When did you become debt free?

[G-dog]

I became COMPLETELY debt free this year at 53 yo.

When did you become debt free?

If you are not there yet (that's OK), when do you expect to get there?

Does anyone plan to never be debt free?

[SwordGuy]

Three years ago at the same age. :)

[Cheddar Stacker]

We carry low interest mortgage and SL debt only with no plans to accelerate the pay down at all. If we stay in this house, we have 14 years left on the mortgage. I suspect we will move in 3-5 years, take out a 15 year mortgage, and be debt free in about 20 years at age 56. This will be 10 years after FIRE according to projections.

Congrats to you both on the accomplishment, but I like the fixed interest leverage so I'm in no hurry.

[deborah]

2001

[pka222]

2011-

[lexie2000]

We've always been debt free except for mortgages.  We were completely debt free from 1995 to 1998 and again from 2000 to 2005.  We currently have a mortgage.

[gooki]

2012 at age 31

[boarder42]

i would like to reach it by 35 but our mortgage is 3% so in all likelihood we will wait til 41 when it is scheduled to be paid in full.  2028

[boarder42]

but we may also sell our house and travel the world for a few years at 35 so it could happen then as well

[ephillipsme]

Debt free Minus a mortgage which has 7 years left, which will put me totally debt free by 50.

[NearlyThere]

2013 at age 30.

[netskyblue]

About a week before my 30th birthday (2013).  I paid off my car, which was my only debt.

I have yet to buy a house, so I will be in debt again one day.

[apfroggy0408]

Hopefully in 2 months at 23 years old when I finish the last chunk of student loans!

[johnhenry]

I was lucky enough to be born and raised poor and frugal.  I've never had any kind of consumer debt.  Once I reached my mid-20s I started using credit cards, paid off each month of course.  I do have a mortgage on my primary residence.  I also have a mortgage on each of the investment homes I own.  For each place that I obtained a mortgage on, I had enough funds in a taxable, non-retirement account to pay for outright.  I'm still building an asset base at this point, so I'm planning to accumulate more debt before I focus on eliminating it.

[ivyhedge]

About a week before my 30th birthday (2013).  I paid off my car, which was my only debt.

I have yet to buy a house, so I will be in debt again one day.

Not if you take steps to avoid taking on debt now ...

[catccc]

Lucky to have never been in debt myself.  DH had a small amount of student loans that we eliminated about a year after getting married.

[netskyblue]

About a week before my 30th birthday (2013).  I paid off my car, which was my only debt.

I have yet to buy a house, so I will be in debt again one day.

Not if you take steps to avoid taking on debt now ...

Nah, I'm not going to spend the next 16+ years renting @ $9k/year so I can save up the $150k to buy with cash.  It's going to take me 6 years just to save up the $50k downpayment & $10k emergency fund I want to have in place before buying.

[trailrated]

Last year at 26, been growing the stache since

[arebelspy]

Hopefully never.

Unfortunately my student loan pays off next month after paying the minimum for years (bummer!), but I plan to keep multiple mortgages until I die.

[johnhenry]

Hopefully never.

Unfortunately my student loan pays off next month after paying the minimum for years (bummer!), but I plan to keep multiple mortgages until I die.

+1

For those with a multi-generational plan, this is wise.  Not so much dying with mortgages, but dying with assets that the next generation can receive on a stepped-up basis. 

As far as I'm concerned, it's completely unfair, but part of my plan nonetheless.

[arebelspy]

Hopefully never.

Unfortunately my student loan pays off next month after paying the minimum for years (bummer!), but I plan to keep multiple mortgages until I die.

+1

For those with a multi-generational plan, this is wise.  Not so much dying with mortgages, but dying with assets that the next generation can receive on a stepped-up basis. 

As far as I'm concerned, it's completely unfair, but part of my plan nonetheless.

Yes, but you can do that with or without the debt on the property.

I like the inflation hedge of long term, low rate debt.

[Jack]

I like the inflation hedge of long term, low rate debt.

I like that and I like the non-margin-callable leverage.

My mortgage finishes amortizing about 25 years from now, but if interest rates stay low I'll be cash-out refinancing and investing the difference.

[shotgunwilly]

Hopefully never.

Unfortunately my student loan pays off next month after paying the minimum for years (bummer!), but I plan to keep multiple mortgages until I die.

