Share Your Story on How You Got Debt Free (vehicles, checking account, mortgage)

[Lakewooder]

Originally Posted by AnthonyB

Good for you putting your financial health before Keeping Up with the Joneses. If only more did that.

I have never been in debt. Not because I am some financial genius or make lots of money (I don't) but because I fastidiously live within my means and don't buy anything unless I have the cash in hand.

The bad side of being debt free is that we live in a society that values the outward trappings of wealth - big car, big house, expensive clothes. Swimming against that tide - of appearing to have less than others - is the hardest part.

You said it, brother. I've had people on here question my sanity because I said it was rude to show off and that some people actually like living around people of different means. Of course I am lucky to have grown up in eclectic, egalitarian East Dallas - the old money types taught me great lessons.

[alexanderaf]

Originally Posted by GreenMachine

Anymore stories on how you crawled and scraped your way out of debt? Surely, someone must have a good one. How determined were you to pay off those credit card bills and turn your life around???? I want to hear about it.

Greenie

I know this is an old post, but I think I have a good story to share...


From the time I was 22 - 25 years old and in college, I had no financial responsibility at all. I also had very little knowledge about finances...which was ironic I knew so little about finances but was going to school to be an Aerospace Engineer. It damaged me, but read on to hear how I survived...

I did some very, very foolish things! At 22, I cosigned on a 7 year, 11.9% interest loan so my best friend could have a waverunner. My dad also helped me into a 2003 Mustang GT convertible, and I was obligated to those monthly payments and high insurance. My down-payment on the car was...a private student loan.

Here's my debt when I graduated in the summer of 2005, at 23 years old:
- $40,000 in student loans
- $15,000 owed on my car
- $1,000 in credit card debt
- *I got a job right out of college, and pulled out a $5,000 unsecured loan at 4% interest. It was a low rate, but I didn't need the money!

Then a few months into my job, I traded in the Mustang for a 2005 Buick Rendezvous because I 'needed' a practical car. Truth be told, I got tired of the first car after two years and wanted another new one. Now I owed $24,000 on the Rendezvous. I also had a girlfriend from college I was still with, and I drove 250 miles one-way to see her in another state. I'd take her out to dinner and shop all the time. I earned a lot of money for someone my age, but I was spending much more than I was earning!

Here's where I got real stupid...

I got tired of the Rendezvous after 11 months of ownership and started thinking of trading it in for another sports car. Then I found out my girlfriend had been cheating on me. We broke up, and I had the stupid logic that without her I'd be saving enough money so I could afford the loan on another car. I traded in the 2005 Rendezvous for a 2006 Pontiac GTO. I traded the car upside down for another one. Also, I had all the debt I accrued with my girlfriend...Here's a recap:

Summer 2006
- $39,000 in student loans
- $38,000 owed on my car
- $7,000 in credit card debt
- $4,500 left on unsecured loan


My girlfriend and I got back together after lots of drama. I should have seen this coming. Again, I was doing 250 mile road trips to see her, spending lots of money, and living the good life while my debts were mounting rapidly.

Here's the breaking point...

Remember the waverunner I cosigned on? My best friend died in a general aviation accident in November of 2006. I was devastated beyond belief. On top of that, there was still $12,900 left on the loan because of the high interest rate and the length of the loan. The debt became mine even though he died, because of my cosignature. Two months later, I broke up with my girlfriend and I totally changed things around. She had a large amount of student loan debt herself, and had been without a job for 2 and a half years...I told her I had to turn myself around first and couldn't be in a relationship.

So in January of 2007, here's what I owe:
- $35,000 in student loans
- $35,000 on my car
- $7,000 on my credit card
- $12,900 for the waverunner
- $4,000 on the unsecured loan

Total: $93,900

Things had to change, and after my friend's passing I was a changed individual. Even though I already had a career, I took a second job on the weekends as a laborer. I figured if I was working on the weekends I wasn't spending money. I also established a solid budget, moved closer to work, moved into a smaller apartment, cancelled utilities like my cable and Netflix, and conserved electricity as much as possible. I went from living the high-life to bare-bones minimum. I live so close to work now, I can even bike to work and groceries. So far, I have biked every day, rain or shine. I'm hoping to continue it even in the winter, because I love saving money and keeping in shape!

