I’M DEBT FREE!!
I just wanted to announce to the world that I am DEBT FREE! Debt free except the house, that is. It’s such an awesome feeling to know that you do not owe another lender any money. When I first started out on my own with finances, I just assumed that student loans and auto loans were just the normal thing to do and it’s true. Debt is really just normal in America. It’s very abnormal to be debt free.
My debt free fire really started with my auto loan. I really disliked Chase Auto Finance. They would apply my principle payment as monthly pre-payments! A large tax return helped put Chase to bed 3 years before I was scheduled to pay it off.
Once the auto loan was paid off in early 2010, I rolled that payment into my student loan. That brought it down from a 10 year payoff to roughly a 5 year payoff. I thought to myself, 5 years to get rid of $16,000… There has to be a faster way to get rid of this. That’s when I discovered Dave Ramsey in August of 2010 and really got fired up. I listened to his radio show via podcast on my way to work. I’ve also followed JD Roth from GetRichSlowly.org for about three years now and watched his progress of paying off debt and working towards his dream job. If thousands of people can become debt free and pursue their dreams, I knew I could too.
At first, I wasn’t totally on board with Dave’s plan. The thought of cutting up credit cards struck a little fear within me. What if there was an emergency? What if I needed to rent a car? What if? What if?… That’s when it hit me: fear was paralyzing my decisions. I had some money in my emergency fund, but I did not want to part with it “just in case”.
By October of 2010, I had one foot on the debt free boat. I used $2000 from my “extra” mortgage payment to jump start my student loan payoff. The “extra” mortgage payment is from being paid bi-weekly: 26 pay periods in 52 weeks equals one extra month’s salary. This got me motivated like you would not believe.
By December of 2010, I cancelled three store credit cards and cut them up to display to my friends on Facebook.
Since December, I have not used any credit cards what-so-ever. By March, I cancelled and shredded 2 out of my 3 credit cards. I had this idea to keep one open “just in case” I run into any emergencies with my small emergency fund. I am looking to cancel this credit card by the end of the summer.
Just this past month I made my final student loan payment to Sallie Mae of $4,283.46. How did I achieve this? I took $2000 from my vacation fund, $1200 from my tax return, and roughly another $1000 from scrimping and saving. I paid off $16,000 in roughly one year from May 2010 to May 2011. The outcome: DEBT FREE EXCEPT THE HOUSE! I still plan on going on vacation this summer, but I figured I would just work harder and save more to get there.
Right now I am on Baby Step 3 of Dave Ramsey’s Total Money Makeover. Baby Step 3 is where you save for 3-6 months of expenses in an Emergency Fund. If I keep up with my current plan, I should have 6 months of expenses saved in about a year.
I can sum up the feeling in two words: worth it. The feeling is so amazing; it’s like a weight has been lifted off my shoulders. If it feels like you’re not getting anywhere, I know the feeling. Just keep pushing forward and you’ll succeed.
It all starts with a plan and a budget! My plan was (and still is) to be debt free and the budget got me there. Just think of it this way, how would you get to your vacation destination without an itinerary (plan) and a map (budget)?
Tags: Baby Step 2, baby steps, budget, Dave Ramsey, Debt Free, GetRichSlowly, plan, Worth it?
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June 11th, 2011 at 10:00 am
Sweet. Now that your debt the executive govt may need to raise your taxes to help the debt ridden American neighbor. LOL!!! Congratulations. This is good news.
June 26th, 2011 at 11:17 pm
Congratulations Gabe!
You don’t actually need to cut up every last credit card… you just need to work with the understanding that you need to pay it off every month and resist the urge to spend impulsively. There are too many Americans actually carry a monthly balance on their credit card and that 19%+ is a killer to pay down over any length of time.
Keep up the writing!
August 6th, 2011 at 8:54 am
Congratulations on your debt-free status. I, too, am debt-free and love the financial freedom.
I did keep one credit card, I refrain from using it. I believe it’s important to keep one line of credit open for a HUGE emergency. I pray I never have to use it.
Can’t wait for you to join me at baby step #7!
August 10th, 2011 at 10:50 pm
Thanks Krystal! I cannot wait to arrive at baby step 7 either!
My guess is I will be able to pay the house off in about 10-15 years. I’m leaning more towards that 10 year mark. However, with the way taxes keep going up in New Jersey, I wouldn’t be surprised if it takes me 15 years.
I’ll keep advancing my career and attempt a small business!
August 10th, 2011 at 11:02 pm
Thanks Mike! It’s been quite a busy few months between work and class. I’m going to post more here soon and on your forum!
I always paid off my credit cards each and every month, but for some reason I always ended up spending more than I intended. It was always the extra, well, I always wanted to try this item from Whole Foods that seemed to sneak up. I wouldn’t consider myself an impulsive spender and always watched my purchases. When I got myself on a cash budget for most things, I found myself to pay closer attention and really hit my goals of paying off my student loans.
My thinking with the credit card is this: If I have 10-20k in the bank attached to a credit/debit card, why would I need to carry around a credit card for an emergency? I can still rent cars, stay at hotels, and do everything a credit card will allow me to do. It will even carry the same protection as long as I sign for the purchase going through the Visa or MasterCard system.
December 19th, 2011 at 11:30 pm
Many thanks for providing such enjoyable content, I certainly could not have announced it any better to be truthful! Carry on with all the excellent work, as I am going to certainly be a returning visitor.
December 20th, 2011 at 3:31 am
Well said. Finally among all the comments I find some truth. The root cause of the problem is the Federal Reserve and the corrupted U.S. government-. While it’s hard to tell if even Paul, Kucinich and Sanders can dig us out of this mess, it is very clear what is the problem if you only do some reading. How can we survive if the Fed keeps stealing 6% off the top of every transactio-n and has the power to create money out of thin air whenever it desires. Once again I urge everyone to look closely at your representa-tives and decide if they have YOUR best interests at heart or their own. If you keep voting the party line you will keep ending up with the same ONE party system we already have that is taking advantage of our ignorance. abolishthe-fed.blogsp-ot.comguild wars 2 gold
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