This article was written by Ashley over at Money Talks. Her passion in life is to help you get control of your money. Stop by her site or follow her on twitter.
In January of 2008 my husband and I had $38,000 in consumer debt with total monthly payments of almost $950. On February 1st of this year I paid off the last bit of that debt. I’m finally debt free!!
That’s $950 a month that we don’t have to come up with if my husband loses his job. That’s $950 a month more in my pocket. It’s $950 a month of pure freedom! And it’s awesome.
We were a pretty typical family that made pretty typical decisions. We had two financed cars, some credit card debt from some home improvement upgrades, two little kids, good credit, and one income. In fact, in a lot of ways we were better off than typical. We lived on a budget, had a some money in savings, and our debt wasn’t over the top considering it includes two cars.
So how did we do it?
Unfortunately, it’s not an amazing story of life changing sacrifice. I wish it was because that would be easier to write. But maybe that’s a good thing because not everyone is able or willing to go through those kinds of changes. Instead, my story is like my family, pretty typical. Our main goal when it came to debt was to stop taking on new debt. Period.
With our “no new debt” plan in our back pocket we put all extra money towards our credit card balance, which was about $8,600 at that time. That was paid off in September of 2009. What we should have done at that point was to roll the credit card payment into one of the car loans. But we didn’t. If we had our debt would have been paid off even sooner. But our budget was tight and we decided to put some breathing room into our monthly budget instead. Such is life. I didn’t say our path was perfect, I said it was typical.
Next up was the loan for my minivan. By sending extra to that when we could we had it paid off in June 2010. Now here is where we did something sorta right. We took that monthly payment and set up a “car fund” with the intention of saving up for a replacement car. We set up an automatic transfer of the car payment amount into a new savings account. Finally in January of 2012 the balance of the car fund and the balance due on my husband’s car was the same, about $7,300. We could be debt free!!
I was hesitant at first to send the money. I liked having that money sitting in savings but I knew it was the right thing to do. Now that the debt is totally gone I feel wonderful. A huge weight that I didn’t even know I was carrying has been lifted. I feel so in control over my money now. We have set up a plan to never have another car payment. If things go to plan I don’t see us ever having debt again. This is so much better!
The mortgage is next. If paying off the car feels this good, I can’t imagine how happy I’ll be when the mortgage is gone.