Then things got better

I received a big promotion in the summer of 2007, which really helped. What also helped was I went from spending around $350/week to less than $100/week. Now I took it to the extreme and I'm spending $30/week. I am also bringing in another $500-$1000/month with my second job. I'm working 60+ hours per week, but here's where my debt is now...a year and a half later after the turnaround.

Summer 2008
- $16,500 in student loans
- $27,000 on the car
- $0 on my credit card
- $0 on my waverunner (sold for $5,500, paid off the rest)
- $0 on my unsecured loan

Total: $43,500

I found out in April 2009, my job will be taking my to Los Angeles. I am really excited about this, and while LA is more expensive, I will also be earning $25,000 more per year!

My goal now is to pay off all my student loans completely before going to LA. Then the only thing left I will have is what I owe on my car. The first year in LA, I would like to pay off, then sell my car and be completely debt free. The GTO is high on insurance and a gas hog. I would like to keep bicycling to work, and buy a used Yamaha Majesty or Suzuki Burgman scooter for long commutes. I love scooters! I grew up with scooters/motorcycles my whole life. They're fun, cheap as dirt, cheap as dirt to insure, and cheap as dirt to fill up! A Majesty or Burgman are good for around town, and long freeway trips, and with the good California weather I can enjoy it every day along with 60mpg.

I hope once I get rid of the car to save for retirement and save for a house. My goal for the house is to very aggressively save $100k in 3 years. I am relaxing my budget once I get debt free so I can live life again. I like the simple life better than when I would just go out and buy whatever I wanted, but I would like to have a nice apartment and treat myself to something nice once in a while...and maybe have more to spend on groceries! I'm thinking of keeping single for the 3 years I'm saving since it will be aggressive. I know having that much money as a start in the bank will make my life much easier when I get married and have kids. My life was hell, then my life has changed, and now my life is starting to get good again

From an idiot with a card to a fiscally responsible, hard working individual. That's my story!

[John23]

Something else that isn't talked about much is reducing risk. Especially permanent, "wipe out" risk, where you drop down a level signficantly (you're down $20 k or $50 k like that).

The economy is more volatile than it was even 7 or 10 years ago.

I know people that bought RV's when gas was cheap, $1 something or $1.80 something. You invest all this money in an RV. And you're going to have it for 10 or 20 years to enjoy. But you get so leveraged on gas, gas goes up to $3 or $4 (in 3 or 5 years), you're screwed.

Then you've got the depreciation of the RV. And you've got these other factors. And in 5 years you're wiped out, kind of sad.

-I wouldn't buy anything or get in any deal where you expect prices to stay within a small band (up or down with a certain percent). Whether it's gas, interest rates.

You can do everything else right (pay your bills each month, save, invest), but if you're dependent upon where the FED takes rates, or dependent upon a certain price point and it doesn't happen....you can wipe out everything else you've done.

-Interest rate risk is crazy if you're living a moderate lifestyle. Where if you're late on a payment, and you've got X in student loans and X in credit cards, they'll shoot up.

Say you've got 5 or 10 years to pay them off. Your lifestyle is going to be moderate between now and then, why take on so much risk?

-Also, from personal experience, there's risk in putting too much on your plate. Too many cards, too many different due dates. Too many things changing...and X happens outside of that...traffic, work, family, etc.

If you can't handle what you're doing now, scale back. It won't get any easier in the future.

[Jaxson]

Originally Posted by alexanderaf

From an idiot with a card to a fiscally responsible, hard working individual. That's my story!

Fantastic job now don't forget the lesson learned.

[Nikk]

I am what I think an average person. I have some credit cards with some debt, a house, a wife, 2 kids, a rabbit and a beta fish.

I have saved money though, when I bought and sold my first house. I repainted it on the interior and exterior and added capeting and lamitate flooring when I could purchase it. I ended up making 30k which helped me buy my larger home with A/C to accomodate the family size.

I have been driving a '90 chevy cavilier (2.2 - 4 cyl.) which I bought used 8 yrs. ago used for $1500. I have changed spark plugs and wires, water pump, alternator and starter over the years myelf. On average about $200 a year in maintenance ($1600). That puts me at $387.50 a year, not including insurance and fuel. This is a monthly car payment! So I am happy with it.

All the furniture in my house is hand-me-downs from family members. Everytime I hear someone say they want to get rid of something, I at least check it out. Some of it I have gotten out of dumpsters (Get only solid wooden furniture this way... not sofas with bugs!!)

