incurring new debt is a big thing for us.

[keith]

Just discovered this site about a week ago from ERE and have decided that FI is possible sooner than I had originally thought. It will be a long row to hoe since we have a significant amount of debt accumulated but if I start now then it will happen sooner than later.

DEBT:
mortgage = $248,500(5%APR)
CC= $22,500
Car loan = $13,000
Personal loan = $7400
Student loan = $7000

Savings:
TSP = $24,000
IRA  = $3585
MMSA = $1100
CD = $975

Income:
Me= $56,000(net)
wife= $13,000(net)

seems a little daunting when I write it down like that but no time like now to start.

Its tough to write it all down, but its the first step to fixing it. I have some friends that are in serious debt and still in the denial stage, where they can't even bring themselves to write it out and come up with a plan.

Since you didn't list the interest rates for the non-mortgage debt, I'm going to assume the CC is the high one and you are going after that one as top priority, right? Or you doing the debt snowball thing?

Either way, good luck and keep us posted on the progress.

[The Taminator]

I'm starting with a small amount of debt:

$3,538.00 on the LOC
$204,584.00 on the mortgage.

The LOC will be paid off by next April on my current plan, which doesn't take into account any tax returns, overtime or bonuses, and the mortgage will be gone in (sigh) 25 years.  I will be moving in with my girlfriend sometime in the next year so we will then be consolidating finances. She's got an LOC (she won't disclose the amount, since I abhor debt and she doesn't want to give me a heart attack) and a mortgage. The plan then is to rent out one condo and aggressively pay down the other ourselves. We make decent money, about $120k gross, combined, so overall I think my dream of retiring at 50 is doable. I'm 39 and she's 42.

[carolinakaren]

I am now in the process of refinancing my mortgage from the original 5.89% 30 year loan to a 3.2% 15 year loan!  It is very low cost, so thank you mushtachians for the recommendations!

[DoubleDown]

Debt does, indeed, suck. And it should be attacked vigorously. But both financially and psychologically, it can be a better strategy to split the amount you are able to save between paying off the debt, and investing in an appreciating asset.

Seeing a loan decrease feels good, and it is good. But psychologically it can feel even better to see an asset appreciating at the same time. There are tradeoffs to be made depending on what kind of rate you are paying on a loan, and the rate of return on an asset. If they're even, and all other things being even, it doesn't really matter which way you go from a purely ROI standpoint.

But paying off debt to the complete exclusion of investing could be a riskier and unwise proposition. For example, if you need money in an emergency, there's not much you can do with your more-paid-off loan -- but you could tap into an investment if needed. Or as an obvious example, it would be foolish to focus all your available income toward paying off your 4% loan while simultaneously ignoring an employer's 50% or 100% matching 401k funds. So don't let the debt intimidate you, just attack it and try to also put some money towards investing. It will be easier to give the middle finger to that debt when you can say, "MEh, so what. I've got 50k in debt, but I also have 50k sitting in my portfolio that is continuing to grow."

[noob515]

I'm new to MMM, and also starting out my FI journey with debt.  A lot of it. 

I have:

$3675 CC debt @ 7.15%
$55,000 Public Student loan @ 6.125% - minimum payment=$395
$9400 Private student loan @ 4.5% - minimum payment=$90
$4500 car loan @ 2.8% - minimum payment=$340
$230k mortgage @ 4.125% (for 30 years - just bought the house Jan 2012)

The plan of attack is to pay them off in this order: CC debt, car loan, private student loan, public student loan, and then mortgage.  Although the mortgage isn't really a top priority, since I've got so much other debt to deal with first (Plus I pay automatically twice a month, rather than just one, which shaves 5-7 years off, so I've already made steps to pay this off early).

DH is currently not contributing to a 401k since his company doesn't allow it until after you've been there 6 months (he was downsized in the spring and now makes 40% less than he did before, which has made it difficult to pay more than the minimum debt payments).  I'm considering asking DH to *not* start 401k contributions until we pay off some of the debt.  At least the car loan, so I can get the debt snowball going sooner, so to speak.  Is that mustachian?  Or is it better for him to be earning interest on 401k savings while concurrently paying off the debt?

[DoubleDown]

I'm new to MMM, and also starting out my FI journey with debt.  A lot of it. 

