5 Lessons From Our Pay Off Debt Year

Each year I choose one specific goal to work on. I’ve found when I split my focus it becomes confusing, and hard to achieve. I declared 2006 our “Pay Off Debt Year”.

Our monthly bills were just too high. I made two thirds of the income and my husband is a performer with a variable income. There were months in the winter when he had no income at all. If I wanted to quit my job, we needed to take control of our money.

Adding up all of your debt is not fun. I knew that we had a ton of student loan debt, home equity loan and a new car, but I always ignored the specifics.

I remember the moment of adding up all of our debt so clearly. I was on my computer and looking up the bills online. I had a little piece of paper where I was writing the numbers. It hurt to write them down…

Student Loan 1 $3,400

Student Loan 2 $22,780

Home Equity Loan $24,560

Honda Civic $19,300….

Those numbers looked big on their own I didn’t want to add them up. I hesitated.

I was in $70,040 of debt.

Ouch.

I was 24 years old. How did I let myself get into all that debt? I know technically each one of these loans was my choice. I just wish I knew then what I know now!

We’d bought the Honda Civic two months beforehand. Brand new. It seemed like it would be the perfect family car for when we had children. What I didn’t realize was that those smaller decisions were stopping me from having the life I wanted.

I didn’t like my job. I worked 60+ hours per week and was stressed to the max. But I didn’t correlate the car as a chain to my job. I just wanted a new car.

Adding up all of the debt made me admit to myself that I hadn’t made the best choices. I realized handling your finances over the internet with options such as certificates of deposit are a good way to keep a track of expenditures.

I kept saying that I hated my job and wanted to quit, but I wasn’t doing anything about it. Actions really do speak louder than words!

Here are a few things that I wish I knew that day:

1. The pain of getting out of debt is temporary. We made the decision to never get into debt again. Once that $70,000 was gone, it would be gone for good.

I know we tend to think about the hardship we have to go through now, but the truth is, even if it takes 3 or 4 years to accomplish that is only a small piece of your life.

2. You don’t need to live for tomorrow. My husband wasn’t on board at first. He said, “Why live for tomorrow when you could die today?” He had a valid point. What I realized was that, if we didn”t at least try to do it and work toward our goals, we would never live the life we truly wanted.

I don’t like the statement “living for tomorrow” when it comes to getting out of debt. Not buying a lot of things doesn”t mean you are only living for tomorrow. Enjoying each day fully is not dependent on going out to eat or buying stuff. It’s an internal game.

3. Accountability and support really helps. Telling people we were getting out of debt was important. My husband and I used each other as ‘accountability buddies’. He would check up on me and I would check up on him. He would support me when I was feeling down and vice versa.

You get used to it. Really. It’s a total lifestyle change at first, and you may feel consumed with numbers. Heck I like numbers, but I still felt totally overwhelmed. My budget was all wrong for the first few months and I wasn’t sure what else I could be doing. But it gets SO much easier.

4. The learning curve feels very steep. It it so much easier to go back into the normal routine of buying a coffee or forgetting the budget at the beginning of the month.

I promise you, it gets easier. I’ve been doing this for four years, and now I can sense when I need to create a budget. I automatically think about my personal fund when I go to Starbucks.

5. You enjoy the simple things in life more. Selling a lot of our stuff made me appreciate how much we had that we never used. Even selling things that I loved (like the new car) made me realize what really mattered in life.Not anymore. I actually took control of my life. And let me tell you, it was worth it.

How are you taking control of your life now?

For more info on making more money- check out: 32 Ways to make money from home!

 

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Hi I’m Jaime. Each and every week I bring you the top business advice from the people who know best.

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13 responses

  • So you made a big important decision to pay off your debt. And you don’t mind the new lifestyle. So how far are you going to go with this new way of life?

    Will you continue or have you had enough and will be responsible, but stop saving/paying off debt so aggressively?

    • Well we paid everything off by 2007. So now I work part time and we are enjoying life. Still being frugal, since it’s almost innate now, but not working 70 hours a week trying to save.

      I love the frugal lifestyle because it allows me the freedom of time. But my plan would be to build up enough wealth so I don’t have to always stick to $125 weekly grocery budget. 🙂

  • 2009 was my year. My husband and I both nearly got laid off and it was a wake up call for me. Although we had no consumer debt, we were spending too much of our income and not paying down our debt faster. WE had 2 mortgages, a ripped apart kitchen and 2 other gutted rooms and limited cash to buy a car if I lost my company one.

    Aside from finishing our current open projects, we stopped spending money on remodeling for the year. We had bought all the major stuff already so that was a relief.

    My goal was to reduce our fixed monthly expenses as much as possible. That meant paying off the mortgages. Daycare is also a big expense, but at least if we lose our jobs, we lose the expense too. Hopefully by next year we’ll be totally done.

  • Encouraging read. Our decisions can chain us to a lifestyle we loathe. I have a mountain of debt, mostly from graduate school, it’s six figures. I refuse to have a fatalistic attitude about it, as a household, we just keep forging ahead. Like you, I have to have a singular focus – now I am almost exclusively focused on paying our truck off, in the past six months, we paid off $6700 of the loan, just $8100 left. YAY!!

    • Congrats! I agree with you completely. You can’t cry about bad decisions you just keep moving forward to fix them! Great job paying off so much already and good luck with the rest!

  • Hi Jaime,

    What a lovely site. Thanks so much for the fabulous pointers and tips.but where o where do I sign up for the news letter? I really, really want a copy of the tool kit.
    Have a wonderful weekend

  • Being in debts is really complicated and not pleasant feeling!

  • Congrats Jamie!  I’m a graduate of Financial Peace University October 2009 – while I was laid off from a 6 figure job.  Couldn’t believe how much Stupid Tax we’d paid, or how much dumb spending we had done – $70,000 in consumer debt.  No student loans…all cars and credit cards.  After 16 months, I finally got a great job…..only problem is that it was a 46% pay cut.  No matter…we’ll have a balanced budget by the end of this year. 

    We made the decision that debt is in fact dumb and have been on the path ever since.  over $20,000 paid off since then.  On a clip to pay off about $10K to $12K per year and project October 2015 to do a debt free scream!  We have a few years to go – but every week (sometimes more since I’m the number geek…) I can see the progress.  The light at the end of the tunnel used to look like an oncoming freight train…but now it’s looking like glorious sunshine! 

    What a feeling it is to know that we will have the money to help pay off the daughter’s student loans…..since we weren’t smart enough back when to save for college….

  • Congratulations!  You found the problem, isolated the problem, and neutralized the problem. Well done!

    Just remember that debt is your friend when it affords you an asset that produces positive cashflow.

    To think all debt is bad will lead to financial ruin.

  • Thank you! Everytime I tell people I want to live a frugal lifestyle until I pay all my debt I get the response “live your life”. I think I am living my life just fine without eating out and watching where I spend my money. Great post!

    • Yes! Thank you- you can still enjoy life without all the material stuff! 🙂

  • Great post. Congratulations on being debt free.

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