Anyone else hell-bent on paying off all debt?

[rokkerkory]

A few years ago, I realized that one of the most important things I wanted in life is financial freedom (as much as possible). I understand that you need money in this world and you do need to spend money to live (food, insurance, etc) but how and what you spend it on can really impact your long-term lively hood.

I started to do everything in my power (even though I am not great at it yet) simplify and buy less crap. Basically I have everything I NEED and much more so I needed to make a lifestyle change. So here are some things I am focused on and being pretty relentless on it.

What's going well:
1. Paying off mortgage... I have been paying about double each month for last couple of years. I started on a 15 year mortgage and will have paid off my condo in next 2 years if things progress as planned. Living in Bay Area, this would immediately lift such a boulder off our shoulders and basically makes me not rely on having a very high stressed, tech job. I could make much less at a different job and be OK but have SO MUCH LESS STRESS.
2. Zero car debt - Paid off our cars. We currently have 3 cars and likely will sell 1 of them to reduce maintenance, insurance, etc costs. Maybe in a few years just go down to 1 car.
3. Zero CC debt - I pay off the CC bills each month, which basically gives us zero finance charges. Every purchase is over 2-3 cards to keep credit score high and to get points for travel.
4. Paid off all school loans - Did this years ago for both wife and I.

What's not going well:
5. Reduced going out, eating out, etc - Although this is still very much work in progress and we aren't great at this, still need to push on this.
6. Buying crap (clothes, 'nice to have things', etc) - This is not going too well at the moment tbh
7. Cut down on non-essentials - Cut off TV service last year, cut off other 'services', slowed down on gaming (!), but I think there's other things we can cut out

My long term goal is to rent out my condo which would bring in a decent amount of money each month. I've moved some savings into investments that should give at least a modest % return. Without a mortgage, the wife and I can work more as needed basis and travel. We are eyeing maybe living 6 months a year abroad and just enjoying life rather than stressing over life.

I'd love to hear your guys thoughts and what you have done to reduce debt in life!

 

[BDS]

I dislike having debt too, but at the same time it's difficult to exist in the Western world with no debt whatsoever (and even a detriment to your credit score). I have manageable debt at the moment in the form of student loans (small compared to other people's) and a car loan that is significantly above water.

 

[Deleted member 19813]

We're doing the Dave Ramsey debt snowball right now. We're currently in-between BS1 and BS2. We look to have most debt gone by Sept. 2021. After that, about nine more months on student loans, then about pay off house early... we have about $80k for the house. I believe we should almost be there in about 5 years, though I know things will pop-up.

 

[Massicot]

The only debt I've ever had is a car loan, and I paid it off in just over a year because I just hated the idea of still owing on it.

Don't have my own place yet, probably won't until I know I can pay something off in ~10 years.

 

[ned_ballad]

The only debt I have is my mortgage. I pay off my credit card every month and I finished up my student loans last year

I hate having any kind of debt.

 

[rokkerkory]

We're doing the Dave Ramsey debt snowball right now. We're currently in-between BS1 and BS2. We look to have most debt gone by Sept. 2021. After that, about nine more months on student loans, then about pay off house early... we have about $80k for the house. I believe we should almost be there in about 5 years, though I know things will pop-up.

Click to shrink...

Interesting... will research on this method.

 

[Deleted member 8741]

I really hate having debt, but it's debatable if it's wise to always try to get rid of it. With interest rates where they are today, it's not the wisest economic choice a lot of times.

I could easily pay off a car loan I have, but it's at 2.5%. Why wouldn't I just invest that money and make the payments. As long as I'm financially capable of taking care of that debt in an emergency, it's not the best option to pay it off.

Similarly, it's arguable paying off a house early is the best option with todays rates. It's possible to be house rich and lose liquidity that actually insulates you from the changing financial tides.

It's all a balancing act, but the "debt bad" concept isn't as clear cut as people like Dave Ramsay makes it sound. It's a good general idea for basic finances though.

 

[Deleted member 24052]

Yep, working with the snowball method right now as well. It's working fairly well.

Debt stresses me out, but I'm getting better at coping with the debt that I have and paying into it what I can. We've definitely gotten better about not going out as much, and we both rarely buy things we don't need. Treats every now and then of course, but we're pretty practical overall.

Based on my budgeting I've got a few years more of paying off various debts.

 

[Pwnz]

I strongly dislike debt, and I pay an extra $500/mo on mortgage principal which will result in full ownership when I'm 50, but otherwise no. My autoloan is 4 years with 25% down, but the interest rate is 2%. Once the loan was agreed on, now it makes no sense to pay it off faster because inflation typically beats 2%.