I bought a used ride-on lawn mower for $150 to find out it is an antique and can sell on ebay for more than double than that in its current condition. It was apparantly shedded by the previous own so it is in very good all original condition. It is still running well for me after two seasons and I expect I will get many more (I keep it in the garage too).

I think the key is to say screw it to the jones. I just want to live at peace with myself. I get a kick out of saving money. My wife hates it when I go dumpster diving so I don't do it anymore. But I still glance every once in a while.

[kickchick2000]

Between my DH and I the only debt we have is our home and our cars. We are in our late 20's. Here is how we have stayed out of consumer debt.

We went to in state colleges. We got some scholarships. We worked jobs during college to supplement anything our parents could not pay for. Dh was on work study and I was working 25+ hours a week. Then during the summers we found fulltime jobs. Because of this we had no student loans upon graduation.

When we bought our house we bought a small older less expensive home at $116k. Even at 23 I knew the differnce between a good mortgage and a bad mortgage. Yes lenders tried to sell me a interest only or a an adjustable mortgage with a $375 month payment, I did some simple math and it didn't make sense. So I went with a 30 year fixed mortgage principal, interest and taxes are $866 a month, we usually just send $900. Smaller home also = smaller utilites costs and smaller furnishing costs

When we bought our cars we bought less expensive cars and took out shorter loans.
We have an 05 corolla and a used tacoma. Combined we owe about 3k on them.

Electronics are not a big thing for us. 5 years ago I bought a 32 inch TV for $189 on sale, I still have it and it's the biggest, nicest TV I own. I still have my 2000 model computer, it works fine, yes it has a big monitor it does not bother me. I just bought an i-pod last year when it was on sale for $150. We use our PS2 as a DVD player, again we've had it quite a long time. No house phone. Cell phones, Dh's recently broke so he has a newer one but we waited to replace it untill our contrat renewed so we could get the new phone for about $50. Mine is older, no camera or anyting I got it free when I signed my contract.

We don't use credit cards. We only buy something if we have the money. We don't have the big house or the new shiney car every year. We could have alot more stuff and we could have a bigger house. I've just never felt like I needed it.

[texdav]

Baiscally I have always been basically debt free. For one thing have always saved and I have several savings accounts. One I always keep paying into when I have payed off a car like I just did 11/2 yrs early. One for big ourchases and one for vacations etc.When I finished paying oiff my house I satrted a savings then converted to CDs for a house I will probably buy in one year or so.looking back i first started saving when I was 13 to get a car when i got my license and have since.I do use credit cards that payback money for most of our general purchases but I have always payed them off at the end of the month. This also help keep track of what we apend and on what plus alot les chack writing. Last year I got back lke 400 dollars in payback.

[Oildog]

I got in debt putting myself through college, buying a new car, and having too much fun on credit. I finally became debt free at 30, by living well within my means. Part of it was taking a job in an area that was more affordable to live (TX vs IL).

First step was trying to payoff the credit card with the least debt and make minimums on the others. Once it was paid off, I took the amount I paid per month and added it to the minimum on my next lowest card. I did this on six cards....which I froze 4 in my freezer, to make sure I'd think if I wanted to use them.

Biggest raise you give yourself is paying off the car...thats when I really made progress. The extra $350 a month really knocked down the bills.

The downside is I didnt dress too fancy (shopped at Target and JC Pennys), or had toys like a nice stereo/golf clubs. I did buy a decent reliable car (Honda) though.

Since that day I pay my credit cards every month and the only debts I keep are the mortgage and car which I pay off in two years.

[RangerDuke08]

Pay off higher debt first, refinance to lower rates and double down when possible. There isn't a way to cheat the system, there is a smart way of tackling problems.

[ahowell722]

My husband and I just paid off our last credit card this week and it feels so....FREE! It took us 19 months to pay off about $13,000 and now we have so much extra income that we are saving. We turned off our internet and cable to save money. We moved into a cheaper apartment that wasn't as nice or as big. We ate a lot of peanuter butter sandwiches for lunches. We sold some stuff we didn't need or use. The day I made the final credit card payment I wanted to shout it to the world, because we made a budget on Microsoft Excel and stuck to it every month. It takes a lot of commitment and discipline but we did it. We are so blessed, because we didn't have much income for the first 14 months of our debt free journey.