I have:

$3675 CC debt @ 7.15%
$55,000 Public Student loan @ 6.125% - minimum payment=$395
$9400 Private student loan @ 4.5% - minimum payment=$90
$4500 car loan @ 2.8% - minimum payment=$340
$230k mortgage @ 4.125% (for 30 years - just bought the house Jan 2012)

The plan of attack is to pay them off in this order: CC debt, car loan, private student loan, public student loan, and then mortgage.  Although the mortgage isn't really a top priority, since I've got so much other debt to deal with first (Plus I pay automatically twice a month, rather than just one, which shaves 5-7 years off, so I've already made steps to pay this off early).

DH is currently not contributing to a 401k since his company doesn't allow it until after you've been there 6 months (he was downsized in the spring and now makes 40% less than he did before, which has made it difficult to pay more than the minimum debt payments).  I'm considering asking DH to *not* start 401k contributions until we pay off some of the debt.  At least the car loan, so I can get the debt snowball going sooner, so to speak.  Is that mustachian?  Or is it better for him to be earning interest on 401k savings while concurrently paying off the debt?

The optimal approach would be to do the following things, in order:

1. Assuming your husband will get matching 401k funds from his employer, invest the maximum amount he can to obtain all the matching funds. If they match dollar for dollar, that's an automatic 100% return on investment, not counting any market gains. So if his 401k earns 5% per year, it really is getting 110% per year (100% from matching funds, plus 5% earned on matching funds, plus 5% on contributed funds)!

2. Pay off CC debt at 7.15%

3. Pay off public student loan debt at 6.125%

4. Pay off private student loan debt at 4.5%

5. Pay off mortgage debt at 4.125% (or refinance, rates are down below 3%!)

6. Pay off auto loan at 2.8% (or sell car, etc., that's a whole other MMM topic)

[grantmeaname]

I'd ordinarily agree with Double Down, but there are some cases where a debt snowball is a good idea. How badly do you need the cash flow? Do you have an emergency fund? Do you have kids, unstable employment, or any other reason to suspect you could have an expensive emergency in your future?

[Another Reader]

I think your debt snowball plan is more workable in your circumstances.  With little room to wiggle, it's better to get rid of as many minimum payments as possible.  In your shoes, I would look at having some emergency cash set aside and I would contribute up to the match on DH's 401k as soon as I could fit that into my budget.  Does the reduction in income make refinancing impossible?  If so, will it become possible once you get rid of some of the smaller debts?  A no cost refinance down to the mid-3's would help your cash flow.

[HumanAfterAll]

Debt does, indeed, suck. And it should be attacked vigorously. But both financially and psychologically, it can be a better strategy to split the amount you are able to save between paying off the debt, and investing in an appreciating asset.

Seeing a loan decrease feels good, and it is good. But psychologically it can feel even better to see an asset appreciating at the same time. There are tradeoffs to be made depending on what kind of rate you are paying on a loan, and the rate of return on an asset. If they're even, and all other things being even, it doesn't really matter which way you go from a purely ROI standpoint.

But paying off debt to the complete exclusion of investing could be a riskier and unwise proposition. For example, if you need money in an emergency, there's not much you can do with your more-paid-off loan -- but you could tap into an investment if needed. Or as an obvious example, it would be foolish to focus all your available income toward paying off your 4% loan while simultaneously ignoring an employer's 50% or 100% matching 401k funds. So don't let the debt intimidate you, just attack it and try to also put some money towards investing. It will be easier to give the middle finger to that debt when you can say, "MEh, so what. I've got 50k in debt, but I also have 50k sitting in my portfolio that is continuing to grow."

I agree with this strategy.  When I got serious a few years ago, I split money between debt payments and investing in Vanguard, so I could withdraw at any time.  Once I got up to a comfortable level of investments (a year's worth of expenses really changed how I feel) I pointed the firehose of cash entirely at my debt.  I set a goal of spending 15% less than I did last year, and I've stayed on target all year.  I'll be out of debt before 12/31/2012!

Looking forward to changing things up in 2013 - getting married, building a real 'stache, and learning more about taxes.

[keith]

Big news everyone! I'm now debt free :)

I just submitted the final student loan payment.

Below is the chart of how/when it happened. I destroyed approximately $40,000 of debt in the last 12 months.

Note: First 3 months bullet points are a little fuzzy, due to poor record keeping and not remembering which day of the month I was supposed calculate this. I am almost positive it was around 40k on Jan 1st. By April/May I was consistently revising the totals on the 1st of the month and all number points are accurate from there on out due to improved record keeping. I also cheated a bit and used part of my Dec 1st paycheck to clear out the remaining balance.



Next up - running full speed ahead towards FI.

[Nancy]

Big news everyone! I'm now debt free :)

Next up - running full speed ahead towards FI.