I'm doing very well financially. My next car I may not even get a loan.

 

[Zoe]

Interesting... will research on this method.

Click to shrink...

That method isn't the most financially efficient way. It's about feeling good from paying off your smallest debts first rather than looking at the APR for each.

 

[Bio]

I spent three years living at home with my father, paying off all my debt and then saving to buy a condo.

A year after moving into that condo I'm back up to $20,000 in debt, all of it medical expenses due to America's joke of a health insurance industry. At this point I've realized I'm not going to ever live debt free, so fuck it. Not looking to rack up any more, but certainly not going to ever obsess about paying it all down again.

 

[Qwark]

Picked up a small second job to help get rid of debt. Currently have a little bit of CC debt, and relatively small car and school loans. Should be able to pay that off in about a year, and then I can think about dropping the second job. But we also are in the process of buying a house so we'll have a mortgage to deal with and my s/o has quite a lot of school debt so we'll see. May continue second job as long as I am comfortable with it.

 

[Captain Smoker]

(...)

What's not going well:
5. Reduced going out, eating out, etc - Although this is still very much work in progress and we aren't great at this, still need to push on this.
6. Buying crap (clothes, 'nice to have things', etc) - This is not going too well at the moment tbh
7. Cut down on non-essentials - Cut off TV service last year, cut off other 'services', slowed down on gaming (!), but I think there's other things we can cut out

(...)

Click to shrink...

Regarding this, a long time ago I read "I Will Teach You To Be Rich" and what somewhat resonated with me is that he argues that you shouldn't concentrate so much on cutting your fun (like going out, eating out) and instead concentrate on increasing your income (ask employee for more money, ask him for more than you are comfortable with, but with preparation, etc.). The increase in salary is going to pay off far more than cutting morning coffee out of your live and you need a lot of willpower to withstand buying crap.

 

[Ikuu]

No, not all debt is bad.

 

[Deleted member 17402]

Not necessarily. To be clear, I don't enjoy accruing interest on top of my debt - that's not a fun position to be in. I have over $20k in student loans and luckily no other debt. At the rate I am paying them off, I should be done by 2026. I have the means to pay it off in half the time, but I'd rather not. Why? Because I'd much rather stash as much cash away as possible as well as invest in index funds that yield a higher interest rate than even that of my student loans.

To me it's way more important to just pay the minimum on my student loans and bite the bullet, which in the end will see me paying thousands of dollars extra thanks to interest.

The way I see it is this: I could throw all of my $20k+ in savings toward my loans and be debt free right now, while tomorrow I suddenly get hit with a medical bill or other financial emergency that I cannot afford because the day before I decided to wash away debt.

As for debt via credit cards, I accrue maybe $400-500 every month, and I pay it off in full each time. I have done this for as long as I've used credit cards.

 

[Deleted member 23094]

I've never been in debt or had a credit card.. Not American, so that might explain it.

 

[whatsinaname]

Nah, not when my borrowing rate is <4%.

 

[Deception]

We're doing the Dave Ramsey debt snowball right now. We're currently in-between BS1 and BS2. We look to have most debt gone by Sept. 2021. After that, about nine more months on student loans, then about pay off house early... we have about $80k for the house. I believe we should almost be there in about 5 years, though I know things will pop-up.

Click to shrink...

I also did this starting in 2017 and managed to pay off my 10K car loan, 8k in credit card debt and now i'm about 2.5 years away from paying off my student loans which started at 18k. My student loans would have been paid off by the end of this year but I decided to purchase a home so put all of that towards my downpayment + stuff for the house. Still, not bad for 5 years.

 

[Guppeth]

5. Reduced going out, eating out, etc

Click to shrink...

This is the one you shouldn't stress over too much. Live your life. If you go for maximum austerity you will reach your goal a little sooner, but it's miserable getting there. Buying less stuff is fine, and if you can find activities you enjoy just as much but cost less, than sure. But live your life.

 

[Linkura]

We did this to pay off our mortgage in under 4 years and it feels so damn good to own our house free and clear and have no debt.

 

[Trigonometrize]

Don't be the financially illiterate person that goes ham on every penny of their debt. Smart people leverage debt to improve their lives and often make more money.

Certain types of debt, like credit cards, absolutely need to be gone ASAP yes, but reducing debt should not be the bedrock goal of managing your money.

 

[Falchion]

Currently debt free but I know sooner or later I'll probably buy a place to live. Feels great knowing I could put my shit in storage and go travel for a year if I really want to though.