I'm not sure I understand why it's a bummer to pay off your final minimum payment on a student loan.  I understand interest on the loan may have been very little, and you could leverage the cash that would have gone towards that debt... but don't understand why it's still not relieving to make the final minimum payment and have that extra each month???

[arebelspy]

Hopefully never.

Unfortunately my student loan pays off next month after paying the minimum for years (bummer!), but I plan to keep multiple mortgages until I die.

I'm not sure I understand why it's a bummer to pay off your final minimum payment on a student loan.  I understand interest on the loan may have been very little, and you could leverage the cash that would have gone towards that debt... but don't understand why it's still not relieving to make the final payment and have that extra each month???

I'd rather have the money that I had to use to pay it down.  I paid as slowly as possible, but now I don't have that debt anymore because of the fact that I had to pay it off; it's a bummer that I had to pay it off, and no longer have that debt.

I'm looking at borrowing on real estate at 5.5-6.5% which will turn out to be an effective rate of 9%.  The 3.x% of my student loans was cheap!

Make sense?

[shotgunwilly]

I'd rather have the money that I had to use to pay it down.  I paid as slowly as possible, but now I don't have that debt anymore because of the fact that I had to pay it off; it's a bummer that I had to pay it off, and no longer have that debt.

I'm looking at borrowing on real estate at 5.5-6.5% which will turn out to be an effective rate of 9%.  The 3.x% of my student loans was cheap!

Make sense?

So.. you would have rather had free money?  Yea, me too.

Edit: Or, i guess essentially an interest only loan?

[Cheddar Stacker]

shotgunwilly, it's not free money or an interest only loan. The argument is fixed interest debt will not change (typically). So your SL debt of $40K at 4% amortized over 25 years equals maybe $200/month in payments. 20 years from now that $200/month will feel like $75/month due to inflation.

It's an inflation hedge. It also can act as leverage as Rebs pointed out. If he has the cash, he can (and will) put it to work elsewhere and make a return higher than 4%, so why pay it off?

[shotgunwilly]

shotgunwilly, it's not free money or an interest only loan. The argument is fixed interest debt will not change (typically). So your SL debt of $40K at 4% amortized over 25 years equals maybe $200/month in payments. 20 years from now that $200/month will feel like $75/month due to inflation.

It's an inflation hedge. It also can act as leverage as Rebs pointed out. If he has the cash, he can (and will) put it to work elsewhere and make a return higher than 4%, so why pay it off?

I understand not paying it off EARLY, and only paying the minimums for the life of the loan. (Which is what you just discussed).  But that's what arebelspy did, so his comment that "Unfortunately my student loan pays off next month after paying the minimum for years (bummer!)" had me confused, because if you're not wanting to pay atleast minimums, then what are you doing? Asking for free money OR an interest only loan.

Edit: I tried to make my own paragraph more understandable. :)

[Cheddar Stacker]

Got it. I think he just means he wishes he had access to the inflation hedge for a longer period. Hard to take out a student loan when you're in your 30's and not attending school you know.

[shotgunwilly]

Got it. I think he just means he wishes he had access to the inflation hedge for a longer period. Hard to take out a student loan when you're in your 30's and not attending school you know.

Yea. I was just sitting here thinking about how I wish I had taken out student loans and bought property with them. :/  Although my parents would have probably flipped since they funded my studies.

[Cheddar Stacker]

Got it. I think he just means he wishes he had access to the inflation hedge for a longer period. Hard to take out a student loan when you're in your 30's and not attending school you know.

Yea. I was just sitting here thinking about how I wish I had taken out student loans and bought property with them. :/  Although my parents would have probably flipped since they funded my studies.

If you're serious, you still can, just use a mortgage or HELOC instead. I think when I move in 3-5 years I will make sure I get a mortgage for exactly 80% LTV for this exact purpose. It will likely be my last move for a very, very long time so I might as well make the most of it.

[rocksinmyhead]

In about a month, my only remaining debt will be a 0% car loan. That will be paid off next year. Then I'll be debt free at age 27 :)

...and then I'll probably get a mortgage at some point and be indebted again :( but hopefully it'll be a 15-year one.

[Numbers Man]

I paid off my student loans about 5-7 years out of school. I think the monthly payment was in the $90 dollars a month range. I've never had consumer debt. I've had a mortgage for almost 30 years and will probably never pay it off. Who pays off a note for 2.875% when you can be investing in higher yielding asset classes? I took out a lot of debt to pay for my children's college education, I was able to pay off half by the time they graduated. Again, the interest rates are low and I'm invested in higher paying assets. I will start making payments in a few months on the student loans.