Congratulations!! That's completely badass. Well done on sticking to your goal. I'm sure it'll feel great to invest $40K per year instead.

[Phoebe]

 My husband and I are 28 and started out our journey a few years ago with about $65,000 in debt ($13,500 CC debt, $8,000 for my engagement ring, and the rest were student loans for each of us, and a loan to my parents for school). Once we got serious about it, we were able to pay it off pretty quickly.

Then, we had such great momentum, that it's been relatively easy to build up our 'stache which is around $282,000 today.

Good luck to all of you starting where we did!  You can DO THIS!!!!!  And FI will then be right around the corner!

If you want to follow our journey, you can check out our blog in my sig.

[PJ]

Whoo Hoo!  Time for a debt free party ... and to switch over to saving, as Nancy and Phoebe have said.  Won't it be great to post all those milestones along the way???

[keith]

Thanks guys! Yup, its really going to feel awesome to suddenly use that momentum for building the stash instead of digging out of the hole.

I will be throwing a small get together with a couple close friends to celebrate the occasion!

[noob515]

I'd ordinarily agree with Double Down, but there are some cases where a debt snowball is a good idea. How badly do you need the cash flow? Do you have an emergency fund? Do you have kids, unstable employment, or any other reason to suspect you could have an expensive emergency in your future?

We don't have kids, and I'm a federal employee, so I've got stable employment.  Knock on wood.  We don't have any reason to expect an expensive emergency, so I feel pretty comfortable in throwing any and all extra $$ at the debt.

Anti-mustachian as it is to have 2 cars, but I95 is not the place for bikes.  And DH works retail, so his hours aren't ever the same, let alone sync up with my schedule.  So we need 2 cars.  But my car is a manual transmission, and one of the semi-MMM-approved models (Subaru Forester), so I'm okay with this. (he has a manual transmission 2003 Honda Civic that we own outright)

BUT, my DH just got a promotion, which comes with an $18k pay raise.  Yay!!  Unfortunately, his most recent paycheck didn't reflect the increase, like it was supposed to, so he's going to talk to HR about that today.  AND, he's been with the company for 6 months now, and signed up for 10% 401k contributions, with automatic 2% increases every year up to 20%.  So I feel like those are both steps in the right direction.

[wilk916]

Yes.  A mountain of it...

Mortgage: $434k (3.875%)
Student Loans: $71k ($15k @ 2%, $33k @ 3%, and $23k @ 6.8%)

Happy to report...

Mortgage: $417k (@ 2.375%)
Student Loans: $56k (13k @ 2%, and $43k @ 3%)

Still a mountain, but a shrinking (and less steep) mountain...

[Chowder]

Someone mentioned spreadsheets so I figured I'd post the one I use for planning:
http://www.vertex42.com/Calculators/debt-reduction-calculator.html

I also have one that tracks actual balances/payments.  $110,841.35 to go not counting 2 mortgages ($356k, both under water) :(

I think I calculated that if we never changed our lifestyle beyond getting rid of the various debts, we would put away $44-50k a year easy.  Its so far away though.

Thank you! I've had a hard time finding a spreadsheet/calculator that would allow me to incorporate my bonuses as "snowflake payments" to get a real interpretation of my pay off date. April 2017 it is...

[Tesseljoan]

I accumulated EUR 55,000 (@ 3.58%, 15 yrs) in student loan debt.
In the past two years we have scaled down our lifestyle to pay this back asap. I am married, but since I brought this debt into the marriage I feel it is my responibility to pay it off. We split our household expenses, and what is left after that goes goes to the loans. This is how I prefer it, it really is a pride thing as well and I wnat to prove I can clean up my own mess. However, since I lost a decent-paying job and had to downgrade jobs, it is going excruciatingly slow (at EUR 26,000 a year before taxes) and we could be debt-free quicker if we used both our incomes (his is EUR 47,000 a yr before taxes). I know he wouldn't mind, it really is a matter of getting over my own pride. Would be very interested in hearing how other couples deal with this..

[SwordGuy]

I currently have about $19,000 remaining on my truck - I know that everyone says new vehicles/financing are not worth it, but I live in a very remote town with no public transportation options to get to the nearest city. I travel to Whitehorse once every two months or so to do a massive grocery/shopping trip, and the road between here and there is often very isolated with no cell reception. I made the decision to buy a new vehicle with the intention of driving it until it dies of old old age, because I am not mechanically inclined, and there is not a mechanic in my town.

That's a logical fallacy.   When you buy a new car, it's only mechanically new for about a year.  After that, you're driving a used car.   Since you intend to drive the car until it dies, you might as well start out with a low-mileage used car. 