 

[WeAreStarStuff]

I finished grad school last summer and am trying to pay it off as quickly as possible. In the past year I've made total payments of $26,202.50; $22,743.96 of which has gone towards the principal. Cannot wait to be done with it. We're in the process of selling our house, and the car is paid off so this is all the debt that I have. Wife has zero debt.

 

[Violet]

I had a similar feeling coming out of college. My wife and I had about 65k combined in student loan debt, but we owned our cars outright and were just renting, so we basically used any extra money to go towards our loans. Within about 18 months, we paid off the entirety of her loans, and my only private, high interest loan. After the blitz to get all of our high interest stuff done, we were left with around 11k and were moving into a more expensive place.

Now, we still will have our debt paid in the next 2 years (overall, we will have taken around 5 years to take it all down), but we decided to scale back on the constant stress of trying to be debt free in order to accomplish other goals. We purchased (and paid off) new vehicles for both of us. We have saved enough for a down payment on a home. We've put more money into our retirement and investing in general. Obviously it sucks having any debt hanging over your head, but I feel much more at peace with it now.

 

[mhayes86]

My credit card bills are paid every month, and mortgage and utilities are paid with no issues. My student loans are about $35k that I've been paying for the past five years, and I should really be putting more towards them every month than I do currently. Instead, my wife and I have been traveling, deal with some hefty vet bills, and other stuff (home improvement and appliance replacements). I also had a car that was in the shop far too frequently that I had to replace, and it was so close to being paid off. I'm doing the snowball method with my student loans where I'm paying off the smallest loans first and working up. I've already knocked out 1 of the multiple loans, and am close to knocking out another. No intention on paying off this house since both my wife and I would like to move in the near future. In general, I put more towards each debt than the minimum required.

 

[rokkerkory]

Regarding this, a long time ago I read "I Will Teach You To Be Rich" and what somewhat resonated with me is that he argues that you shouldn't concentrate so much on cutting your fun (like going out, eating out) and instead concentrate on increasing your income (ask employee for more money, ask him for more than you are comfortable with, but with preparation, etc.). The increase in salary is going to pay off far more than cutting morning coffee out of your live and you need a lot of willpower to withstand buying crap.

Click to shrink...

This is the one you shouldn't stress over too much. Live your life. If you go for maximum austerity you will reach your goal a little sooner, but it's miserable getting there. Buying less stuff is fine, and if you can find activities you enjoy just as much but cost less, than sure. But live your life.

Click to shrink...

Interesting perspective... I guess we have to have some relief / fun in life but manage it accordingly.

 

[TMC]

I really hate having debt, but it's debatable if it's wise to always try to get rid of it. With interest rates where they are today, it's not the wisest economic choice a lot of times.

I could easily pay off a car loan I have, but it's at 2.5%. Why wouldn't I just invest that money and make the payments. As long as I'm financially capable of taking care of that debt in an emergency, it's not the best option to pay it off.

Similarly, it's arguable paying off a house early is the best option with todays rates. It's possible to be house rich and lose liquidity that actually insulates you from the changing financial tides.

It's all a balancing act, but the "debt bad" concept isn't as clear cut as people like Dave Ramsay makes it sound. It's a good general idea for basic finances though.

Click to shrink...

This. The only debt I have is my car loan. I could pay it off today if I wanted to, but my loan APR is 2.25%. I can (and do) earn far more investing that money rather than using it to pay off my car loan.

I've never carried credit card debt because it essentially nullifies any rewards you would get from using them. Always paid in full every month. Never spent outside of my means in order to accomplish this.

I currently rent so mortgage yet.

Also was fortunate enough to graduate from college with no debt (mostly grants and scholarships) which was a huge help.

 

[mistersensation]

Yep. Determined to finally pay off the last of my student loans this year. Started with 80k in 2010, down to sub-20. If I budget right and don't make too many Amazon impulse purchases I think I can do it

 

[DanteLinkX]

Well in the country where I live (third world/emergent), paying all your debts is a dream lol.

 

[FernandoRocker]

Yeah. This is my short story:

I purchased my house in December 2015. The way it works here in my country, is that you can set up the mortgage so your employer takes that part of your salary and it goes straight to the mortgage (Infonavit). I hated, since day one, seeing less money on my weekly payment. So, I decided to pay as soon as possible. I made some sacrifices, but I fully paid my house last month.

It only took me 4 years to fully pay my house. But I had to give extra payments. All my Christmas bonus and stuff went directly to my mortgage. I saw my co-workers (with mortgages) spend their Christmas bonuses in new gadgets, down payments for new vehicles, clothes... and I didn't fall for the temptation.

How I have a house that I fully own, and my paycheck is full.