So the answer to the question is I've never been out of debt since I'm concentrating on leveraging my assets in a way that is prudent to increase net worth. Increasing Net Worth is a priority versus erasing debt.

[RNwastash]

I paid off my car a year and a half ago.  I only have a mortgage now.  It is only 3.375%.  However, my goal is to pay it off in 4.5 years so I can have the option of going part-time.  My husband and I are already maxing our 403b's at work as  well as our Roth IRA's.  So, when I am 50 I'll be debt-free.

[arebelspy]

Got it. I think he just means he wishes he had access to the inflation hedge for a longer period. Hard to take out a student loan when you're in your 30's and not attending school you know.

Yea. I was just sitting here thinking about how I wish I had taken out student loans and bought property with them. :/  Although my parents would have probably flipped since they funded my studies.

Yes, this exactly.  We paid for our Master's degrees in cash and really regret that, I wish we had more student loans. :)

Anyways, I'll let the thread go back to people listing when they go debt free (or when they hope to) - cause debt free is an admirable goal!

Just wanted to give some food for thought that it's not the only path out there, and in fact may be a slower path to FIRE than utilizing leverage.  :)

[gimp]

36k in student loans today. Still deciding how best to wipe or not wipe it out... 6.8% loans first, then 5.6, 5, 4.5... but the 3.86 and 3.4 loans I might keep for a while.

Or just pay them all off in 3.5 years and be done with it. Hum.

[secondcor521]

February 27, 2014 at age ~44.75.

[Dee]

I may find myself debt-free at 40! I'll be 40 in the next year, regardless, and I got rid of consumer debt (including 0% car loan) about 4 years ago. I just got rid of a debt to myself, having borrowed from my RRSP as a first-time home buyer. Even more recently, in the last couple of weeks, I paid off the last $5k of my student loan. I had been making the payments without acceleration and could have continued paying for a good, long time, but what eventually got to me was the logistics of having an additional bank account from which automatic payments could be made (and taking the time to fund the account properly, to keep a balance of $2.5k to avoid banking fees). So I paid it off! And I'm quite happy about it!

So all that's left is a mortgage and my house is up for sale. I am planning on moving in with my boyfriend, while he renovates his house and then puts it up for sale. During that period, I would be debt-free. Our plan, though, is to then buy a house together so I would likely have another mortgage at that point. Though if we stay at his place long enough, we may be able to get our expenses low enough that I could save enough to not need another mortgage when we do buy...

So it may happen that, coincidentally, I will be entirely debt-free on my 40th birthday, which I would really like as a symbolic milestone. But, really, it would just be symbolic, so it doesn't actually matter much... But this thread has just prompted me to realize that may be the case and I take pleasure in that possibility. Being debt-free at 40 would be a nice marker of seeming accomplishment.

[G-dog]

Three years ago at the same age. :)

YAY! 

[G-dog]

We've always been debt free except for mortgages.  We were completely debt free from 1995 to 1998 and again from 2000 to 2005.  We currently have a mortgage.

The only major debt I have had is the mortgage, then student loans. Student loans were paid off before I hit the mortgage. I've never gotten in to credit card debt. 

[G-dog]

We carry low interest mortgage and SL debt only with no plans to accelerate the pay down at all. If we stay in this house, we have 14 years left on the mortgage. I suspect we will move in 3-5 years, take out a 15 year mortgage, and be debt free in about 20 years at age 56. This will be 10 years after FIRE according to projections.

Congrats to you both on the accomplishment, but I like the fixed interest leverage so I'm in no hurry.

I am not going to argue with success!  Your little slaves are off working on your FIRE project!

[G-dog]

2012 at age 31

WOW! Very impressive, good for you!

[G-dog]

2013 at age 30.

No wonder you get to unleash the face punches! Excellent!

[G-dog]

Hopefully in 2 months at 23 years old when I finish the last chunk of student loans!

How great to get out from under the student loans so quickly!  I see a big, bright, FI future for you.