[Rollin]

Try $83,000 in cc debt!

In about 1998 I discovered that the DW and I had $83,000 in credit card debt and (what I already knew) about $50,000 on a mortgage.  In June of 2001 we became debt free.  I was making about $50,000/year.  She wasn't working.

Refinanced to lower rate and made extra payments on the mortgage.  Shopped around (optimized) for everything that was "fixed" (i.e., car insurance, home owners insurance, etc.) and eliminated many of those "little holes in the boat" like add-ons for phone service, etc.  The saying goes that a ship usually doesn't sink with one big hole, but with many little ones (wartime and catastrophe notwithstanding).

I took over the bills and focused on how to get us debt free, optimizing everything I could get my hands on (that recent blog post hit the nail on the head for me).  I would have a few bucks in my pocket at the end of the week and walk down to the bank and pay down a credit card.  I rode my bike to work more (been doing that since I started full time in 1986).  These were small things, but kept me focused.

A big thing was selling my 1965 Corvette, added $5,000 to the $31,500 selling price and paid off the rest of my mortgage.  Had that car for 22 years, but was more interested in being debt free than driving a car like that (and all the upkeep).

Now I own two homes that are producing enough rent to pay for my live-in home.  No other debt, but the $225,000 for the current home.  Goal to reach FIRE in 6 - at 57.

What I have found so freeing about this knowledge that I don't have to work forever, especially as reinforced through MMM, is that I could really walk today if I so chose.  I'd have to make adjustments, but could do it.

At present, I'm looking around for the things I might like to do when I semi-retire.  I'm not waiting until 57 to see what comes.  I talk to many people who are retired and those close to retired and learn a lot.  I also enjoy tipping off the younger co-workers about the possibilities for them.  I tell them how I started my retirement planning with $10/week when I was 24.  Some listen, most don't.

Thanks for asking.

[Mozactly]

Starting this journey with about $5,130 in student loan debt at 6.8% interest rate.

Saving for our first home (have an offer pending on a short sale, which we will put 10% down on). We own both cars, have no credit card debt (except occasional charges for reimbursable business travel) and plan to pay for all major purchases (couch and fridge for home) with cash, and hopefully buy used from Craigslist.

My goal is to pay off the student loan in the next five months. We've been saving about $1,700 a month, so I trying to convince my husband to let me move my share to my loans instead for a couple months.

I hope to report back soon with a positive update. And I'd like to hear from other posters to see how their debt pay down is going.

[Mr Mark]

Starting this journey with about $5,130 in student loan debt at 6.8% interest rate.

Saving for our first home (have an offer pending on a short sale, which we will put 10% down on). We own both cars, have no credit card debt (except occasional charges for reimbursable business travel) and plan to pay for all major purchases (couch and fridge for home) with cash, and hopefully buy used from Craigslist.

My goal is to pay off the student loan in the next five months. We've been saving about $1,700 a month, so I trying to convince my husband to let me move my share to my loans instead for a couple months.

I hope to report back soon with a positive update. And I'd like to hear from other posters to see how their debt pay down is going.

Well done. At that interest rate, with after tax money, it's a guaranteed return. As long as you have that loan, every single thing you buy you're borrowing at that rate to do.

Time to stop feeding that monkey.

[wilk916]

Yes.  A mountain of it...

Mortgage: $434k (3.875%)
Student Loans: $71k ($15k @ 2%, $33k @ 3%, and $23k @ 6.8%)

Happy to report...

Mortgage: $417k (@ 2.375%)
Student Loans: $56k (13k @ 2%, and $43k @ 3%)

Still a mountain, but a shrinking (and less steep) mountain...

Let's see some updates people!!!


Me...

Mortgage: $385k (@ 2.375%)
Student Loans: $38k ($10k @ 2%, and $28k @ 3%)

$82k reduction over last 29 months ($2.8k per month)
$50k reduction over last 15 months ($3.3k per month)

I'm happy, but I could have done better.

[rubybeth]

When I first found MMM, we still had some student loan debt. I forget how much it was at that point, probably less than $10k, but reading the blog got me excited again to pay it off and start stashing instead. We began with over $53k in combined student loans for me and my DH, and we both got jobs in 2009 and started making 'real' money, so we paid off the debt in a little less than four years, while also replacing some crappy (in a dangerous way) vehicles and other things during that time. :)

[arebelspy]

Let's see some updates people!!!

Whoah, old thread flashback!  OP got out of debt 6 months after starting this and now is over 6-figures in net worth! 

Badassity compounds over time.  :D