How’d we get rid of more than $150,000 in debt in one day? We sold our big, 1,500 sqft house! Feel free to insert all celebratory emoticons, bitmjois, memes, and GIFs here. 🙂
Loan Balance: How Much Debt Remains
Here’s our total loan balance from our Mint account before we sold the house.
Here’s our loan balance now that we’ve sold the house.
Oh yeah! That’s a difference of $152,089.82. 🙂
What Kind of Debts Do We Have Left to Pay?
We have two kinds of debts remaining: student loans and a mortgage on our small, 500 sqft house. (We paid off our credit card debt and our auto loans awhile back.)
Balance of the small house mortgage: $35,227.87
This mortgage on our “tiny” house will be paid off well before the end of the year, making us true homeowners for the first time in our lives. Update: We’ve paid off our mortgage.
Balance of the student loans: $29,496.38
We have a series of small-ish student loans that add up to the $29k referenced above. Here’s our path to debt freedom. Update: We’ve paid off the last of our student loan debt, so we’re 100% debt free as of March 2017.
Our Plan to Become Debt Free in a Year
One of our lofty goals is to be debt free before the end of 2016. *fingers crossed*
To crush the remaining loan balance, we’ve reallocated the amount we spent on the big house mortgage and bills to the small house mortgage. For months, we’ve been paying two mortgages, two electric bills, two water bills, and two sewer bills. Thus, we now have an extra $1,300 to apply to our remaining loan balance.
As we examined last week, we took a look at all of the strategies that the FIRE community uses to reach financial independence. Some choose a couple of core strategies to focus on while others test the waters with all six. Since last week’s post, we’re taking a look at not only our money but our time in an effort to prioritize most of our efforts using a couple of core strategies: frugality and entrepreneurship.
In our situation, we maintain our frugality and continue to seek expenses to cut. We plan to shop our insurance policies to find a lower premium for our home and autos. Having two houses and extra cars results in crazy amounts spent on insurance policies, so we’re already spending less…but I think we can spend even less if we shop around.
We’ve even further optimized how much money we spend on food. At the start of the year, we added back some money or restaurants, which quickly got out of hand. No more! We can’t control ourselves. Thus, we’re trying something new. We’ve signed up for the local CSA, which offers enough greens for us for a week. We’re also in our second month of using Soylent for lunch. I’m confident we can keep our grocery budget to under $500 per month. I know we could live on less, but I’m not inclined to sacrifice the organic and free-range foods in our lives. Even at $500 per month, this is a far cry from where we were in July 2014.
And Enjoy Life Along the Way
Part of our debt crushing plan includes enjoying life. We’re spending more time celebrating our successes by way of weekend hikes and a frugal vacation (or two). As the Debt Free Guys say, we need to enjoy the journey as much as the destination. And we are loving the journey. We’ve met, online and offline, many new friends via our blog. We read constantly, soaking up every nugget of wisdom from personal finance to productivity to business management. Life is good.
In going through this process, I can say that I’ve learned far more than I ever imagined. Two things stand out that I’ve made a part of my daily life.
- I make time to celebrate the wins, big and small.
- I make time to journal about what I’m grateful for.
Today, we celebrate the big win. Tomorrow, I’ll be grateful for having sold our big house, but I’ll also be grateful for the financial lessons we learned as homeowners.
3 Tips for Becoming Debt Free…
Since we paid off a bunch of debt in a short period of time, we learned a little bit along the way that helped us accelerate our journey. Perhaps these debt free tips will help you, too!
1. Be Totally Fed Up With Debt
We didn’t start making real progress on our personal finances and paying off debt until we decided we hated our debt. We hated how much money we were spending on debt to clean up past mistakes. We hated that we couldn’t do the things we wanted to do, like travel. We hated making payments. By the beginning of 2015, we were absolutely, totally fed up with being in debt.
That’s why I think being totally fed up with debt is actually a great place to start the journey — you’re likely more motivated to get out of debt than ever before. And maybe it’s because you want to travel like we do. 😉
2. Cut Your Big 3 Expenses
Once we decided we were both fed up with debt, we worked together to craft financial goals. We made these goals SMART (specific, actionable, measurable, realistic, and time-bound) goals to hold us accountable while we worked to execute our plan.
Set SMART goals to cut spending on any or all of the big 3: food, transportation, and housing.
If you spend a lot of money eating out, consider making a whole bunch of food on one or two days each week so there are fewer excuses for going out to eat.
If you have more vehicles than you really need, consider selling them and sharing cars or using public transportation.
If you have more house than you need, consider downsizing. Downsizing to a “tiny” house is what we did, but you don’t have to go that small. 😉
3. Make More Money
If you really want to crush that debt fast, start a side hustle and make more money. Ride-sharing apps, freelancing, and selling stuff on Craigslist, eBay, or Facebook Marketplace are all great places to start making more money.