Heck, I don't want any debts ever again. We were planning on buying a new vehicle, but fuck that. When/if I purchase a new vehicle, it would be in cash (or at least 80%). Right now, what I'm gonna do in May, is invest close to $1000 USD in fully restoring our 2008 car: new paint, interior detailing, new stereo, new headlights. We will bring the car back to life.

I just don't want any debts ever again.

 

[BarryFishFinger]

Good for you guys paying double your mortgage payments or whatever. Not an option for most people, but if you can do it; do it!

I need to sort my credit card out, got £3k on there which is a pain. I'm just about to balance transfer to a 0% interest one so although the monthly payments won't drop, at least the actual debt will reduce.

 

[vypek]

I'm doing a little better this year with my debt. I'm aggressively attacking my student loans and have a plan to reduce my student loans by about 75% by the end of the year if all goes well. But I also want to get a car and possibly a home in the near future so I'll likely be entering debt soon after paying off student loans or during it.

 

[Acidote]

I bought a house a little more than a year ago, and now I'm renovating it so a lot of investing yet to do. But once I'm done investing, I'd like to pay the mortgage double each month If things go the way I want them to go (and are going right now). I've already been making sacrifices for a couple of years now and I still have to sacrifice a couple more. Then I hope I'll be in a more... finantially upwards position. I have no other debt so I have that going for me, but I also need a new car.

 

[nekkid]

Not "obsessed" - I still want nice things. But I have a pretty aggressive plan to be debt free within 10 years.

 

[BDS]

I could throw all of my $20k+ in savings toward my loans and be debt free right now, while tomorrow I suddenly get hit with a medical bill or other financial emergency that I cannot afford because the day before I decided to wash away debt.

Click to shrink...

This is where I'm at too. I could pay off my car and student loans right now, but then I'd be left vulnerable with nothing to show for it. My interest rates are low enough that I'm fine making minimum payments and instead putting my savings towards other investments.

 

[G_Shumi]

God yes! I just started a new job a few weeks ago that pays me much more than my old one, and I really feel like NOW is the time to whittle down all of my debt. My biggest hurdle is my student loans since I've had those for almost a decade now and started regularly paying them 7 years ago, but now that I make more, I feel like I can approach my student loans differently so I can finally eliminate them once and for all. Making regular payments doesn't do shit.

My parents told me recently not to worry so much about my debt because everyone has it, but it just always feels like a ball and a chain that won't go away no matter what I do.

 

[TP-DK]

At first I wanted to pay off my mortgage as fast as possible, but then I realised that its not worth it. I can get more out of my money by investing else where.

 

[Transistor]

Absolutely. My wife and I refinanced to a 15 year loan so we can have the house paid off by 50. Maybe even sooner if the career goes well. We don't live expensive lifestyles, so it should hopefully be easy.

 

[Nothing Loud]

Well I just bought a condo, 30 year mortgage, so there's that. Plus my student debt. Plus $15k in cc debt from moving and 2 years left on the car loan. Not sure if I'll live to see it all paid off someday, but hopefully.

 

[Deleted member 9486]

Nah, as I don't have any bad debt. Just our mortgage which we don't remotely have enough money to pay off--and will probably sell off and make some money (prices going up pretty decently yearly where we bought) well before paying it off and my student loans which got locked in at 3% back when I finished grad school over a decade ago.

Makes more sense for me to put extra money in retirement since I didn't start my career until nearly 31 (got a PhD) and need to catch up more since I don't have any high interest debt.

 

[rokkerkory]

Yeah. This is my short story:

I purchased my house in December 2015. The way it works here in my country, is that you can set up the mortgage so your employer takes that part of your salary and it goes straight to the mortgage (Infonavit). I hated, since day one, seeing less money on my weekly payment. So, I decided to pay as soon as possible. I made some sacrifices, but I fully paid my house last month.

It only took me 4 years to fully pay my house. But I had to give extra payments. All my Christmas bonus and stuff went directly to my mortgage. I saw my co-workers (with mortgages) spend their Christmas bonuses in new gadgets, down payments for new vehicles, clothes... and I didn't fall for the temptation.

How I have a house that I fully own, and my paycheck is full.

Heck, I don't want any debts ever again. We were planning on buying a new vehicle, but fuck that. When/if I purchase a new vehicle, it would be in cash (or at least 80%). Right now, what I'm gonna do in May, is invest close to $1000 USD in fully restoring our 2008 car: new paint, interior detailing, new stereo, new headlights. We will bring the car back to life.

I just don't want any debts ever again.

Click to shrink...

This is awesome story... thanks for sharing. Amazing you paid off your house in 4 years. WOW.

