Debt Free Kiwi #10

How much debt have you paid off?: $1,500,000

What was it for?: About 50/50 between buying out my business and starting my wife's business. Basically, buying an income.

From deciding to become debt free to making the last payment, how long did it take you?: It was exactly six years between taking on the debt and making the last payment.

What age did you take on your first debt, and how old are you now?: First bought a house at 24, and am now 46.

Did you do it alone or as a family?: Family - everything is a team effort.

Did you pay off debt from your regular income, take on extra work, or change jobs to speed it up?: The debt was to grow income, so we repaid it by directly directing that income into the loans.

Did you sell anything or receive cash gifts to contribute towards your debt payoff?: No.

What people, books, websites, podcasts, budgeting tools, debt trackers and resources helped you?: YNAB (You Need A Budget) helped a lot, mostly with lifestyle creep.

Did you keep an emergency fund while you paid off debt? If so, how much?: Yes, $65,000. More than most people, but a) it's offset against my mortgage, and b) if I lost my business, then I'd be six months without an income.

Did you have any setbacks along the way, and how did you overcome them?: Covid. Everything was tracking fine until we had to start making payroll without revenue. It costs a lot, but a mix of government support, strong-arming the landlord and taking a repayments holiday with the bank. Luckily we don't need tourist dollars to operate, so caught up a bit after the lockdowns ended.

What tips/hacks could you share?: It's widely known, but I found if I left the money in the account intending to transfer it once I hit a certain threshold, then, well, that took a long time! The key for me was transferring the same amount each month and then just managing the business finances with what was left. Sometimes that meant we had to introduce extra money from savings.

Was there a structure to your debt payoff? i.e. paying smallest to largest, or highest interest rate to lowest?: Most of the debt was on fixed payments, so it all got paid at roughly the same time.

How did you stay motivated, and what was the most challenging part of paying off your debt?: Pretty charts showing the number going down.

How did you celebrate making your final payment?: Crazy dinner in town. Actually, in hindsight, the thing I most enjoyed was changing the automatic payment from going to the loan to coming to us. Everything my wife earned in the last six years went straight to the loan until a couple of days ago.

Was getting out of debt worth it, and what have you learned about yourself?: I learned I don't like the stress. We'd effectively bought an income, so we had a high income and huge monthly payments. I'd frequently lie awake thinking, 'if this screws up, it's going to go bad really fast'.

Will you ever go back into debt again?: NO.

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