[G-dog]

I paid off my student loans about 5-7 years out of school. I think the monthly payment was in the $90 dollars a month range. I've never had consumer debt. I've had a mortgage for almost 30 years and will probably never pay it off. Who pays off a note for 2.875% when you can be investing in higher yielding asset classes? I took out a lot of debt to pay for my children's college education, I was able to pay off half by the time they graduated. Again, the interest rates are low and I'm invested in higher paying assets. I will start making payments in a few months on the student loans.

So the answer to the question is I've never been out of debt since I'm concentrating on leveraging my assets in a way that is prudent to increase net worth. Increasing Net Worth is a priority versus erasing debt.

Makes sense, I know there are smart ways to use leverage (aka debt), if I was younger I would probably be in a better position to do this (or smarter if I knew what I know now).

[G-dog]

Got it. I think he just means he wishes he had access to the inflation hedge for a longer period. Hard to take out a student loan when you're in your 30's and not attending school you know.

Yea. I was just sitting here thinking about how I wish I had taken out student loans and bought property with them. :/  Although my parents would have probably flipped since they funded my studies.

Yes, this exactly.  We paid for our Master's degrees in cash and really regret that, I wish we had more student loans. :)

Anyways, I'll let the thread go back to people listing when they go debt free (or when they hope to) - cause debt free is an admirable goal!

Just wanted to give some food for thought that it's not the only path out there, and in fact may be a slower path to FIRE than utilizing leverage.  :)

Great points - if someone had to pick taking financial advice from me or from you - they should pick you. I would.

[G-dog]

36k in student loans today. Still deciding how best to wipe or not wipe it out... 6.8% loans first, then 5.6, 5, 4.5... but the 3.86 and 3.4 loans I might keep for a while.

Or just pay them all off in 3.5 years and be done with it. Hum.

Arebelspy and some others have some good reasons for you to keep the lowest interest loans.....

[G-dog]

Hopefully never.

Unfortunately my student loan pays off next month after paying the minimum for years (bummer!), but I plan to keep multiple mortgages until I die.

I'm not sure I understand why it's a bummer to pay off your final minimum payment on a student loan.  I understand interest on the loan may have been very little, and you could leverage the cash that would have gone towards that debt... but don't understand why it's still not relieving to make the final payment and have that extra each month???

I'd rather have the money that I had to use to pay it down.  I paid as slowly as possible, but now I don't have that debt anymore because of the fact that I had to pay it off; it's a bummer that I had to pay it off, and no longer have that debt.

I'm looking at borrowing on real estate at 5.5-6.5% which will turn out to be an effective rate of 9%.  The 3.x% of my student loans was cheap!

Make sense?

Arebelspy - you strike me as someone that has a formula (or spreadsheet, or rule of thumb) to actually analyze whether it is better to pay off the debt, or carry it and invest. Do you have anything like that or know where.to find something?
 In a finance class  (MBA), the prof asked a question whether it was better to take the $5000 cash back or the X% interest loan when buying a.car. It was shocking how many of us had a hard time calculating and comparing the two options, and how many different values people got!

[arebelspy]

Arebelspy - you strike me as someone that has a formula (or spreadsheet, or rule of thumb) to actually analyze whether it is better to pay off the debt, or carry it and invest. Do you have anything like that or know where.to find something?
 In a finance class  (MBA), the prof asked a question whether it was better to take the $5000 cash back or the X% interest loan when buying a.car. It was shocking how many of us had a hard time calculating and comparing the two options, and how many different values people got!

The answer to the professor's question - and yours - comes down to opportunity cost.

For someone who isn't comfortable with the stock market and has a bunch of money sitting in cash, I urge them to pay down their mortgage, even at sub-4%.

For someone who is investing in real estate and leveraging up in the acquisition phase, it'd be ridiculous to pay off student loans at 3.x%.

For most people the answer will depend.  Likely the "right" area for most people is around 5-6%.  Above that, pay off the debt.  Below that, invest.

Either will move you towards FIRE, one more rapidly than the other (and no way to know which, for sure, due to the uncertainties and variance of returns -- historically investing in stocks would have left you far ahead, but I don't have a crystal ball for if the future will be different than the past), so you're really just playing the odds either way, and picking what makes you more comfortable.

[deborah]

It also depends on which country you are in, and what the tax incentives are there.

[rencelas]

I look forward to it in ~3 years. We both have advanced degrees that we paid for ourselves - she a DPT and me an MBA. That set us back a bit, though we have no student loans at all, which helps tremendously now. 

Just 3 more years of house payments and we're done!