 

[Ayirek]

I recently started doing the David Ramsey thing, though not as extreme as he recommends. It's been hugely liberating to have as much debt knocked out as I've gotten in the past year. Credit score's jumped by more than 100 points as well, which is nice. A few years ago I'd let my finances get way out of control. Had like 2 grand in credit card debt, was in collections for medical issues, nearly had my car repossessed (that was an eye opener) and had defaulted on my student loan. I don't wish that on anyone.

 

[dark_prinny]

I don't care.

 

[Ikuu]

It's always interesting that people are desperate to pay off their mortgage is quick as possible, wonder how many have taken the time to look at what that money could have done instead.

 

[kyle mechlachlan]

The only debt I have is a little over 1k in student loans that I'm not in a rush to pay off. And right now 1.5k in cc debt because I just bought some plane tickets but that's usually no more than 200-300 in a given month before paying it off.

 

[Vish]

Why did you mention your credit card, you're supposed to pay it off. You willingly occur debt, and pay it off every month to benefit with a credit score. You definitely like some types of debt.

 

[Vern]

OP trying to live simply and buy less, owns three cars and gets new clothes often 😅, amongst other things.

Anyway, the rest seems good OP, paying off that mortgage ASAP is great.

As for me, I've also been a minimalist and very anti debt (and anti possessions) essentially my entire life. The only debt I ever took on was for college, I owed around 20k when I finished and had it paid off within the first year after graduating.

I have bought two new cars in my life, both without loans. First was when I was16 because my original hand me down junk car got totaled and I got a decent payout, plus I'd been saving allowance and money from mowing lawns in the neighborhood since I was 10 or so. I know that buying cars straight cash isn't recommended but I really wanted to avoid debt so... currently have zero cars and I haven't had a car since 2012. To be honest OP this is one of the best ways to avoid debt, cars are expensive to buy and to own.

I have no desire to buy a house so that's a good way to avoid debt as well. Credit cards get paid every month, so no debt there either.

I hope I never need to go into debt again, that college debt felt like a huge burden, even though I cleared it relatively quickly. I suppose if I buy a house someday I'll need to consider a mortgage but from a mental health stand point I think I'd prefer to buy it cash, and the few places that I would consider buying I think cash would be manageable.

 

[Deleted member 11985]

I've been putting 30% of my paycheck into my student loans for the past 4 years. As soon as they're done, I'm going to try to emigrate to literally any other first world country so I don't get that American Medical Freedom™, otherwise known as crippling medical debt.

 

[reKon]

After graduating from school, the only personal finance on my mind was to personally pay off this fucking student debt.

I'll admit though that the hunger wasn't there initially there, but a few years in, I snapped out of it and started making significant payments towards the loan. I ended up at a point where the balance hit $20Kish and I refinanced to a much lower, fixed interest rate. Since then I've been more about investing in order to get my retirement accounts to a point where interest will compound beautifully since I prioritized student loan payments during my career thus far. I figure that maybe in 1.5 years, I'll get annoyed enough that I'll get tired of seeing a balance there just use emergency funds to be done with it.

Once this is done, I will have no debt, unless I decide to buy property in the next few years.

 

[BarryFishFinger]

Yeah. This is my short story:

I purchased my house in December 2015. The way it works here in my country, is that you can set up the mortgage so your employer takes that part of your salary and it goes straight to the mortgage (Infonavit). I hated, since day one, seeing less money on my weekly payment. So, I decided to pay as soon as possible. I made some sacrifices, but I fully paid my house last month.

It only took me 4 years to fully pay my house. But I had to give extra payments. All my Christmas bonus and stuff went directly to my mortgage. I saw my co-workers (with mortgages) spend their Christmas bonuses in new gadgets, down payments for new vehicles, clothes... and I didn't fall for the temptation.

How I have a house that I fully own, and my paycheck is full.

Heck, I don't want any debts ever again. We were planning on buying a new vehicle, but fuck that. When/if I purchase a new vehicle, it would be in cash (or at least 80%). Right now, what I'm gonna do in May, is invest close to $1000 USD in fully restoring our 2008 car: new paint, interior detailing, new stereo, new headlights. We will bring the car back to life.

I just don't want any debts ever again.

Click to shrink...

I gotta know more about this. 4 years to pay off a house? Crazy. How much was the house, how much did you have to pay off, how much are you earning etc etc. Typically mortgage term here is 30 years, no one is paying their house off in 4 unless their mortgage was a tiny percentage of the value, like my mate who complains about his mortgage when it's about £80 a month because his girlfriend's parents and his parents gave them £400k to buy a house with.