After reading countless stories of millennials and gen-Xers who shoulder many of the same debts, including mortgages, auto loans, and student loans, we asked ourselves how we ended up in the same situation, having started 2015 with more than $200k in debt.
Long conversations ensued regarding the pivotal moments in childhood and adolescence in which we were taught to be good capitalists, consumers of all things new and shiny. In all of these conversations, one question stood out among the rest:
“When did we decide that ‘debt’ was
something we could afford?”
It stands to reason that if we couldn’t pay cash for our stuff, then we couldn’t afford it. And within a week, we created a better plan for our future. It was the start of the avalanche of change that has ensued. We made 2015 the year we change our lives.
We’ve made all the usual mistakes with our finances, everything from student loans to new car loans to a mortgage for a house that’s too big for two people. As a result, we were in over our heads. Sure, we kept up with monthly payments, but is that supposed to be the measure of success? Have we achieved the American Dream?
As each month passes, we tracked our debt payoff progress below.
In the personal finance blogosphere, there are some who do not count mortgage debt because houses could be liquidated, rented, etc.
For us, any negative number means we owe someone something, which, to us, is not desirable.
Thus, our mortgage is a liability and included in our debt total, along with student loan debt and interest-free credit card debt.
We are now 100% debt free!
March 2017: $0 (We paid off the last student loan, so we are 100% debt free!)
February 2017: $10,286.53
January 2017: $10,679.54
December 2016: $23,785.73
November 2016: $24,495.32 (We paid off the small house mortgage!)
October 2016: $38,005.47
September 2016: $41,241.00
August 2016: $42,012.70
July 2016: $54,686.12
June 2016: $60,048.36
May 2016: $65,981.97 (We sold the big house and shed its mortgage!)
April 2016: $219,071.25
March 2016: $223,946.70
February 2016: $227,062.32
January 2016: $227,913.35
December 2015: $234,443.56
November 2015: $240,352.35 (We took on a mortgage for the small house.)
October 2015: $188,455.59 (We paid off our credit card debt!)
September 2015: $194,844.52
August 2015: $197,673.60
July 2015: $200,098.43
June 2015: $200,941.46
May 2015: $202,583.02
April 2015: $204,971.31 (We include the mortgage, student loans and credit card debts.)
How We Spend Less Money
Here’s an ever-evolving list of steps we’ve taken along the path to pursue debt freedom and financial independence.
1. PF knowledge: On a daily basis, we read and connect with others in personal finance to learn more about minimizing expenses to free up cash to pay off debt.
2. Cutting housing-related expenses: ICYMI, we moved to a small house to cut housing-related expenses by two-thirds, a savings rate that applies to the cost of the house, water, electricity and taxes.
3. Cutting transportation-related expenses: We’ve sold a car and leased electric smart cars for our commuting and grocery-getting needs. In January 2017 when the leases are up, we’ll become a one-car family.
4. Shopping ban for clothing: We hadn’t purchased clothes for two years!
5. Cutting cable: We did this several years ago and haven’t looked back. In January 2016, we cut Amazon and Netflix, too.
We use only Hulu today. We don’t pay for Hulu anymore, either.
6. Coupon clipping: We clip coupons for fresh berries from Driscoll’s, which gets us $1 off per box. Yay for printing $ and for berries with breakfast! We use the coupon app Ibotta to clip coupons; sign up here (aff) and use Referral Code rnkaeoy to get $10 just for signing up.
7. Cutting restaurant / going out for meals: When we looked at how much we spent at restaurants, we stopped going cold turkey. We were lazy, plain and simple.
In January 2016, we added back a limited amount for dinner. In January 2017, we stopped going out to eat again. Our food budget continues to be a moving target; check out our household budget for 2017.
8. Side hustling: We help small businesses with digital marketing. We also teach SEO to side hustlers, freelancers, and small businesses by way of our online courses!
9. DIY: Whenever we can, we do it ourselves. We maintain our own home, fix our Volvo, make our own food, and much more.
10. Water: We drink water. It’s a free or cheap, no calorie drink, so we stopped buying bottled drinks of all kinds and started using Nalgene bottles full of water.
11. Coffee: We prepare our coffee each morning via a French press. Love it! No more Starbucks for us.
12. Lawn Maintenance: We DIY. Our lawn at the small house is quite small, so we’re able to push a reel mower around fairly quickly.
13: Home Maintenance: More DIY fun! We painted our own fence and porch. We clean our own house.
14. Cell Phone Service: Since we pay for only one of our cell phones, we switched to Ting Mobile to cut our bill significant!
14. Pet Maintenance: We groom our three cats. 🙂
Making Progress on the Path to Financial Independence
Sell the “big house” (current home, Cape Cod style, 1,500 sq ft). DONE! We sold the big house May 2016.
Downsize to an apartment or small house. DONE! We moved into our small house September 2015.
Crush the small house mortgage to achieve mortgage freedom! DONE! We paid off the small house mortgage in November 2016.
Pay off remaining student loan debt. DONE! We paid off the last of the student loans in March 2017.
Goal: Save money to build a tiny house using the power of Craigslist and efficient design. TARGET: TBD
Paying Off Debt With a Side Hustle
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